How to set up a limited company in Ireland: A step-by-step guide
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Posted: Tue 19th Sep 2023
If you’re thinking about setting up a business in Ireland and want to protect your personal interests, you should consider setting up a limited company.
Unlike other common business structures (such as sole traders), directors and shareholders of a limited company can only lose the money they’ve invested in the business.
On the other hand, if you set up as a sole trader, you can be held personally responsible for paying off your business’s debts. Setting up a company will limit the risk you take and protect your personal assets.
VIDEO: Self-employed or limited company: Which is better for you?
Watch this webinar to learn the main differences between a sole trader and a limited company (UK-focused):
13 steps to follow to set up a limited company in Ireland
1. Appoint a director, preferably resident in Ireland
Every limited company needs at least one director. They manage the company on behalf of its shareholders (we’ll get to that later).
An Irish company must have at least one director who is a resident of an EEA country. If none of the directors are EEA residents, you’ll have to buy a non-EEA residents’ bond before setting up in Ireland. Remember, this rule now applies to UK and Northern Ireland resident directors.
One of the benefits of locating a business in Ireland is its low corporation tax rate of 12.5%. To take advantage of this, your company must be able to prove that it’s “centrally managed and controlled in Ireland”.
Since it’s the directors who control and manage a company, having directors who are residents of Ireland can help with this process. If your company is deemed not to be centrally controlled and managed in Ireland, or where your directors are tax residents elsewhere, you won’t qualify for the 12.5% tax rate, even if you’re incorporated in Ireland.
2. Choose a company secretary
A company secretary is responsible for filing the annual returns on time every year. Missing this deadline can incur fines of up to €1,200 and mean your financial statements can be audited for two years.
You need to make sure your company secretary is an organised and trustworthy individual who will respond on time to deadlines.
If you have more than two directors, one of them can be the company secretary. Otherwise, you’ll have to assign someone new. You can also outsource the role to a corporate body such as Accountant Online.
3. Know your shareholders
Shareholders are the people who own a company. Shares are pieces of a business, divided among the owners.
The more shares you have, the more of the financial returns you’re entitled to. Shares are also usually attached to votes, with larger shareholders getting more of a say in decision-making than smaller shareholders.
For new businesses, the directors and company secretary are usually also shareholders in the business.
4. Decide how many shares you should release
Keeping that in mind, the number of shares you want your business to have is a big decision. The division of shares determines who legally owns a company.
If you have many shareholders, you’ll have many owners, although some of these owners will only have a few shares and so will have little control. Shares are issued when a limited company is set up, and more can be issued or transferred at a later stage.
Authorised shares
A business will have authorised shares, which is the number of shares you can give out, now or in the future. Authorised shares don’t affect the value of the company, since no-one actually owns them; they’re just available to be owned.
It’s suggested that you authorise more shares than you intend to issue so there are shares available for future investors.
Issued shares
Issued shares, on the other hand, are shares which have been allocated to and paid for by shareholders. To start, it’s recommended to have 100,000 authorised shares and issue 100 of these at a value of €1 each. This means that a person who is issued 50 of these shares would have 50% ownership in the company.
5. Get a registered office address and business address
Registered office address
A registered office address is your company’s official, legal address. It must be a physical address that you monitor regularly (i.e. not a post box). This is because the Companies Registration Office (CRO) often send important notices to this address.
Business address
A business address is where company mail, like invoices, is sent. Don’t mix a business address up with a trading address.
For example, you might be running your business and trading from your home but not want it to be your business address since it will be publicly listed. Instead, you might choose to use a business correspondence address to keep your home address private.
6. Choose a company name
A company name sets the tone for your whole business. It will be the base for your brand, the thing you want your customers to remember. It’s important you choose a name that fits you and your business.
However, be aware that the CRO has rules around the company names businesses can use. Your name must be unique and distinguishable from other names registered in Ireland. The registrar will check your proposed name and can reject it, which will cause you a delay in setting up.
7. Prepare and sign incorporation documents
There’s always quite a bit of paperwork involved with setting up a company. For a limited company, you must prepare and sign documents to incorporate your company.
You can go through this process online via the Companies Online Registration Environment (CORE). Or, if you want an expert to handle the process, you can outsource it to a company formation specialist.
8. Buy a company seal
A company seal is an embossing tool with your company's name engraved on it. You use it to seal certain documents to mark them as official. A company seal is used on share transfers, and company and property law documents, to name a few.
As a limited company, you must have a company seal, as it serves as confirmation that documents stamped with the seal are approved by the company and its directors.
A seal can only be used by the directors of your company, or with their approval. The seal must be accompanied by signatures from a director or other authorised person and the company secretary or other authorised person.
9. File a beneficial owner
A beneficial owner is anyone who holds more than 25% of a company’s shares. You need to register any beneficial owners with the Register of Beneficial Owners (RBO) no more than five months after you incorporate your business.
However, be aware that many banks won’t let you open an account until you’ve done this, so sooner is always better than later. If you don’t complete an RBO registration, you may receive a fine or even a conviction.
Majority shareholders will need to have a Personal Public Service Number (PPSN) to complete registration. If they don’t, they’ll have to complete a form called BEN2 or have a company formation specialist do so on their behalf.
10. Register for tax
Companies in Ireland have to register for tax with Revenue before they can trade and invoice customers. This is a different process from registering with the CRO and is usually handled by an accountant.
You may need to register for:
11. Set up an Irish business bank account
Before setting up a business bank account, you’ll need to have all your company documents. This includes:
your original certificate of incorporation
your company constitution
a copy of your A1 form
Most banks will also insist you file your RBO (see step 9) before they allow you to set up an account.
Usually, to open an Irish bank account, one of the directors will need to have at least one face-to-face meeting with a bank representative. This is important to note if none of your directors live in Ireland. In that case, you might decide to set up an online bank account.
12. File your annual returns with the CRO
When you incorporate a company, you have to file annual returns with the CRO, even if you’re not trading.
Your company will be allocated an annual return date, which you can check on the CORE website. The first annual returns date is due six months after the company is incorporated, but you don’t need to provide any financial statements at this point.
You then have 56 days to complete all elements of the annual returns. Miss the deadline and you could face some heavy financial penalties.
13. File a director's income tax return
A director who is a beneficial owner of a business or who controls more than 15% of the ordinary share capital of the business is a proprietary director. They will need to file a self-assessed directors’ tax return via a Form 11. The first of these is due by 31 October of the year following the company’s formation.
You need to file this return even if your director only has PAYE income or the company hasn’t begun trading or making money yet. Failure to do so might mean you have to pay fines.
Final thoughts
Setting up a limited company is more complicated than setting up as a sole trader in Ireland. However, it does mean that the personal assets of both directors and shareholders are protected. If you do decide to set up a limited company, there is always help available!
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