You’ve already decided to start a company.
Now you ask yourself what form to choose: self employment or limited company ?
This is the fastest and cheapest option because setting up self- employment takes up to 3 working
days and there are practically no fees associated with the registration (except registration in the
CRO). You need to register your business in Revenue (registering for Income Tax) and Company
Registration Office where business name is registered. It is the requirement for using the name and
for setting up a business bank account.
If you are sole trader without employees and you are not registered for VAT, your Accounts and
Income Tax Return is submitted to Revenue once a year only.
An additional advantage is certainly lower fees for accountancy services.
However, it should be remembered that in this form, you as the business owner are liable wholly
and personally for all liabilities and debts incurred.
That is the reason why entrepreneurs prefer the second option, which is forming the limited
This form is associated with higher set up costs (about 300-400 euros) and higher fees in
accountancy services. The process of registration of limited company takes about 3-4 weeks. There
are restrictions as to withdrawing the cash from the company by directors. This form requires
greater discipline from the owners – directors, but it also brings benefits.
There is limited liability of shareholders up to the amount of the shareholding.
The limited company looks more credible to potential stakeholders, especially if we think of
operating on the international market.
Enterprise Ireland offering non- repayable grants requires that the business is in the form of a
Corporate tax is 12.5% – in Ireland we have the lowest rate in all the European Union!
However, it should be remembered here that if you want to take your wage or dividend out of the
company, the same income tax rates apply as in the case of self-employment.
The big advantage of the limited company is that private pension contributions for the owner are
fully expensed and taxed deductible. Tax savings can be gained also through putting through
mileage and subsistence for the directors.
As you can see, there are many pros and cons in each of the form. Therefore, before making a
decision, it is worth reviewing your situation with qualified and experienced accountant with that
will help to take the right step.
Finally, great advice if you decide to start a business – write the business plan. If you don’t know how
to do it, find someone who can. Yes, consultations and specialist services cost money, but not
listening to the specialist’s help proves to be even more expensive.