Ireland was recently ranked 11th on the Forbes annual list of the best countries to do business in.
The Republic still stands strong in terms of capital investment, despite recording a certain decline over the years and slipping from its previously held 8th position.
In order to make the most of Ireland’s business mecca status, it’s important to understand how to set up a Limited Company and ensure compliance with all legal requirements.
If you’re a first-time business owner, all the paperwork and red tape might seem like an impossible hurdle to surmount. Our detailed checklist will keep you in the know regarding the most important steps of your entrepreneurial journey, and help you prevent taking the wrong ones.
Limited Company 101
Otherwise known as “a private company limited by shares”, a Limited Company is by far the most common corporate structure in Ireland, as well as in other countries of the Commonwealth.
In layman’s terms, registering a Limited Company means that directors and shareholders can be held liable only for the capital they invested in the company. In other words, their personal assets won’t be affected in case of a corporate loss.
So, a Limited Company has shared capital, limited liability, and meets audit exemption criteria.
However, since there are different corporate structures available, it’s essential to opt for the one that’s best for your particular field and goals. Register now for Accountant Online’s Startup Webinar to get free advice before setting up a company in Ireland.
Essential checklist for company registration
- Directors, company secretary, and shareholders’ details
- Identification and proof of address
- Sign documentation – Form A1 and Constitution
- Engage with an accountant for tax
- Open a bank account
1. Appoint a sirector
Limited Companies should have at least one director in charge of managing and overseeing business operations. Directors also make decisions on behalf of their shareholders.
Although there’s no maximum number of directors, it’s recommended not to have more than five. It’s common in smaller companies that shareholders themselves act as directors.
There’s another requirement that you should be aware of – at least one of the directors needs to be an EEA country resident. Otherwise, you’ll have to purchase a non-EEA resident bond.
2. Choose a company secretary
Every Limited Company needs to have a company secretary too.
In case your company has only one sirector, a different person has to fill the role of company secretary.
The company secretary’s key duty is preparing and delivering the company’s Annual Returns to the Companies Registration Office (CRO).
They have to work closely with your accountant and make sure that the filing process is completed on time in order to prevent a fine of up to €1,200.
3. Have at least one shareholder
Apart from the director and company secretary, your company should also have at least one shareholder.
Shareholders are the company’s owners. In many small companies and Startups, both the company director and company secretary are shareholders too.
Any individual or corporate entity can also be a shareholder.
4. Company share capital
There are two types of company shares – authorised share capital and issued share capital.
The former, also known as nominal share capital, refers to the maximum amount of shares that can be issued to company shareholders. The amount of shares issued is outlined in the Company’s Constitution. A portion of the company’s authorised shares commonly remains unissued.
Issued share capital is the total amount of shares that have been allocated to shareholders. This type of capital decides who the owners of the Irish Limited Company are.
We suggest keeping your issued share capital low, as that’s what you’ll be held liable for. We’d recommend having 100,000 authorised shares and issuing 100 shares, worth €1 each.
According to the revised Companies Act 2014, a Limited Company is allowed to remove the cap on authorised share capital. This means that it could potentially have an unlimited number of shares.
5. Have a Registered Office Address
This will be your company’s legal address, to which all your correspondence, legal notices and official mail from the Companies Registration Office will be sent.
This address can be located anywhere in the Republic of Ireland, as long as it’s an actual, physical location – you can’t use a PO box. However, a residential address can serve as your Registered Office Address.
You’ll also be required to have a business address, an address where your business operates. In case you’re running an online company, you can use a mail forwarding service address for your correspondence.
6. Pick a company name
Even though this seems like a simple task, you should know there are certain guidelines to follow when deciding on the name of your company.
First of all, the name you choose has to be unique and easily distinguishable from all the other companies on the register.
Make sure to use the CRO Company Search functionality and check whether a company has already registered the name you’d like to use. We recommend that you also check your company name with a good formation agent, because the CRO search facility doesn’t include all names on the register.
We also advise the following:
- General words such as Trading, Systems, Solutions or Services, as well as numbers, are deemed non-distinguishing, which means that you should avoid them.
- Local place names can lead to confusion if there are other companies in the same field operating in your area.
- Dissolved companies have the right to protect their names for 20 years, meaning that you have to check your choices against them too.
7. Sign the incorporation documents
After you’ve made sure that your Limited Company meets all the requirements, you can move on to signing the incorporation documents.
The incorporation process can be done online with the help of the Companies Online Registration Environment (CORE.ie). In this case, you have to deal with all the procedures mentioned above and take care of the paperwork yourself.
However, you can trust this entire process to a company formation specialist and let them do all the work instead.
When the incorporation process is completed, you’ll need to order a seal with your company’s name engraved on it. This seal should be used for sealing certain documents, such as transfer of shares. You can order it as soon as your company has been incorporated.
Finally, you’ll have to set up a business bank account in Ireland. It’s important to keep your business and personal income separate.
8. Know your taxes
Here are the mandatory taxes that you have to register for:
- Corporation Tax. This 12.5% tax applies to trade or “active” income; that is the income which results from selling your products or services in Ireland.
- Value Added Tax (VAT). VAT registration is mandatory if your turnover from the sale of goods exceeds €75,000, or if it exceeds €37,500 from the supply of services, over a 12 month period.
- Relevant Contracts Tax (RCT). This tax applies to certain payments made by principal contractors to subcontractors for performing activities on their behalf. The industries to which this tax is applicable are forestry, construction, and meat processing.
- PAYE for employers. If you have employees, you need to operate a payroll system. It’s your responsibility to deduct the PAYE tax, USC, and PRSI from employee wages.
Apart from knowing your taxes, it’s important to file your Annual Returns in a timely manner and avoid fines.
The company’s Annual Return Date is allocated to each company upon incorporation, and you can check it via the CRO Search Facility.
The process of setting up an Irish Limited Company is pretty straightforward and this breakdown will point you in the right direction. You will be able to take your ideas off the ground and we can take care of the rest. We’re experts at the incorporation process so you can look forward to running your own business.
9. Open a bank account
Once you’ve set up your company, you’ll want to open a bank account. Having a bank account for your business means you can keep your personal affairs separate. If you’re not sure about the different banks in Ireland, take a look at Accountant Online’s guide on business bank accounts in Ireland.