Guide | 4 min read

Running as a limited company in Ireland – a beginner’s guide

Our guides focus on everything you need to know about running and setting up your limited company in Ireland.
By Patrick Onofrei
Published April 23, 2022
Last updated December 03, 2022
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What is a limited company?

A limited company is a type of business where the owner’s liability is limited to the amount they have invested in the shares or guaranteed to the company.
In other words, the owners of the limited company are not personally liable for the debts of the company.

Operating as a limited company

Small businesses generally choose to trade through a limited company as they can be much more tax efficient compared to trading as a sole trader or partnership. It does, however, need to be structured in the right way to take advantage of the savings available. Luckily, we are able to help you with this.
A limited company is a completely separate entity from its owners.
Everything from the company bank account, to ownership of assets and any involvement in tenders or contracts is purely company business and separate from the interests of the company’s owners or shareholders.

Incorporating a limited company

Incorporating (forming) your limited company is relatively straight forward.
There are just three simple steps;

1. Decide who the director(s) is going to be

The director is the person who will be responsible for running the company, along with the shareholders.

2. Decide who the shareholder(s) is going to be

The shareholder(s) will be the person(s) who will own the company. The directors and shareholders are often the same people in small limited companies and can be just one person.

3. Registering your company with CRO (Company Registration Office)

Once you have chosen your director, you will need to get a formation agent or accounting practice (like us) to register your company with CRO.

What is a dividend?

A dividend is a payment from the company’s profits (after tax) to its shareholder(s). To declare a dividend, you must produce a dividend voucher and minutes. Once the paperwork is in place, the money can be transferred from the company’s bank account to the personal bank accounts of the shareholders.

Completing your bookkeeping

Bookkeeping is the recording of your day-to-day transactions on some kind of system, such as a spreadsheet or accounting software. These transactions are then used as a basis for completing your accounts and tax returns.
No matter how big or small your business is, you will need to ensure you keep accurate bookkeeping records to manage overall finances and get a view of everyday expenses.

How often should I complete my bookkeeping?

We recommend you complete your bookkeeping as often as possible, on a weekly or monthly basis. Doing your bookkeeping regularly reduces the chances of errors and allows you to clearly understand how your business is performing throughout the year.

Claiming your business expense

Different types of business will have different types of expenditure. But as a general rule the vast majority of business expenditure is allowable, even expenses you have incurred personally for business purposes.
The most common business expenses are:
For more information, check out our Business Expense Guide

When do I need to register for VAT?

You must register for VAT if your turnover exceeds €37,500 in supplying services or €75,000 if supplying goods in any continuous period of twelve months.
However, if your customers are also VAT registered, it could be beneficial to register for VAT voluntary before you reach this threshold.

How do I take money from my business?

If the company is an owner-operated limited company (i.e., the shareholders and directors are the same people), then it is normally more tax efficient for the director(s) to take a small salary as dividends. By structuring the withdrawals in this way, the company directors or shareholders do not pay income tax. The only tax payable is corporation tax on the profits of the company.

What happens if I start employing someone?

If you take on an employee, you will need to register as an employer with Revenue straight away and start running payroll.

Still have questions?

Sometimes it’s better to talk to an expert. Book your free consultation with one of our small business experts now.
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