Here is a list of all the 10 most common questions asked by our clients before they start a business in Ireland. Our clients have been in your shoes and we have helped them with the first stages of deciding how they should set up their business. Take a look at the most common questions we get asked:
- Do I need to write a business plan to start a business?
- Is it better to be a Sole Trader or a Limited Company?
- What should I consider when choosing a business structure?
- How do I register my business in Ireland?
- Do I need a physical office in Ireland?
- Do I need an Irish business bank account?
- How much does a business pay in taxes?
- Do all businesses need to file tax returns?
- How do I hire staff and set up payroll?
- Do I need a bookkeeper?
If you would like to get in touch with us to learn more about how we can help, call +353 (0)1 905 9364 or email firstname.lastname@example.org.
Do I need to write a business plan to start a business?
Writing a business plan will help you get your business idea out on paper. But it’s easy to get carried away with writing too much. Spending too much time on a business plan may delay you actually starting your business.
Start by mapping out your product, its competitive advantage and the values of the business. Try using the Lean Canvas Model – it’s a one-page template that helps you to visualise your business model.
Truly understand these parts of your business to stay focused and open-minded about the direction of your business. Certain aspects, such as your target market or niche, may change as you start to operate and work with clients or investors.
Is it better to be a Sole Trader or a Limited Company?
This depends on you and your business.
We’ve seen entrepreneurs start a business as a Sole Trader and never consider changing into a company. Other Sole Traders will change to a Limited Company at a later stage. Another option is to set up as a Limited Company straight away. Some entrepreneurs start a business with a full-time job and they work on their own business on the side.
There are pros and cons to each structure and the decision will usually depend on your business idea and how much revenue you think you’ll make. There is a lot to consider and if you need expert support, reach out to our Client Services Team who will listen to your situation and offer advice. Check out this post if you need more help choosing between being a sole trader or a limited company.
What should I consider when choosing a business structure?
As mentioned, choosing a business structure is unique to you. But here are some main things to consider when deciding between a Sole Trader or Limited Company:
- Taking money out of your business. Sole Traders don’t take a wage/salary. Everything they earn is subject to pay Income Tax, USC and PRSI. Directors of Limited Companies can get paid a salary, take dividends, and/or contribute to a pension through the company. Depending on how much money you expect to make from your business, setting up a Limited Company may save on your tax bill.
- Compliance requirements. When you set up a business in Ireland, there are certain statutory requirements that you must follow. Sole Traders need to file Income Tax returns every year, and Limited Companies need to file Annual Returns with the Companies Registration Office (CRO), and Corporation Tax returns with Revenue. There are more compliance requirements for Limited Companies, so consider if you have the financial knowledge to look after them yourself or if you can afford to outsource the responsibility?
- The costs. It’s quick, cheap, and relatively easy to set up a Sole Trader in Ireland. Limited Company formation can take longer and be more complicated, so it will cost you money to outsource. But the additional red tape is because you are setting up a new legal entity when you set up a company. The company is legally separate from you as an individual (i.e. Limited Liability) whereas a Sole Trader is a business in your name (i.e. Unlimited Liability). Feel free to reach out if you are wondering how much does it cost to set up a limited company in Ireland.
Talking to one of our Client Services Team about starting a business in Ireland will help you decide which structure to choose. We’ll talk to you about your idea and give you information about being a Sole Trader or Limited Company.
How do I register my business in Ireland?
Registering with Revenue
Sole Traders need to register as self-employed and Limited Companies need to register for corporation tax with Revenue. Both business structures pay tax to Revenue but the type of tax depends on their activities. Check out our post guide to being self-employed in Ireland if you want to become a sole trader.
Both business structures can register for Value Added Tax (VAT), Relevant Contracts Tax (RCT), and employers taxes, but you may not need to do this straight away.
Tax registration is an essential part of starting a business, and it can be confusing if you don’t know what taxes you need to register for. Registering for taxes also means your business needs to file tax returns to Revenue each year.
Registering with the Companies Registration Office (CRO)
Sole Traders need to register with the CRO if they want to trade under a different name than their own (check out our post on how to register a business Name in Ireland).
For example, Mary O’Brien can start a business called Mary O’Brien without registering with the CRO. But if she wants to use O’Brien Consultancy as her business name, she needs to register that name with the CRO.
The CRO plays a bigger role in Limited Companies than Sole Traders. All companies need to be registered with the CRO and any changes in any Irish company need to be submitted to them.
In general, it takes the CRO one week to process applications for new companies so it’s a good idea to outsource company formation to a professional.
There are certain documents you need before you can start a Limited Company in Ireland. Check out our post on the documents required to register a company.
If you need expert advice on how to set up a business in Ireland, get in touch now and we’ll happily talk you through it.
Do I need a physical office in Ireland?
You don’t need to have an office in Ireland to start a business here. You can work from home, in a coworking space, or wherever you are currently based.
For example, many of our clients start a business with a full-time job so they are working from home during their free time. In this case, a business owner may decide to outsource to an address service provider (check out our virtual office in Ireland service). This provides security because you don’t need to provide your home address on marketing and invoices.
If you’re planning to start a Limited Company in Ireland to avail of the 12.5% Corporation Tax, you should consider where your board of directors are resident because this will determine where your company is tax resident.
Do I need an Irish business bank account?
It’s best practice to have a business bank account but it doesn’t necessarily have to be in Ireland. If you’re not a resident in Ireland, it may be difficult for you to open a bank account here. Most banks require at least one face-to-face meeting. Irish banks also require evidence or proof of an economic link to Ireland, such as employing staff in Ireland or shareholders or Directors living in Ireland.
If you want to open a bank account in your resident state (not Ireland), you may need to get your company documents apostilled first. These company documents include the certificate of incorporation, share certificates, and company register.
How much does a business pay in taxes?
This depends on many aspects of your business. It can be difficult to quantify how much tax you will pay until you’ve actually carried out some business activities.
Things that affect the amount of tax you pay include business expenses, what rate of Corporation Tax in Ireland you should pay, how much you pay yourself and more.
As well as that, there are tax-reducing initiatives to help entrepreneurs start a business in Ireland.
Understanding tax liability is one of the main reasons entrepreneurs hire accountants (check out our post on accountant fees as well). Business owners are especially concerned with how much they owe to Revenue and how to be compliant.
Get in touch with our Client Services Team to get advice on how to start your business in Ireland. We’re here to help with any queries you have.
Do all businesses need to file tax returns?
Yes, all businesses need to file tax returns, even those that aren’t trading or making a profit yet.
If you don’t know how to file tax returns, you should outsource this to a professional. Failure to submit tax returns could lead to fines and penalties. Check out our Income Tax Deadline guide for more information.
We have seen many clients get caught out for not filing tax returns because they have not made a profit. This means they owed money to Revenue in interest and fines even though the business wasn’t making any money.
Don’t let this happen to you! Get in touch with our Client Services Team to learn more about what you should expect from starting a business in Ireland.
How do I hire staff and set up payroll?
Both Sole Traders and Limited Companies need to register as an employer with Revenue before you hire any staff (check out our guide on how to employ someone in a small business for more information).
You can register using a tax registration form or outsource this responsibility to a professional.
When you hire staff, you need to have a payroll system through payroll software or directly on the Revenue website.
You may not need to register as an employer if you don’t plan on hiring straight away. However, if you are a director and you wish to pay yourself a salary, then you will need to register the company as an employer.
Do I need a bookkeeper?
Very early-stage business owners don’t usually hire a bookkeeper in their first few months. If you only have a few transactions, the costs may outweigh the benefits.
But that doesn’t mean you don’t need to do the bookkeeping at all. It’s very important that you keep organised records of all your transactions – e.g. receipts, invoices, and bank statements, and follow a proper bookkeeping process.
We recommend that you use online accounting software as soon as your business is set up. We love Xero bookkeeping and recommend it to all our clients. It’s easy to use for beginners, can integrate with other software like Shopify and Stripe, and it will help you to run an efficient business.
Online accounting software also makes bank reconciliations easier – which can be a very time-consuming task, and it helps you to have more control over your finances. Talk to our Client Services Team about our accounting services that include a free subscription to Xero – we’re always here to recommend the best services for your needs.
Where to start?
The first step in starting your business is to get your business registered.
Whether you decide to start as a Sole Trader or Limited Company, you need to start legally operating as a business before you invoice clients. It’s an exciting time for you so we understand the importance of understanding every aspect before committing to starting a business in Ireland.
Talk to our Client Services about your situation and we can recommend the best services to suit your needs. Call us on +353 (0)1 905 9364 or email email@example.com.
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.