How to setup a Limited Company in Ireland
If you have been thinking about setting up a company in Ireland but are not sure where to start, then you have come to the right place. This essential guide will walk you through the basics and need-to-know information of setting up an Irish company.
What is a Limited Company?
A limited company refers to the way your company is structured. If you are a sole trader and wondering if setting up a limited company is for you, here are three key differences between the two:
If you set up a private limited company, it will have a legal identity that is separate from that of its directors and shareholders.
The directors and shareholders are not personally liable for business debts of a limited company, which allows for a riskier business strategy.
Setting up a company involves some time-consuming paperwork and other responsibilities.
Let’s look at the benefits and cost of setting up a company in Ireland.
Why set up a limited company?
The simplest structure for setting up your business is as a Sole Trader, but there are several benefits to consider if you set up a private limited company. These are:
Your company will look more professional – company incorporation is a trust indicator to potential clients, suppliers, and investors.
Your company will be a separate legal entity to you – if something was to go wrong, the company would be liable and not you personally. The only loss you will incur is what you have put into the business. Your personal assets will be secure.
Your company will be more tax-efficient – You will be required to pay corporation tax through your business. Your take-home will be your salary and any dividends. Get the set-up right and you’ll have top-notch tax efficiency.
So, what’s involved in starting an Irish company? How much does it cost to set up a limited company, how long does it take and what step do you need to take to create a company?
How much does it cost to set up a limited company in Ireland?
The initial costs to set up a company in Ireland are for registering with the Companies Registration Office which charges €50. If you are new to the registration process you may want the help of an advisor to make the process of opening a company in Ireland as smooth and swift as possible. There are also some ongoing costs to consider. These include:
The day-to-day management of your business – software to keep accurate records and professional advice all comes at a cost.
Time costs – it takes more time to fulfil the legal and administrative responsibilities that come with starting a company. It will be essential for you to decide if being a limited company is necessary for the sort of business you run.
How long does it take to set up a limited company in Ireland?
The amount of time involved in company formation largely depends on you. But once all the necessary decisions have been made it takes 5 to 10 days for the Companies Registration Office (CRO) to process your application. The time-consuming part could be filling out the paperwork you need to submit to the CRO. Getting organised with a solid business plan or recruiting a company formation agency will help speed up this process.
How to set up a limited company
If you are deciding to set up a company in Ireland and you are still unsure, what can help you decide and what are the exact steps you need to take? Keep reading for a step-by-step guide to opening a company in Ireland.
#1 Is setting up a limited company right for your business?
Running a business as a sole trader is the most common legal structure for a reason, it is the simplest. It is easy to set up as a sole trader and there are fewer legal responsibilities which means it is the quickest way to get your business up and running. That being said, sole traders have unlimited liability with means that they are personally responsible if something goes wrong. Sole traders also do not enjoy the same tax efficiency as directors of limited companies. Some questions to help you decide the best business structure for you are:
What type of business are you setting up?
What risks are involved in setting up your business?
After some soul-searching, if you are still not sure if company incorporation is for you, look at getting some professional advice.
#2 How do you choose a name for your limited company?
Choosing a name for your company can be a fun and creative process. However, be aware that the CRO has some strict criteria. The company name must be unique and distinguishable against other company names already registered in Ireland. The CRO has produced guidelines for you to meet. If the name doesn’t fit in with these measures, the company formation process will be delayed. To save time and money, you can recruit an agency to help you with this step.
#3 How many limited company directors should you have?
Each limited company needs to appoint a minimum of one director; although there is no limit to the number of directors that can be appointed. All Irish companies must have at least one director who resides in a European Economic Area. If none of the directors resides inside an EEA, check out our post on How to Start a Company in Ireland as a Non-Resident.
The director, or directors, are responsible for the running of the company and managing it on behalf of the shareholders. At the start of company incorporation, the shareholders and the directors are usually the same people, but this can be changed later.
#4 What are shareholders and shares?
Who will be a shareholder?
It is the shareholders that own the company. It is commonplace for the director(s) to be the shareholders of new businesses. In the case that you are setting up a company with a co-founder, you don’t need to worry about shareholder agreements as these are not required when setting up a company in Ireland. Each company situation is different so you can get advice from our team specifically for you.
What are Shares?
Shares are pieces of your company that you can give away. How you divide the shares decides the legal ownership of the company. A company issues shares at the point it becomes limited. But it can also issue more shares and transfer shares when it becomes more established. It can be a complicated process for the uninitiated but there are agencies, like Fusion Formations, that can help with this.
There are two types of shares. Authorised shares and issued shares. Authorised shares are the total number of shares that a company is permitted to have both now and in the future. Issued shares are the number of shares that have been paid for and issued to a shareholder.
What is a person with significant control?
A person with significant control a PSC is a person who meets one or more of the following criteria:
Holds more than 25% of the shares or voting rights in the company
Holds the right to appoint or remove most of the directors of the company
What is the Register of Beneficial Owners
Anyone holding 25% or more of the shares is also known as a beneficial owner.
If you are setting up a company in Ireland, you must register all beneficial owners on the Register Of Beneficial Owners. You can find the RBO website here. This is a legal requirement, and you have five months after incorporation to complete this step. You can outsource this step to a company formation agency like Fusion Formations.
#5 Prepare the incorporation documents
Once you have met the above requirements, along with appointing a company secretary and selecting a company address you are ready to incorporate your company. You can proceed by carrying out one of the two steps.
Set up the company online with the Companies Online Registration Environment; or
Approach a company formation specialist, like Fusion Formations, to guide you through the best options for each step of the process.
#6 What records do I need to keep when running a limited company?
Once your company has been registered you will need to:
Order your company seal – this is a unique seal that is purchased by the company to be used in legal documents.
Register for tax – this needs to happen before the company can start trading and is a separate process from registering with the CRO. It usually requires the help of an accountant.
Set up a business bank account in Ireland – this will require the original certificate of incorporation; your company constitution and a copy of the A1 form submitted to the CRO and evidence of filling your RBO.
File Annual Returns with the CRO. The first of these is due six months after incorporation. There are penalties if the deadlines are missed.
It is possible to complete all the steps of setting up a limited company in Ireland DIY style. But it can be confusing, time-consuming and, if you make a mistake, costly. Fusion Formation specialises in helping people set up companies quickly and correctly. Call our agents to find out how we can best help you or check out our company formation packages.
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