Are you thinking of setting up a limited company in Ireland? We know that it is not as simple as registering your business name and opening a bank account. There are many legal, financial, and administrative steps involved in the process, and you need to comply with Irish company law and tax regulations. We have created this essential checklist for setting up a limited company in Ireland.
This guide will explore the main steps and requirements of forming an Irish company, from choosing the right business structure to filing your annual accounts. We will also provide you with some useful tips and resources to help you along the way. Let’s dive in!
Understanding What a Limited Company Is
A limited company is a legal entity that is separate from its owners (shareholders) and managers (directors). This means that the company has its own rights and obligations, such as entering into contracts, owning assets, suing and being sued, and paying taxes.
The main advantages of a limited company
- It limits the liability of its shareholders to the amount they have invested in the company. This means that if the company goes bankrupt or faces legal claims, the personal assets of the shareholders are not at risk.
- It can raise capital more easily than other types of businesses, such as sole traders or partnerships.
- A limited company can issue shares to investors, who become part-owners of the company and share its profits and losses.
- A limited company can also borrow money from banks or other lenders, who may prefer to lend to a registered entity rather than an individual or a group of individuals.
Disadvantages of a limited company
A limited company also comes with some disadvantages and responsibilities.
- A limited company has to comply with more rules and regulations than other types of businesses, such as keeping proper accounting records, filing annual returns, holding annual general meetings, and maintaining a registered office address.
Choosing the Right Business Structure for Your Needs
One of the most important decisions you need to make when setting up a limited company in Ireland is choosing the right business structure for your needs. The type of company you choose will affect various aspects of your business, such as:
- The legal status and liability of your business
- The taxation and accounting requirements of your business
- The ownership and management structure of your business
- The funding and growth potential of your business
- The costs and fees involved in setting up and running your business
Therefore, you need to consider carefully the advantages and disadvantages of each type of company and how they align with your business goals and plans. You also need to consult with a professional accountant or solicitor who can advise you on the best option for your specific situation.
Choose Your Company Name
Once you have decided on the type of company you want to set up in Ireland, the next step is to choose your company name.
You need to choose your company name carefully. The company name should be unique. This is because your company name is part of your company identity and brand, and it has to be unique and distinctive from other existing companies.
After you have registered your company name with the CRO, the next step is to appoint directors for your company.
Directors are the people who are responsible for managing and directing the affairs of your company. They have to act in the best interests of your company and its shareholders, and comply with Irish company law and tax regulations.
If you are setting up an LTD company, you need to appoint at least one director (up to 15), who must be a natural person (not a corporate entity) and at least 18 years old.
At least one director must be an EEA resident, which means that they live in one of the EU member states.
If none of your directors is an EEA resident, you need to obtain a non-resident director bond from an insurance company or a bank, which costs around €1,800 per year and covers any potential fines or penalties imposed by the Revenue Commissioners or the CRO on your company.
Appointing Company Secretary
In addition to appointing directors, you also need to appoint a company secretary for your company.
A company secretary is the person who is responsible for ensuring that your company complies with Irish company law and tax regulations. They have to perform various administrative and legal duties, such as:
- Keeping and updating your company’s statutory books and records, such as the register of members, the register of directors, the register of charges, and the minute book.
- Preparing and filing your company’s annual returns and financial statements with the CRO and the Revenue Commissioners.
- Organising and attending your company’s meetings, such as the annual general meeting (AGM) and the board meetings, and preparing and distributing the agendas, minutes, resolutions, and notices.
- Communicating with your company’s shareholders, directors, auditors, creditors, and other stakeholders on behalf of your company.
- Advising your company’s directors on their legal and fiduciary duties and obligations.
- Updating your company’s constitution and name if necessary.
Share Capital and Shareholders Agreement
Another important aspect of setting up a limited company in Ireland is determining your share capital and shareholders agreement.
Share capital is the amount of money that your shareholders invest in your company in exchange for shares. A shareholders agreement is a contract that governs the rights and obligations of your shareholders in relation to your company.
To set up an LTD company, you do not need to have a minimum or maximum authorised share capital. You can issue any number of shares with any nominal value (such as €1 or €0.01) to your shareholders. You can also issue different classes of shares with different rights and preferences (such as ordinary shares, preference shares, redeemable shares, etc.). However, you need to specify the number and value of issued shares in your annual returns.
The purpose and benefits of having a shareholders agreement depend on the size and nature of your company. A shareholders agreement can cover various aspects of your business, such as:
- The roles and responsibilities of each shareholder
- The decision-making process and voting rights of each shareholder
- The dividend policy and profit distribution of your company
- The valuation and transfer of shares in case of sale, death, or exit of a shareholder
- The dispute resolution mechanism in case of conflict or deadlock among shareholders
- The protection of minority shareholders’ interests and rights
A shareholders agreement can provide clarity and certainty for your shareholders and avoid potential misunderstandings or disputes in the future. It can also help you attract and retain investors who may want to have a say in how your company is run.
Obtaining a Registered Office Address in Ireland and a Business Correspondence Address
Another essential requirement for setting up a limited company in Ireland is obtaining a registered office address and a business correspondence address for your company. These are the official addresses of your company that will be used for legal and administrative purposes.
A registered office address is the address where your company’s statutory books and records are kept and where your company can receive official notices and documents from the CRO, the Revenue Commissioners, and other authorities. A registered office address must be a physical location in Ireland (not a PO box) and must be accessible to the public during normal business hours.
A business correspondence address is the address where your company can receive general correspondence and communication from your customers, suppliers, partners, and other parties. A business correspondence address can be different from your registered office address and can be a PO box or a virtual office.
Preparing Your Company Constitution
Another important document that you need to prepare for setting up a limited company in Ireland is your company constitution.
The company constitution is a legal document that sets out the rules and regulations that govern your company’s structure, operation, and management. Your company constitution also defines the rights and obligations of your shareholders, directors, and secretary in relation to your company.
If you are setting up an LTD company, you need to prepare a single-document constitution that contains two parts: Part A (Mandatory Provisions) and Part B (Optional Provisions).
- Part A contains provisions that are required by law, such as the name of your company, the type of company, the share capital, the liability of shareholders, etc.
- Part B contains provisions that are optional or customisable, such as the objects of your company, the transfer of shares, the meetings of shareholders, etc.
You can either adopt the default Part B provided by the CRO or draft your own Part B according to your preferences.
Filing Your Company Documents with the CRO
The final step in setting up a limited company in Ireland is filing your company documents with the CRO. These are the documents that contain all the essential information about your company, such as its name, type, address, share capital, shareholders, directors, secretary, and constitution.
To file your company documents with the CRO, you need to follow these steps:
- Fill out Form A1 (Application to Register a Company) online on the CRO website. Form A1 contains information about your company’s name, type, address, share capital, shareholders, directors, secretary, and constitution. You also need to attach a copy of your company constitution and any other relevant documents to Form A1.
- Pay the registration fee online on the CRO website. The registration fee is €50 for online applications or €100 for paper applications.
- Wait for the approval and confirmation of your company registration by the CRO. The CRO will usually process your application within five working days, but it may take longer depending on the volume of applications. If your application is approved, you will receive a confirmation email from the CRO with your company number and digital certificate of incorporation.
- Print out and keep a copy of your certificate of incorporation and other company documents for future reference.
Your certificate of incorporation is an official document that proves that your company exists and is registered in Ireland. Your other company documents are also important records that show the details and history of your company.
Associated Costs with Setting Up a Company
Setting up a limited company in Ireland involves various costs and fees that you need to be aware of and budget for. Some of these costs are mandatory and fixed, while others are optional and variable.
Some of the main costs associated with setting up a limited company in Ireland include:
- Company name registration fee: €50 for online applications or €100 for paper applications. It’s not mandatory to register your company name.
- Company registration fee: €50 for online applications or €200 for paper applications
- Non-resident director bond: around €1,800 per year (if applicable)
- Registered office address: depends on the location and type of premises. We provide our Registered office address for around €200 per year
- Business correspondence address: depends on the location and type of premises
- Share capital: depends on the amount and structure of shares
- Shareholders agreement: depends on the complexity and length of the contract
- Company constitution: depends on the type and content of the document
- Professional services: depends on the scope and quality of service:
- EEA director €1,200 per year
- Irish resident director €3k per year.
The total cost of setting up a limited company in Ireland can vary depending on various factors, such as:
- The type and size of your company
- The number and qualifications of your directors and secretary
- The amount and structure of your share capital
- The location and type of your registered office address and business correspondence address
- The complexity and length of your shareholder’s agreement and company constitution
- The choice and quality of your professional service providers
Therefore, it is advisable that you do some research and compare different options and prices before you decide on the best way to set up your limited company in Ireland.
Understanding the Annual Accounting Requirements for Irish Companies
Once you have set up your limited company in Ireland, you need to comply with the annual accounting requirements for Irish companies. These are the requirements that ensure that your company maintains proper financial records and reports its financial performance and position to the CRO, the Revenue Commissioners, and other stakeholders.
The annual accounting requirements for Irish companies include:
- Keeping and updating your company’s accounting records, such as invoices, receipts, bank statements, ledgers, journals, etc. You need to keep your accounting records for at least six years from the end of the financial year to which they relate.
- Preparing your company’s financial statements, such as the balance sheet, the income statement, the statement of changes in equity, and the notes to the accounts. You need to prepare your financial statements in accordance with the Irish accounting standards and principles, such as the Generally Accepted Accounting Practice (GAAP) or the International Financial Reporting Standards (IFRS).
- Filing your company’s annual returns and financial statements with the CRO within 56 days of your company’s annual return date (ARD). Your ARD is usually the anniversary of your company’s incorporation date unless you change it with the CRO. You need to file your annual returns and financial statements online on the CRO website. You also need to pay a filing fee of €20 for online filings or €40 for paper filings.
If you fail to comply with the annual accounting requirements for Irish companies, you may face serious consequences, such as:
- Fines or penalties imposed by the CRO or the Revenue Commissioners
- Loss of audit exemption or filing exemption for future years
- Disqualification from acting as directors or secretary of any company
- Criminal prosecution for fraud or negligence
Therefore, it is essential that you comply with the annual accounting requirements for Irish companies and that you hire a professional accountant or auditor who can assist you with these tasks.
Obtaining a Tax Registration Number from the Revenue Commissioners
A tax registration number is a unique identifier that is assigned to your company by the Revenue Commissioners for tax purposes. A tax registration number is also known as a Tax Reference Number (TRN) or a Business Registration Number (BRN).
You need to obtain a tax registration number from the Revenue Commissioners before you can file your corporation tax returns and pay your corporation tax. You also need a tax registration number if you want to register for other taxes or schemes, such as Value Added Tax (VAT), Pay As You Earn (PAYE), Professional Services Withholding Tax (PSWT), Relevant Contracts Tax (RCT), etc.
Opening a Business Bank Account in Ireland
A business bank account is a separate account that is used for your company’s financial transactions, such as receiving payments from customers, paying bills to suppliers, transferring funds to employees, etc.
You need to open a business bank account in Ireland before you can start trading or operating your company. You also need a business bank account to file your corporation tax returns and pay your corporation tax to the Revenue Commissioners.
To open a business bank account in Ireland, you need to follow these steps:
- Choose a suitable bank and account type for your business needs and preferences.
- Prepare the required documents and information for opening the account. You need to provide various documents and information to prove your identity, address, and business details, such as:
- Your certificate of incorporation and company constitution
- Your tax registration number and tax clearance certificate
- Your registered office address and business correspondence address
- Your share capital and shareholders agreement
- Your directors’ and secretary’s personal details and consent
- Your business plan and financial projections
- Your proof of identity and address (such as passport, driving licence, utility bill, etc.)
- Apply for opening the account online or in person. You can either fill out an online application form on the bank’s website or visit a branch of the bank and speak to a business advisor. You also need to submit the required documents and information along with your application form.
- Wait for the approval and confirmation of your account opening by the bank. The bank will usually process your application within a few days, but it may take longer depending on the bank’s policies and procedures.
Frequently Asked Questions
How long does it take to set up a limited company in Ireland?
The duration required to set up a limited company in Ireland can vary. On average, it takes between 2-3 working days if you outsource your company formation, and around 5-10 working days if you handle the process yourself.
How much does it cost to set up a limited company in Ireland?
The expenses associated with setting up a limited company in Ireland can vary. The Companies Registration Office (CRO) typically charges a €50 fee for filing a new company registration application.
What are the benefits of setting up a limited company in Ireland?
Establishing a limited company in Ireland offers several advantages such as limited liability, tax efficiency, the status of being a separate legal entity, and the potential to attract investment.
What are the alternatives to setting up a limited company in Ireland?
Alternatives of setting up a limited company in Ireland include registering as a Sole Trader or forming a General Partnership.
Ready to Set Up Your Limited Company in Ireland? Contact Us Today!
Setting up a limited company in Ireland doesn’t have to be a daunting task. With the right guidance and support, you can navigate the process smoothly and efficiently. At Peak Accounting Solutions, we’re here to provide that support.
Whether you’re just starting out or looking to expand your business, our team of experienced professionals is ready to help. We offer a comprehensive range of services tailored to your specific needs, from company formation to ongoing compliance.
Don’t let the complexities of company formation hold you back. Contact Peak Accounting Solutions today and let us help you turn your business dreams into reality. Your successful Irish company formation is just a call away.