What new companies can expect in their first six months
The first six months can be a steep learning curve, especially if you don’t know what to expect. There are registrations and deadlines due during this time that could get you on the wrong foot if you miss them.
In this guide, you will learn what you need to do to ensure that your new company is compliant during its first six months in business.
If you need help, don’t have the time or resources to look after your compliance, or if you need professional advice on your business journey, we are here to support you.
Ensure correct company set-up
The first thing is to make sure that your new company is set up correctly. It is not enough to register a business name. You need to go through the formal process of completing a Form A1, having a company constitution, and submitting the relevant documents to the Companies Registration Office (CRO).
Once your company is registered, you should have received a Certificate Of Incorporation and a company number. You need this information to continue to the next steps.
Register of Beneficial Owners
New companies have five months to register their company’s ultimate beneficial owner with the Central Register of Beneficial Ownership (RBO). Beneficial ownership refers to the natural person(s) who ultimately owns or controls more than 25% of the shares/voting rights/ownership interest in a company.
Note that although new companies have 5 months to complete this registration, many banks in Ireland won’t open any new accounts until this registration is done. So, we recommend that new businesses complete this step as soon as possible.
Registering the ultimate beneficial owner is done online, through the RBO website, and this person needs to have a Personal Public Service Number (PPSN) or they’ll need to complete a BEN2 form and upload it to the RBO website.
This registration is legally required and failure to register properly is a criminal offence and can result in a fine or even conviction.
Setting up a bank account
Once your RBO is successfully registered, you can set up a business bank account in Ireland.
There are many banks to choose from, and our advice is to talk to the different banks directly. They may have different rates and perks for new Startups so it’s best to start a relationship with them early.
Some banks are offering remote set-up which means that you can do the whole process online and don’t need to visit a local branch. This is a great time-saver and hopefully, it’ll help you get your bank account set up faster.
Corporation Tax registration
While you are waiting to get your bank account set up, tax registration should be at the top of your mind.
The first tax that you should be aware of is Corporation Tax. It applies to all Limited Companies in Ireland, not just large corporations (as the name might suggest).
Companies register for Corporation Tax through Revenue’s Online System (ROS) and it’s done before the company starts trading or invoicing clients.
There are 2 main rates in Ireland: 12.5% and 25%, and the rate you pay depends on where your company is centrally controlled and managed. Most businesses incorporated in Ireland will fall into the first tax rate – 12.5%. Check out our Ireland Corporate Tax guide for more information.
If you are wondering what rate of Corporation Tax you should pay, you should consider where the directors are residents and where the company is carrying out its trade. The answer to these questions will usually tell you where the company decisions are made and therefore, where the business is “centrally managed and controlled.”
You can ask an accountant about your situation and they will ask you a few questions to establish what tax rate you should pay.
What happens if you forget or don't register for Corporation Tax?
If you set up a company and don’t register for tax, Revenue will ask you to complete a Company Statement of Particulars within 30 days of receipt of the request. This statement details the nature of the company.
New companies that don’t register for tax or complete the Statement of Particulars are notified to the Registrar of Companies (CRO) and the CRO may begin the strike-off process under the Companies Act 2014. The company directors and Company Secretary may also be liable to a separate penalty under the Taxes Consolidation Act 1997.
However, don’t fear Revenue or the CRO, as they can usually offer great advice to new companies if you communicate early with them. But this situation is avoidable if you know what you need to do in your first six months.
Many companies want to register for VAT from the outset, and it can be a tricky process if you don’t know what Revenue are looking for.
It’s also a long process that can take up valuable time in new companies. It can take up to 28 working days to get a VAT number in Ireland and in the meantime, Revenue may ask you to provide evidence you need a VAT number before they process your application.
Set up payroll
Depending on the stage you are at with your new business, you may need to decide if you will pay yourself a salary or if you will hire any staff.
If you are a director, you can pay yourself a salary from the company.
In order to do so, the company will need to register for Employer’s Taxes and operate a payroll system. You can outsource your payroll requirements to a professional firm, like Accountant Online, or do it yourself. But be aware that there is strict legislation around payroll and it may be a good idea to offload this work to the experts so you can focus on running your business.
Bookkeeping - keep organised records of receipts and invoices
At this stage, your bank account should be set up, and it’s likely that you’ve spent some money getting your business set up.
Did you know that you can claim pre-trading expenses when calculating your tax bill? For example, if you purchased a new laptop to start your company on the right foot, you may be able to claim this as a tax-deductible expense.
If you outsourced company formation to a company formation specialist, like Accountant Online, then you can also claim this expense (check out our page on company formations in Ireland).
But the thing to remember here is that you need to keep organised records of all these transactions, and make sure that you have evidence to prove that they were “wholly and exclusively for the purpose of the business”.
We recommend that you look into using Xero accounting software. We offer a free Xero subscription to all new accountancy clients on our Startup Offer For New Limited Companies because we know how important it is to keep good records.
All companies incorporated in Ireland have an Annual Return Deadline (ARD) as soon as they are set up.
Annual Returns are monitored by the CRO and completed through a Form B1. The first Annual Return gives the CRO information about the company such as the stakeholder and share capital situation.
- A company’s first Annual Return is due 6 months after incorporation.
- Annual Returns are filed online through CORE.ie or through Company Secretarial software.
- A company has 28 days after its ARD to file its Annual Return online.
- Once it is filed, you will receive a PDF of the Form B1, which you will need to print.
- Once it is filed online, you are given a further 28 days to gather the signatures of one Director and the Company Secretary and mail the original copy to the CRO in Dublin.
This can be a long process and there are penalties if done incorrectly. Talk to us if you have any questions about our compliance services, we’re always happy to help.
Where to start?
The compliance requirements for new companies can be complicated and cause stress for new business owners. Our advice is to start by recognising what you can do and what you can outsource.
If cash is tight, consider joining a free webinar or start by outsourcing the big tasks, like your Annual Return. You might also be interested in reading about the costs involved with setting up a company in Ireland.
We offer a full range of services that’ll help you succeed in business. We cater to your needs from Company Formation to Accountancy Services. Talk to us today and find out how we can help.
We’re always happy to help you decide what services best suit your needs.
Rachel is a certified company secretary from The Law Society College Dublin and currently leads the Company Secretarial Team at Accountant Online. Areas of expertise include Company Formation in Ireland and the UK, Company Secretarial procedures and regulations, and the Companies Act 2014 relating to small business and company directors.