Are you looking to set up a company in Ireland? As owners of Flexi-Hub Limited, we’ve been through the process and have put together this guide for you to better understand the process and the steps involved.
Usually, the first question that comes up is whether to register as a Sole Trader or a Limited Company. There’s no one right answer to this question, it usually depends on your circumstances and goals for your business.
Let’s take a look at these two options in the next section.
What’s better sole trader or limited company?
When starting out and researching the best option for setting up your company, the main question tends to be ‘Should I set up as a sole trader or a limited company?’ The answer will depend on a few factors including:
- Are you going to be doing freelance work
- Will you be employing staff for your business
- What level of earnings are you expecting
If you want to set up quickly with fewer complications, then the sole trader option might be for you. There are less legal considerations and you don’t have to worry about annual financial statements.
You’ll also have more privacy in regards to your earnings as this will not be made public (compared to a limited company that has to make annual filings among other financials)
If you plan to hire staff and have a high level of income, then setting up a limited company may be the better option.
The limited company will be a separate legal entity which gives you more personal protection. It also gives you the chance to promote a more professional look for your company, and there are some better tax advantages to this too.
Ultimately the question is going to come down to what your current situation is, and what your intentions are for your company.
Are there disadvantages of a private limited company?
As with any decision, there are always going to be pros and cons. So let’s look at some of the disadvantages of a private limited company.
- As a limited company, there are a lot more financial filings and deadlines to worry about.
- When filing your financial statements with the CRO the public will be able to access this information.
- If you don’t comply with the regulations or miss deadlines you could face large fines.
- It’s a more complicated process to set up (and shut down).
How much tax does a limited company pay in Ireland?
Depending on your business and its activities you could be looking at different rates of what’s called ‘Corporation Tax’. let’s take a look at the rates below:
6.25% Corporation Tax
If you earn money from certain things like patents or computer programs, you might only pay this 6.25% tax.
12.5% Corporation Tax
This tax rate applies to money you earn from selling things or offering services.
25% Corporation Tax
This rate is usually for money you make from things like renting properties or investments.
Can you switch from sole trader to limited company?
Simply put yes, you can switch from being a sole trader to forming a limited company.
This change can have its benefits, such as lower tax rates and more liability protection.
You should usually consider making the switch when your business profits start to exceed certain thresholds.
To make the switch you should consider the steps involved like registering the company, ceasing your sole trader operations, and updating financial records. Also keep in mind the potential tax implications, like Capital Gains Tax, and seek professional advice if needed.
Overall, transitioning to a limited company can help your business run more efficiently.
How much does it cost to set up a company in Ireland?
Now that we’ve looked at the different options you have when setting up your company, let’s start to take a look at the possible costs.
As a sole trader, there are not a lot of costs in setting up your company. The main cost might be registering a company name if you are not trading under your own true surname.
For example;
Sole Trader Mary Brady would need to register a business name if she traded as Brady Family Ham but not if she traded as Brady or Mary Brady.
The fee for registering a name with the CRO is €40 for a paper filing and €20 for an electronic filing.
The costs involved in setting up a Limited Company can be a bit higher but if you choose to go down the route of doing it all yourself, you can save money although it can be more time-consuming
If you want to outsource your company formation to a professional, the price can range from €200 – €500 depending on what they include in their service. Doing it yourself would cost €50 to file the company with the CRO.
What are the benefits of setting up a company in Ireland?
Overall there are a lot of benefits to setting up a business in Ireland, here we’ll take a look at just some of the benefits:
- Setting up your company in Ireland is relatively fast compared to other countries.
- Ireland has very straightforward processes for making changes to directors and shareholders, reducing paperwork and the administrative burden.
- Ireland offers a competitive cooperation tax rate of 12.5%, making it one of the lowest in the EU.
- Businesses in Ireland have multiple options to stricture the business such as limited, unlimited, and public limited companies, providing flexibility.
- We have a highly educated and dedicated workforce. Ireland is known globally for having a standout work ethic.
What do I need to set up a company in Ireland?
To set up a company in Ireland, follow this simple checklist:
Develop your idea. Start writing down and answering questions such as:
- Is my idea viable?
- Can I develop it into a sustainable business?
- Do I know who my target market is?
- Why am I setting up this business?
Create your business plan and choose a name
Put together a detailed business plan outlining your goals and choose your business name (if you are not trading under your own name. Don’t forget to register it with the CRO)
Choose a company structure
Decide on the structure you want to operate as, whether it’s a sole trader, partnership, or limited company, considering tax implications and personal liability.
Understand the tax
Familiarize yourself with the tax obligations based on your chosen structure, including Income Tax, PRSI, USC, Corporation Tax, and VAT.
Register employees
If you plan to hire employees, register as an employer with Revenue before paying them, providing necessary information to Revenue.
How long does it take to set up a company in Ireland?
As we discussed briefly above, setting up a company in Ireland is relatively quick. If you’ve followed the checklist above, answered all the important questions and are ready to make your move then setting up the company should only take between 5-10 days to make it official.
Personally speaking from our own experience and using a professional, the whole process took 7 days from getting started to receiving all of our company documents.
Ready to start your new adventure?
Now that you’ve read through the processes and steps involved in starting up a new company you should be more comfortable making the the next step.
Don’t be daunted if it still seems like a lot, we’ve been there and we know the feeling. The important thing is to go at your own pace and make your move at a time that suits you.
If you have any questions about any of the above, feel free to reach out to us for a chat and we’d be glad to talk you through it or recommend you to a professional that can help.