The Basics:
A Sole Trade business is generally one that operates under the owners own PPS number and a tax return is filed once a year. A company is a separate legal structure and there are both a company and personal tax return to be filed by the business owner each year. In order to operate as a company, a company structure needs to be formed with the Companies Registration Office (CRO).
Advantages and disadvantages of a Limited Company:
Advantages
- Company profits are taxed at 12.5% – One of the lowest rates in the EU – (trading companies)
- Limited Liability
- Greater pension options
- Participation exemption on capital gains tax
- Options with raising capital
- Possibility of start-up tax relief
With advantages there are always going to be disadvantages
- Setup costs and extra annual fees
- Availability of losses may be restricted
- Company Names are subject to restrictions
- Extraction of profits
- Close Company Surcharge for certain businesses
- Certain company accounts details are published with CRO
Unfortunately, there are no right or wrong answers when setting up a company first day, each individual business is different. A company looking to get outside investment possibly won’t need the same business structure as a micro business that is looking to operate from their own home.
If you wish to know more, please get in touch.