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(Part 2 of the ‘Starting A Business in Ireland’ series)
When setting up a company, it is vital to understand the options for the different types of companies in Ireland. Choosing the best structure for your specific business is a complex process and will have long-lasting tax and legal implications. So, it’s essential to get it right!
When considering the question of “What business structure is best?”, the answer will depend on your circumstances, the business’ needs and goals and the industry in which you operate. Therefore, this is a decision that must be weighed carefully.
It is wise to take the time to get expert advice from a professional such as an accountant or business advisor. Above all, objective guidance from an experienced professional can save you time by cutting through the complexities. In short, this will help you to choose the most beneficial company type.
The legal basis for setting up a company in Ireland is the Companies Act 2014. This Act includes regulations on the use of company names and company registration.
The Companies Act was designed to reform legislation regarding commercial companies. Moreover, it provides for the registration of a range of company types, including limited companies, unlimited companies and investment companies.
Choosing the right structure for your company has far-reaching legal and tax implications. So, it is essential that you take the time to make the right decision. There are many options as outlined below:
This is the most popular type of company in Ireland. The minimum share capital requirement in Ireland is just €1, making it very easy to establish a new business. This company type can operate in any sector as it does not have an objective clause in its’ constitution. LTD’s can have only one director, and they must have a separate company secretary. There are two main types of limited company:
A Designated Activity Company is:
DACs have “the capacity, including the power, to do only those acts or things set out in its constitution”. As the name suggests, these companies may only engage in their designated activities. In addition, they must have a minimum of two directors.
CLG’s are generally non-profit making entities such as Charities, Trade Unions or Clubs. They have no shareholders or share capital. Moreover, they must have a minimum of two directors and one member. This member must contribute a minimum of €1 to the company in the event of it winding up with debt.
A Public Limited Company is a company where liability is limited by shares. It must have at least seven members and a minimum nominal capital of €38,092. A Public Limited Company is set up when the company intends to be publicly listed on the Stock Exchange. In this way, the company can offer its shares to the general public.
Unlimited Companies – public or private – are the least popular type of company incorporated in Ireland. They are companies with no limited liability, which means the company’s founders are liable for the company’s debts. They must have at least two directors and one member.
If you decide to set up as a sole trader, you are operating as an individual. We have included the sole trader option here as it is a relatively straightforward process to set up. However, you are legally liable for the business and any ensuing debts. Therefore, if the business fails, all of your personal assets may be used to pay your creditors. You must register as a self-employed person with Revenue and you must register your business name with the Companies Registration Office (CRO).
It is essential to understand the difference between incorporated and unincorporated companies when registering a company in Ireland.
The principal feature of an incorporated business is that it has a legal status separate from its owners. In other words, the company is a separate legal entity. It affords protection for its owners from some liabilities incurred in running the business.
An unincorporated business does not provide such protection. However, the limitation of liability does not extend to situations where the owners and directors have given personal guarantees. Or in cases where they may have acted improperly in running the company.
Overseas companies may also use a branch structure as a division of a foreign company trading in Ireland. To meet the requirements of corporate law however, the Irish operation must be trading in Ireland.
Furthermore, it must meet the following criteria:
The EU has implemented regulations to impose a registration regime on branches, similar to that imposed on local companies.
Branches undertaking business in Ireland must file basic information with the Registrar of Companies (CRO). This must include certified copies of the constitution of the company, information on its directors and other documents. The company is required to file the same accounts as it would if it was incorporated as a limited company.
The timescale for incorporating a company in Ireland may take as little as one week. On average, one should allow two to three weeks.
Under Irish law, a partnership is a relationship that exists between two or more individuals carrying on business with a view to profit. Most partnerships are between individuals. Partnerships can also exist between an individual and a business or corporate entity or between companies themselves.
Partnerships do not have a separate legal personality in the eyes of the law. Therefore, partnerships can enter into operation in the name of the partners.
Written partnership agreements provide a legal framework for partnerships. If a formal agreement does not exist, a partnership is subject to the provisions of the Partnership Act of 1890.
There is no legal obligation to prepare accounts. Partnerships usually will and indeed should do so even though there is no obligation to file or publish them. However, partnerships must submit tax returns.
A limited partnership comprises at least one general partner and one or more limited partners. The general partner has unlimited liability. Limited partners are liable for partnership obligations only to the extent of the cash and property they contribute.
The Limited Partnership Act, 1907 legally binds limited partnerships when no written partnership agreement exists. However, if the general partner is a limited company, the limited partnership must submit its accounts for public record with the Companies Registration Office.
A partnership must also register the business name of the partnership with the Registrar of Business Names.
Whether you are an overseas business or already based in Ireland, contact us for help and advice on starting a business in Ireland. o’donnell+co provides a full range of accounting services backed by fast, professional customer service as well as sound business and financial advice.
