How to set up a Limited Company
When you start your business and form a Limited Company in Ireland you need to guarantee you meet all the legal requirements. Our checklist will help you avoid mistakes. This is an exciting time for you so let’s get it right from the beginning.
Setting up a Limited Company doesn’t have to be a difficult task – but you’ll want to make sure it’s done right. Starting your new company is a big commitment with important legal obligations.
We go through what you should be aware of below…
Firstly, what is a Limited Company?
A Limited Company (LTD) is sometimes called ‘A Private Company Limited by Shares’. It is the most common type of structure in Ireland.
A Limited Company has limited liability and shares capital. It can have a single Director and it can claim eligibility for audit exemption.
If you are unsure whether a Limited Company is right for your business, you can learn more about the different business structures during our Startup Webinar.
So what do you need to set up a Startup?
Here we go through an essential checklist to make sure you know everything that’s involved with setting up an Irish Limited Company.
1. Have at least one Director
Name a Director – you need at least one. The Director is responsible for managing the Limited Company on behalf of its shareholders. In small companies, the Directors and shareholders are often the same people.
All Irish companies are required to have at least one Director who is a resident of an EEA country. If all the Directors of your company are based outside of the EEA, then you must purchase a non-EEA residents bond before setting up your company.
2. Choose a Company Secretary
If you only have one Director, you need to find a separate Company Secretary. If you have two or more, one of them can also act as the Company Secretary. You can outsource your Company Secretary to a corporate body, such as our professional team here in Accountant Online.
The main duty of the Company Secretary is to file Annual Returns each year. They work with your Accountant to ensure that your financial statements are filed on time. Late filings will incur fines up to €1,200 and your financial statements may need to be audited for two years. For peace of mind that your Annual Returns won’t be missed, find out more about our Company Secretarial service.
3. Have at least one Shareholder
The shareholders are the owners of your company. It is very common in Startups for the company director and/or company secretary to be the shareholders of the company.
4. Decide how many shares you want to release
Think of shares as pieces of the company you can give away. Therefore, this division of shares determines the legal ownership of the company. You issue shares when you’re setting up a Limited Company. There are two types to consider.
‘Authorised shares’ are like an aspirational amount of shares that you can issue, now or in the future. Authorised shares have no monetary value and do not affect the value of the company.
‘Issued shares’ are the number of shares that have actually been allocated and paid for by shareholders. If you issue 100 shares to one shareholder then that shareholder will have 100% ownership of the company. As a result, the number of shares that you issue determines who owns the Irish Limited Company.
We recommend having 100,000 authorised shares and issuing 100 shares of €1 in value.
5. Have a Registered Office Address and Business Address
Both of these addresses are required when registering a company with the CRO. The Registered Office Address is the official, legal address of your company. It must be a physical address located in Ireland and monitored regularly. Our Registered Address Service ensures your company is in compliance with these laws. It is common for this address to be with your Accountant because important notices get sent here.
A Business Address is where your company is actually trading. If you’re running an online business or working from home, you may want to look into a Business Correspondence Address for your company. Our mail-forwarding service allows you to use our Dublin 3 for your business correspondence.
We also offer a Virtual Office service where you get both address services at a discounted price.
6. Decide on a company name
When you want to set up a Limited Company, the company name is probably the first thing you think of. But did you know that your company name must be unique and distinguishable against other names already registered with the CRO? The Registrar will carry out name checks and if your proposed name isn’t strong, your company submission will be returned. We do this all the time and have lots of experience to help you make the right choice.
If you are feeling uninspired about what name to choose, check out our top tips for choosing your company name. Your proposed name must meet company name guidelines. You can check if anyone else has used your proposed name via the CRO’s Company Search Facility or search the trademark register.
It is easier and less time consuming to outsource company setup to a company formation specialist, such as our team here in Accountant Online. Company name check is included in our new Company Registration package, so just tell us your proposed company name and we will do the rest!
7. Prepare and sign the incorporation documents
Once you have met the requirements above, you are now ready to incorporate your company. You can incorporate your company online via Companies Online Registration Environment (CORE) or have a company formation specialist such as Accountant Online to do this for you. Setting up a Limited Company with Accountant Online offers a simple, stress-free option for incorporating your business.
Gather up all your details as above to be able to complete the form. Our company formation service includes company name check, a fast-tracked service with the CRO, a fully comprehensive Constitution, and all the necessary paperwork will be sent directly to your email.
All you need to do is sign the forms (Form A1 and Constitution) and post them back to our Dublin office. We can have your company formed in less than one week.
8. Order your company seal
So your company is now incorporated and your company name has been approved. You will now need to purchase a company seal. It must have the company’s name engraved on it and should be used to seal certain documents. Examples of such documents include the transfers of shares and certain documents provided in the articles, company law, contract law, and property law.
You can purchase your company seal while you register your company and you’ll have it as soon as it’s set up.
9. Set up a business bank account in Ireland
Once your company is set up, it’s best practice to keep business income separate from personal income. To open a business bank account in Ireland you usually need to have at least one meeting face-to-face. You will also need company documents – including the original certificate of incorporation, your company constitution and a copy of the A1 form – which Accountant Online draws up for you when you form your company with us.
10. What taxes should you register for?
All companies in Ireland need to pay Corporation Tax, no matter how large or small. To qualify for 12.5% Corporation Tax, you need to prove that you’re actively trading and centrally managed in Ireland.
Even if you don’t qualify for 12.5% Corporation Tax, you still need to register with Revenue for tax and you are subject to Corporation Tax at 25%.
You or your accountant must file all payments and returns online through the Revenue Online Service (ROS). Your agent (i.e your accountant) can advise you and submit returns on your behalf. Your accountant will also have access to your ROS account.
Value added tax (VAT)
Over a period of 12 months, if your business generates a turnover above €75,000 from the sale of goods or above €37,500 from the sale of services, you will need to register for VAT. This is a rolling 12 months, not annual. That means that you can register for VAT at any time you estimate your business sales may exceed the threshold.
You can register your company for VAT through Accountant Online or another tax agent. Once your company is registered, you will receive a VAT number which allows you to reclaim the VAT on your business expenses.
Relevant contracts tax (RCT)
You need to pay RCT if you are a principal contractor. This is someone who pays a subcontractor to carry out activities on behalf of your business. This applies to subcontractors in these ‘relevant’ industries: construction, forestry, and meat processing.
If you plan to employ people, you will have to register as an employer and operate a payroll. You are responsible for deducting the appropriate PAYE tax, USC, and PRSI from your employee’s wages on or before they are paid. This can be a time-consuming task and you may consider outsourcing payroll to a corporate body, such as Accountant Online.
11. File annual returns with the CRO and know your statutory annual return date (ARD)
When you incorporate your company, you need to file annual returns with the CRO, even if you are not trading. Each company has an Annual Return Date allocated to it and it can be checked using the CRO Company Search facility.
Your first annual return (a B1 form) is due 6 months after incorporation. However, it is important to note that you have 28 days from your ARD to file your annual return. Your accountant and company secretary will advise you on this. The first annual Return includes details about your company.
You can outsource this to a company secretarial service, such as Accountant Online. We also offer this as part of our Startup Offer for new Limited Companies.
Your second annual return is due 12 months after your 1st Annual Return. Your accountant will now need to prepare a balance sheet, profit and loss account, directors’ report and sometimes, an auditor’s report every year. Subsequent annual returns and financial statements are then filed on this date every year.
12. Be aware of the late filing deadlines
If you are late filing your first B1 form, your company will be fined €100 and then €3 per day after that. This penalty is up to a max €1200 per year. If you are late filing any subsequent B1 forms, you will have to pay the fine and your accounts will be audited for 2 years.
These deadlines are important and it may be worthwhile to have a professional look after it for you. Your annual returns are looked after for you as part of our company secretary service and Startup Offer but please note that you may need an accountant to look after your financial statements.
13. File a Director’s income tax return (form 11) before 31st October
A company director is obliged to file a self-assessed income tax return every year, in the same way that a sole trader is self-assessed. A non-proprietary director (someone who owns less than 15% of the shares in the company) must submit a form 12 tax return. As a client of Accountant Online, we can also file your Director’s Return.
What's the next step?
If you’ve gotten this far in our checklist and you still have questions, get in touch with us and we’d be happy to help.
Setting up an Irish Limited Company doesn’t have to be a difficult task. With the right support and resources, we hope getting your Startup off the ground is a fun and exciting process. Our team of professionals are here to help you each step of the way.