I will give you ten tips when setting up a company in Ireland. The idea is to help you understand more about what you are getting into. I don’t mean this in a negative way. It’s more about what to look out for and to help you avoid things that can trip you up.
The first part is to understand the reason why you want to set up a company. From there, you get into a few structural things. After that, money and registrations become important. We’ll look at
- Reason
- Rates
- Shareholding
- Company Director
- Paperwork
- RBO
- New bank account
- Tax registrations
- Cost
- Put Money into the company
Reason
What’s your reason for setting up the company? Is it for business expansion? Or do you need limited liability? Or is it tax driven? Are you self-employed and suffering from November Pain every year?
You may want to keep a key employee and give him/her a shareholding in the business.
You have an existing business. Profits are increasing and unfortunately tax bills are too. A company could make sense for you, but you’ll want to run some numbers.
The numbers
Paul is single and has an IT consultancy business. For 2024, he had a profit of €100,000. His Tax liability is €36,350, which leaves him with €63,650. If he needs all that money to live, then a company isn’t a help to him from a tax point of view. As in, he’d need to take a salary of €100,000 from the company to meet his living needs.
But let’s say he needs €3,000 to live, which is a net salary of €36,000. In 2025, a gross salary of €46,000 would give him over €3,100 net per month. In a company, the salary is a deductible expense. So, the company profits look like this
| Company Profit | €100,000 |
| Less Salary | (€46,000) |
| Net Profit in company | €54,000 |
| Company Taxes 12.5% | €6,750 |
| PAYE on Paul’s salary | €8,400 |
| Total taxes in the company | €15,150 |
| Personal Tax liability – sole trader | €36,350 |
| Tax saving in the company | €21,200 |
The ongoing costs of running a company will be more, so do the savings outweigh the extra costs? Like Accountancy fees. They will be more as there’s extra work to do.
Rates
The company tax rate is 12.5%. For professional service companies, the rate is close to 20%. On investment income like rents and deposit interest, the rate is 25%. For close companies, a company controlled by 5 or fewer shareholders, there are surcharges. The effect of the surcharges is to bring
- The 25% rate closer to 40% and
- The 12.5% rate for professional service companies closer to 20%
But the headline rate of 12.5% on trading profits is the real advantage compared to a personal tax rate of 52%. That can be even as high as 55% for certain self-employed individuals.
The company pays corporation tax for an accounting period. An accounting period can be no longer than 12 months for taxes. So, if you had a 16-month accounting period, that would be 2 accounting periods for taxes.
- First 12 months of the 16 months
- Last 4 months of the 16 months.
You would need to file two corporation tax returns, one for each period.
Shareholding
When setting up a company, what will the shareholding split be? When forming a company, there will be an authorised share capital and an issued share capital. Usually, the authorised share capital is 100,000 shares. And the issued share capital is 100 shares. So, the 100 shares are the important ones. Who owns the 100 shares?
Say, Paul forms a company for his IT business. He is single and will own all 100 shares. But he may want to give a key employee, Jacinta, some shares. He wants to keep her because she’s vital to the continued success of the business. He gives her 15 shares, so he owns 85 and she owns 15. When giving shares like that, it’s important to understand the tax implications. Both when you give the shares and down the line in the event of any future sale.
If the business is a husband-and-wife team or civil partners, then the shareholding can be 50:50. The number of shares and who owns them is important. The majority shareholder will have the final say. However, minority shareholders can influence company decisions.
Company Director
A company director is an officer of the company. You can have a single director company. In that case, you need another person to be a company secretary. That person is also an officer of the company. These are important roles that carry responsibilities under company law. As a director or secretary, it is your duty to run the company correctly. Failure to do that can lead to fines and penalties for the officers.
One of the directors must be resident in a member state of the European Economic Area [EEA].
A company director or secretary must be over 18.
Paperwork
What paperwork do you need to set up a company? We have an application form that looks for all the relevant information. The usual stuff like names, addresses, PPS numbers, and occupations. Plus, other important stuff too like
- Company name [ask for 3 preferences]
- Who the directors and secretary are
- The shareholdings
- Registered office address
We use CLS chartered secretaries to set up companies for our clients. And they do a brilliant job. They are our go-between us and the CRO and ensure the company is set up as efficiently as possible.
It can take between one and two weeks to set up a company. That’s out of our hands and will depend on how busy the CRO is. Apart from the initial checklist, you will have other paperwork to sign to include
- An A1 application form
- Share subscriber pages
- Declaration of company director and secretary pages
Once the paperwork is in order, the CRO will then issue a cert of incorporation. That is the date the company exists from, and that cert has your company number. This date is known as the date of incorporation. So, you can’t backdate a company. It will only exist from the date on the cert of incorporation.
RBO
RBO stands for the register of beneficial ownership. The purpose of the RBO is to improve corporate trust and transparency in Ireland and the EU. The aim is to deter money laundering and terrorist financing. The RBO does that by identifying the owners of companies. So, if you own more than 25% of the company, you’ll need to register that ownership on the RBO site.
Bank Account
You’ll need to set up a bank account in the company name. It can take time, depending on the bank. Apart from filling in the usual application form, you’ll need the
- Cert of incorporation and
- RBO report
Once the bank account is set up, you will use that account to run the business from. That can involve
- Informing customers of the new account so they can pay you into that
- Paying suppliers from the new account
- Setting up the account on ROS to pay taxes like VAT, PAYE, and Corporation Tax.
This can be a little bit messy if moving from a sole trader to a company. Some clients can continue to pay you into the old account. Plus, you may pay some suppliers from the old account. You should keep this as clean as possible to identify new company income and expense. And pay those from the company account.
Some banks will offer free banking for a year or more for new company clients, so check that out.
Tax Registrations
The company will register for taxes, and you’ll need your company number [CRO number] to do that. It will register for Corporation Tax [CT] from the date of incorporation. The other most relevant taxes will be VAT & PAYE. The company will register for VAT once it exceeds the VAT registration thresholds. And will register for PAYE if it has employees. In most cases, it will, as the business owner/company director will take a salary.
Registering for PAYE and CT should be straightforward. Not so for VAT. It has become increasingly difficult and time-consuming to register for VAT. You can have a local VAT registration if you are only doing business in Ireland. But if you are doing business in Europe, getting an EU VAT registration number is difficult. Revenue will want paperwork to prove you are a legitimate business. This can include a sales contract or a purchase invoice. It can become a chicken and egg scenario where you need a VAT number to buy or sell a product. But you can’t do it without the VAT number in the first place.
The message is that you’ll need help with this.
Other taxes could include RCT if you are in the building trade. Or Dividend Withholding Tax [DWT] if the company will pay a dividend to you or another company.
Cost
What will this cost you? Our usual fee is €850 to €900 plus VAT. That’s an all-in package that includes the company formation agent’s fee of €250 plus VAT. What do you get for that?
- An initial consultation
- Company name search to check availability
- Company application form completed
- Work with the formation agent to set up the company
- RBO registration
- Tax registrations, but price will depend on VAT registration type
- Company pack to include cert of incorporation and constitution
- Correspond over and back with you to ensure all the paperwork is in order and signed where it should be
- Send company docs to the bank
- Go onto our company watch list
If you do this online, you can do it for a lot cheaper. Probably in the region of €300. That’s a call for you to make. Pay for the advice and get it done right, or take a chance and get it done for cheaper. But you’ll have to do the tax registrations, and as I said, the VAT can be painful.
Put Money into the company
Initially, you may have to put money into the company to pay for early-stage bills. This could be for setting up the company or buying equipment like computers or a van. If you loan money to the company, that money is due back to you. There are no tax implications once you don’t take back any more than you put in.
Say Paul sets up a new IT consultancy company. He transfers €10,000 from his business bank account to the new company bank account. The company will owe him €10,000, and he can take that out tax-free. If he takes out more than that, he’s getting a loan from the company, which has tax implications.
Also, if Paul transfers other assets into the company, like IT equipment, stock, and furniture, he’ll need to get the value of that. Whatever the market value of those assets is, the company will owe him for that value. It’s important to get the right advice in that situation.
That’s the first part done. After that, it’s about getting the numbers right to grow the business.
If you want to get your company set up right, start here
