Favourable tax policies, a young and educated workforce, and a vibrant startup scene make Ireland an entrepreneurial mecca.
The fact that corporate taxes are only 12.5% attracts and encourages many entrepreneurs from different parts of the world to start their ventures in Ireland. During the first three months of 2019, as many as 71 businesses were set up on the Emerald Island every day, despite Brexit ominously looming large on the horizon.
Here’s a five-step crash course to help you navigate the process of establishing a company and find your feet in Ireland’s flourishing startup ecosystem.
1. Pick a Legal Structure
This is one of the most important steps of your entrepreneurial journey because it will determine how your business will operate.
Most commonly, this choice is narrowed down to two options – a sole trader or a limited company.
Both these legal structures have their own pros and cons, so here’s what you should know in order to make an informed decision.
- A sole trader is the easiest and most affordable option for setting up a business. It will allow you to be the only decision-maker and have full control over your company’s operations. You can operate under your own name or register a business name. Although you have to keep books and records as well as file taxes and pay VAT, you don’t have to file annual returns and accounts with the Companies Registration Office. The downsides include being personally liable for any debts and having all your profits taxed at the income rate which means up to 52%. Besides, you have to be a resident of Ireland in order to operate as a sole trader.
- A limited company does require more red tape and higher initial investment, but it comes with some benefits too. First of all, you’ll be eligible for a lower corporation tax rate of 12.5% on profits as well as different tax reliefs. As a limited company, you’ll be perceived as more credible and trustworthy. Finally, and most importantly, your private assets will be protected in case any business debts are incurred.
2. Register Your Company
If you choose to operate as a sole trader, then you should first register with the Revenue Commissioners for tax.
In certain cases, setting up a business as a self-employed sole trader requires a license from a local authority or city council.
If you’ve just moved to Ireland, then it’s important to get your Personal Public Service Number – PPSN. In order to obtain it, you’ll need your Sole Trader Income Tax registration, since it serves as evidence that you need a PPSN.
A limited company needs to be incorporated, which means that it has to be registered with the CRO first. This process takes approximately 5 days and after that, you should register with the Revenue Commissioners for tax. Having a bank account in the name of your limited company is another requirement during this stage.
3. Choose a Name
No matter what legal structure you opt for, the name of your business plays an important role in your branding efforts.
As it was mentioned before, as a sole trader you can choose to operate under your own name, but it’s important to understand that if you want to use a name which is in any way different from your true last name, you need to register it with the CRO.
As for a limited company, the most important thing to bear in mind is that your registered name can’t be the same as the one previously registered with the CRO. Opting for a unique and distinctive business name will not only prevent you from having any trademark or legal issues, but also help you improve brand awareness and be more memorable.
4. Have a Registered and Business Address
There is a difference between these two addresses, and you need to provide both when you’re registering your company in Ireland.
Having a Registered Office Address is a legal requirement when you want to incorporate a limited company, and it’s the address where your official and legal correspondence with government, the CRO, and other interested parties is delivered to. However, your everyday business activities don’t have to take place at this address.
On the other hand, a business address is your actual trading address.
These two addresses might be the same, and you can use your home address for both of them.
If you’re operating your business remotely, it’s worth noting that your Register Office Address can’t be a PO box, meaning that you need a physical address in Ireland.
5. Obtain Funding
Last but not least, this step will determine the success of your business.
Luckily, Ireland is known for a number of different private and government funding program.
Local Enterprise Offices offer support to local businesses and startups, and you should first check whether you’re eligible for some of their grants.
The New Frontiers is a national entrepreneurial program which not only provides early-stage entrepreneurship financial support but also business planning and marketing training.
This 5-step guide will hopefully help you start and establish your business in Ireland and stay compliant with the rules and regulations. See this 4 step accountancy guide.