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'Capdata' is a small software writing business located in the south of Ireland and employing four employees - Leaving Cert Business - Question (C) - 2001
Question (C)
'Capdata' is a small software writing business located in the south of Ireland and employing four employees. It has the opportunity to grow but has little experience... show full transcript
Worked Solution & Example Answer:'Capdata' is a small software writing business located in the south of Ireland and employing four employees - Leaving Cert Business - Question (C) - 2001
Step 1
Describe the taxes that 'Capdata' would be liable for: Income Tax
Answer
As a business, 'Capdata' would need to pay Income Tax on its profits. This tax applies to the earnings generated from its software services. Since it has four employees, the company's profits will be subject to taxation based on the applicable corporate tax rate in Ireland.
Step 2
Describe the taxes that 'Capdata' would be liable for: Value Added Tax (VAT)
Answer
If 'Capdata' reaches a certain threshold in sales revenue, it would be required to register for VAT. This tax is charged on the sale of goods and services. As a software writing business, it is likely that VAT would apply to many of its transactions with clients.
Step 3
Describe the taxes that 'Capdata' would be liable for: Corporation Tax
Answer
'Capdata' will also be liable for Corporation Tax on its profits, if structured as a company. This is a standard tax for companies operating in Ireland and is calculated based on the profits of the business after allowable expenses have been deducted.
Step 4
Describe the taxes that 'Capdata' would be liable for: Pay As You Earn (PAYE)
Answer
Since 'Capdata' employs four individuals, it must operate a PAYE system to withhold income tax from employee wages. This ensures that the appropriate amount of income tax is deducted from employees' earnings before they are paid.
Step 5