- Business building in Ireland is a very complex process that involves various documentation and regulations to be complied with. The two major business structure built includes sole proprietorship and limited company. When comparing sole proprietorship vs limited company in Ireland, there are many differences, but a similarity was that every individual who wants to operate their own business in Ireland needs to register company in Ireland which will provide legal recognition to the company.
- Ireland has been providing various services which will support business activities and programs such as assistance in finance, mentorship opportunities, and professional pieces of training. These services help start-ups and entrepreneurs in building their businesses and also help them to expand the reach of their businesses. For the formation of a limited liability partnership (LLP), the Irish government has made it mandatory for companies to register their partnerships, and comply with the form LP1 which is submitted to the Companies Registration Office (CRO). The form is submitted along with the necessary documents of the company required alongside the fees.
- In Ireland, while it is common to work alone as a sole proprietor are required to record all the goods and services. Along with these, sole proprietors are also required to obtain VAT if their turnover exceeds a certain amount. In general sole traders are entitled to a number of social insurance payments. Thus, there present various differences between operating a business whose structure is sole proprietorship vs. limited company in Ireland. Tetra Consultant is there to assist you with various business services such as offshore company incorporation, obtaining offshore financial licenses, corporate bank account opening, international trademark registration, and other ancillary services. Along with these Tetra Consultants might be of great help to you for the incorporation of the sole proprietorship or limited company in Ireland as per the customer preference and also according to the needs of the business.
Sole proprietorship vs. limited company in Ireland
There are many differences between sole proprietorship vs limited company in Ireland which are compared and contrasted as follows:
- Sole proprietorship advantages include easy setup and winding up process, fewer filings required, no requirement of financial statements, and more privacy of the company as compared to a limited company.
- While comparing with a sole proprietorship, a limited company has comparatively more advantages such as the taxation regime of the country being the lowest in Europe, eliminating the risk of losing personal assets, benefits to directors, more credibility in the market, improves eligibility for government schemes, many options available for succession and exits, and partial protection from company’s name.
- Sole proprietors are liable for taxes on profits up to 55% subtracting the expenses. Tax deductible expenses will not include drawing by the proprietor which provides the proprietor will less income.
- A limited company can pay the owners their salaries or dividend and can also plan for pensions. The salaries are deducted as the business expenses while paying the business tax and the directors will have to pay the tax on the salaries as an employee of the company. In this way the tax will be less charged and there will be more income for the company.
- Sole traders are liable for income tax on earnings minus expenses. Depending on the net earnings sole traders may end up paying large bill tax at the end. A sole trader may change their business structure from sole trader to limited company as per the trader’s business.
- Limited company earnings are added to its turnover from which the expenses are deducted which includes directors’ salary and other expenses. A corporate tax of 12.5% to 25% will be applicable to the net profits of the company. Depending on the business there presents various taxes which the company must comply with. Various taxes include contracts tax, VAT, and employer’s Pay-related Social Insurance (PRSI).
- Being the sole trader or a limited company the management or the trader needs to get assisted with professional services. Professional services include bookkeeping services, legal services, and many more which are required. These services may be charged from hundreds of dollars to thousands of dollars depending on the business size and structure. Thus, sole traders need little to no spending on professional fees whereas, the limited company needs to spend a huge amount on such professional fees in accordance to comply with the laws and regulations of the country.
- Choosing sole traders as a business structure might be a suitable option for many traders. It is easy to be open and shut and can function along with the jobs. If the growth prospectus is planned building the brand and maintaining a business might be difficult or near impossible because of its business structure which includes less manpower. Thus, if a sole trader wants to expand its business it might need to restructure the business and change into a much more viable business structure.
- When a limited company is considered the business structure is feasible for the expansion of the business and also to reach a global level. Thus, to build a strong brand and for a better future for the business limited company is a viable business structure that can provide much more manpower support and financial assistance too.
- During the execution of a sole proprietorship, the whole liability is on the sole trader. The sole trader is required to fulfill the debt of the business even through personal assets if the business assets are not enough to pay off the whole liability. Thus, the personal assets of the sole traders can be used to pay off the business debts.
- Limited companies are separate legal entity that eliminates the risk of losing personal assets. Thus, it implies that the potential creditors of the company can only claim against the business assets and not the personal assets.
Set-up process of the company:
- The sole proprietorship business structure can be set up easily and the execution of the business is also easy and simple as compared to other business structures. The sole proprietorship can be carried on easily and fewer compliances make it easy to execute business.
- The limited company is slightly more difficult to set up when compared with the sole traders. There are many compliances that a company must comply with for the proper execution of the business.
- When sole trader vs limited company in Ireland is considered, there are many differences which have been discussed above. The differences between the business structure can provide assistance to business owners and help them in choosing the better and more feasible option which is better for business growth and expansion. Tetra Consultants can help your business with various ancillary services which might be of great help for the businesses to commence and execute.
- Contact us to know more about how to register a company in the Ireland our team of experts will revert within the next 24 hours. Tetra Consultants provide services that might help you with business growth and expansion and also provide seamless assistance to companies to expand business operations. We provide a wide range of services to provide a comprehensive range of services to satisfy our client’s needs.