Setting up a Company
Setting up a company is one of the most important decisions you can make. On par with taking out a mortgage, the financial implications can be felt for years to come, in many cases for the better and in some instances for worse. So how can you be sure that it is the right move for your business? This is a question that early stage entrepreneurs often ask.
While you should always get professional advice on your specific circumstances, here are a few reasons why setting up a company might be the right decision for your business.
1. Your business employs people other than yourself. (If it doesn’t, then setting up as a sole trader might be a better option.)
2. Your business has customers or clients who rely on you.
3. Your business needs to raise finance from banks or investors. (Think Dragon’s Den! Venture capitalists and other investors often look for shares in a company in return for their investment.)
4. You want to protect your personal assets from liability for your business.
5. Your business has ambitious growth plans.
If you answer ‘yes’ to some of these questions, then setting up a company could be the right move for you.
The most common company type in Ireland is the Private Company Limited by Shares. Other types include Designated Activity Companies, Companies Limited by Guarantee, Public Limited Companies and Unlimited Companies. Choosing the right structure is important. You can find information about this on the Companies Registration Office website. Keep in mind that when you become a company director, you take on certain duties and responsibilities. Your company will also incur costs. These are matters to discuss with your professional advisors.
Tax Advantages of Setting up a Company
While there are costs and obligations involved in setting up a company, these can often be offset by tax savings. In Ireland, there are tax incentives for certain startups and to encourage activities such as innovation. For example, new companies may be eligible for tax relief or a tax refund while innovative companies may be able to avail of the Research & Development tax credit scheme and the Knowledge Development Box. The corporation tax rate on company profits in Ireland is 12.5 percent.
Is it expensive to hire an accountant?
Getting your head around the legal, tax and compliance aspects of setting up a company can be time consuming and stressful. It’s a good idea to get professional advice so that you can concentrate on the business and not get bogged down in administration. Startups often worry about the cost of hiring an accountant however professional fees can be claimed as a business expense. A good accountant will also save your business time and money. If you are thinking about setting up a company, Brady & Associates would be delighted to assist you. Contact us for an informal chat and ask about our fixed fee package for startups.