Business Structure

A Sole Trader, a Partnership or a Company?

You need to consider the legal entity of your business.

• Sole Trader
  You need to register as self-employed with your tax office and will be liable for tax through the self-assessment system. (www.revenue.ie for more information on this). You avoid the heavy burden of compliance which is placed on Limited Companies but will be personally liable for any debts of the business. If you are using a trading name you must also register your business name with the Companies Registration Office at www.cro.ie. This will also enable you to open a business account with your bank. 

• Partnership 
  When two or more people set up a business they may choose this option. Partnerships can be very testing on relationships and it is essential to prepare a partnership agreement that sets out all the understandings between you and your partner(s), including what happens if the business fails.

• Limited Company
  In a limited company two or more people own the company or become shareholders. The company is managed by directors and because it is a legal entity in its own right, there is some protection to the shareholders. Limited companies attract a preferential rate of tax known as corporation tax. If you have been operating as a sole trader in the early years it may be advisable to set up a limited company when profits start to flow. Professional advice should be sought to consider these options.