As you gear up to launch your small business in Ireland, you’re likely brimming with questions about the intricate process of setting up your venture. Among the myriad queries that may arise, one stands out as an example: ‘Do I Need an Accountant for My Small Business?’ This question is just one of the many we frequently encounter from clients who have faced similar dilemmas while embarking on their entrepreneurial journeys.
In this article dedicated to the various aspects of business setup, we will address this common question and other key considerations and insights that can help you navigate the challenges of starting your small business successfully.
Do I need an accountant for my small business?
Whether to hire an accountant for your small business varies based on your specific circumstances and preferences. Consider these factors when making the decision:
- Complexity: If you’re running a business that deals with complex financial transactions, multiple revenue streams, or tricky tax implications, it can be beneficial to have an accountant on your side. They have the expertise to help you navigate all the ins and outs of these complexities so you can focus on running your business and achieving your goals.
- Time and expertise: Managing finances can be time-consuming, especially for non-financial small business owners. Hiring an accountant can free up your time to focus on core business activities.
- Tax compliance: Accountants can help optimise your tax strategy and avoid costly mistakes. They have in-depth knowledge of tax regulations and can easily guide you through the process.
- Cost vs. benefit: Consider whether the potential financial benefits and time savings justify the cost of hiring an accountant.
- Personal comfort: Some business owners prefer to handle their finances independently, while others feel more secure with professional guidance.
Do I have time to do my accounting and bookkeeping?
While hiring an accountant isn’t mandatory for all small businesses, it can be a wise investment, especially if your business is financially complex or if you’d like to ensure compliance so you can get on with running your business. Assess your needs, budget, and long-term goals to determine whether having an accountant is the right choice for your small business.
What can I expect from my accountant?
When you hire an accountant for your small business, you can expect comprehensive services and support beyond mere number-crunching. Accountants play a pivotal role in your financial management, starting with meticulous financial record-keeping and tax planning to ensure compliance with tax laws and minimising tax liabilities.
While outsourcing accounting and bookkeeping can significantly ease the burden of managing your business finances, it’s essential to remember that your tax responsibilities as a business owner remain firmly in place.
Tax compliance is a fundamental obligation, and regardless of whether you handle your financial record-keeping in-house or outsource it, the responsibility for accurate and timely tax filing ultimately falls on you. Partnering with a professional accountant or bookkeeper can undoubtedly help ensure that your financial records are in order and that you’re making informed decisions, but staying diligent about your tax obligations is an ongoing commitment that you must uphold.
Is it better to be a Sole Trader or a Limited Company?
This depends on you and your business.
Entrepreneurs can 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.
Each structure has pros and cons, 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.
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 a 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 you money on your tax bill.
- Compliance requirements. When you set up a business in Ireland, you must follow specific statutory requirements. Sole Traders must file Income Tax returns annually, Limited Companies must 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 as a Sole Trader in Ireland. Limited Company formation can take longer and be more complicated, so that outsourcing will cost you money. However, 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).
How do I register my business in Ireland?
Registering with Revenue
Sole Traders must register as self-employed, and Limited Companies must 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 immediately.
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.
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 more significant 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.
Generally, 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.
Can I set up a business with a Visa?
- Stamp 0. Anyone residing in Ireland on a Stamp 0 visa must not work or engage in any business, trade, or profession unless specified in a letter of permission from INIS.
- Stamp 1. On a Stamp 1 visa, you must not engage in any business, trade, or profession unless specified in a letter of permission from INIS.
- Stamp 1a. You must not engage in any other business, trade, or profession unless specified in a letter of permission from INIS.
- Stamp 2, Stamp 2a, and Stamp 3. You are not permitted to engage in any business if you are on any of these Stamps.
- Stamp 4. You can establish and operate a business and are eligible to access state funds and services as determined by government departments or agencies.
If you want more information on your Visa’s permission, contact INIS to determine your eligibility to start a company in Ireland.
Do I need a physical office in Ireland?
You don’t need 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 outsource to a virtual address service provider. This provides security because you don’t need to provide your home address on marketing and invoices.
Suppose you plan to start a Limited Company in Ireland to take advantage of the 12.5% corporation tax. In that case, you should consider where your board of directors are because this will determine where your company is tax resident.
Do I need an Irish business bank account?
A business bank account is the best practice, but it can be elsewhere, too. If you’re not a resident of 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.
To open a bank account in your resident state (not Ireland), you must get your company documents apostilled first. These company documents include the certificate of incorporation, share certificates, and company registers.
How much does a business pay in taxes?
This depends on many aspects of your business. Quantifying how much tax you will pay can be challenging until you’ve done 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 as a business owner and more.
In addition to 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. Contact our team today to learn more about our services.
Do all businesses need to file tax returns?
Yes, all businesses must file tax returns, even those not trading or making a profit.
We have seen many clients get caught out for not filing tax returns because they have yet to make a profit. This means they owed money to Revenue in interest and fines even though the business wasn’t making any money.
How do I hire staff and set up payroll?
When hiring someone in a small business, Sole Traders and Limited Companies must register as an employer with Revenue before employing any staff.
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 immediately. However, if you are a director and wish to pay a salary, you must register the company as an employer.
Tom is a Fellow Chartered Certified Accountant (FCCA) and Chartered Tax Advisor (CTA) and is Accounting Team Manager at Accountant Online. Areas of expertise include Accounting, Compliance, Taxation relating to small business and company directors.