Setting up a Limited Company in Ireland: What you need to know

Essential topics covered include:

Choosing your company name
Choosing your directors
Setting up your registered company address
Deciding how many shares to release
Your shareholders
Writing up your companies constitution
What is company formation?
Registering your company for tax
Setting up a bank account

So you want to set up a Limited Company in Ireland.

Nexus Accounting know that with the abundance of information that exists and coupled with all the legal jargon that could confuse even the smartest of business owners, it can be a real challenge to work out who you need to talk to and what you need to know.

So, we have created this simple guide to help set up your Limited Company in Ireland with confidence and security.

If you have any questions or need a quote you can contact our firm here.

What is a Limited Company?

Firstly we need to understand the meaning of a Limited Company.

In its simplest form it is a business where its assets, liabilities and its income are separated legally from the business owner. This is known as limited liability.

So instead of being personally liable for all possible trading losses/debts under a sole trader you are not exposed to this when compared to the business failure of a limited company.

Under a limited liability you are only liable for the assets you have invested into the company.. Banks and suppliers can get around this by insisting on personal guarantees from the business owners. This should be always avoided.

So why don’t more people register their businesses this way? Well, we will be honest with you. There are a few more hoops to jump through before you register a Irish Limited business but that’s what Nexus Accounting are here for.

1. Choosing your company name

This is one of the more fun parts of setting up your company. However, like all things, there are tight parameters you have to stay within. The Companies Registration Office (CRO) is very strict when it comes to naming your company.

Your chosen name must be completely unique and in no way similar at all to another registered company
You cannot use words that suggest you are sponsored or endorsed by the state
You also cannot use words such as ‘University’, ‘Bank’ & ‘Co-Operative’ as these words would require approval from relevant bodies
You cannot use any words that could be deemed offensive

So in short you couldn’t call your business ‘Scents Away’ if there was a registered company called ‘Cent Away’, even if they are not in similar business fields, because the names are too closely related and not completely distinguishable from one another.

2. Choosing your directors

Now you need to appoint your director/s. Your director will be responsible for managing the company on behalf of the shareholders. In the beginning the directors and shareholders may be one and the same, this is completely alright and fairly common, but once the company has been set up and starts to grow this can be changed.

You will need at least one director. However if you choose to go with just one, you will have to appoint someone different to be the company secretary. The company secretaries role is to file annual tax returns every year and they work closely with the Accountant to ensure all financial records are correct, kept up to date and filed on time so you don‘t incur any late filing fees. If you decide to have more than one director one of your directors can then take on the secretary role.

At least one of your directors must be resident in the European Economic Area (EEA) this now applies to directors residing in the United Kingdom post Brexit as well. If none of your directors are resident within the EEA you must then purchase a Non-EEA Residents Bond before setting up your company in Ireland. For more information on a Non-EEA Residents Bond visit the CRO website.

3. Setting up your registered office address

Now it’s time to set up your official office address for your company. It must be an address that is monitored regularly as this is where all your legal documentation will be going. Due to this it is very common for businesses to register their Accountants as their official office address and it must be a physical address within the Republic of Ireland, so no PO Boxes or virtual addresses.

There are two types of addresses that are usually set up during this phase.

The Registered Office Address, described as above
The Trading Address

Your trading address is where most of your business mail, such as invoices, will go. It is possible to not have your physical business premises as your trading address in cases of online businesses or those who work from home who do not wish to have their personal home address available.

Registered Address

€199.00 + vat

Get our Dublin office address as your business registered address for all your business correspondence. This is for 1 year.

4. Deciding how many shares to release

What are shares? Sometimes it can be hard to wrap our heads around these terms but put simply imagine your company is a pie, a very large pie. Once you cut that pie into pieces each slice is a ‘share’. So really a share is a shareable portion of you company. The more shares you own, the more of the company is yours and say you owned 55% of all the available shares for that company, well this would then mean you have ownership control over the company as you have the largest percentage of shares in your pocket.

Now that you understand what a share truly is you need to decide exactly how many shares you are going to release for you limited company. We do recommend that you issue more shares than you expect to actually sell as this will leave you with a comfortable amount of wiggle room as your company grows and more people may want to buy into your company.

Our recommendation is generally 100,000 authorised shares; this is the number of shares you aspire to sell. They have no monetary value but are, like said before, the number of shares you aspire to sell. Then you should issue 100 shares at 1 euro per share at a minimum. These issued shares have monetary value and if you only have one shareholder, that person would own 100% of the shares, thus owning 100% of the company. This part of setting up your limited company can be overwhelming but we are here to help.

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5. Your shareholders

Shareholders are the owners of your company and to set up a limited company within Ireland you must have at least one shareholder. It is pretty common in the beginning for shareholders to also be either directors and/or the company secretary. Your portfolio of shareholders will diversify as the company grows.

There are not many rules surrounding who can be a shareholder but at a minimum each shareholder must be at least 18 years of age when your Limited Company is incorporated.

All limited companies are also required to register their beneficial owner, which means the person who owns more than 25% of the company shares, with the Register of Beneficial Owners (RBO) within 5 months of the companies incorporation. Incomplete RBO registration is considered a criminal offence and many Irish banks won’t even allow you to set up a business bank account until your registration is completed. So this is a step you definitely don’t want to skip.

6. Writing up your companies constitution

Your company’s constitution may seem like a small task in comparison to a lot of the other steps you have to take to set up your company but it is an important one. Your constitution is what sets the guidelines for your director’s internal and external operation of the company. Your directors can only work within the ‘rules’ as such or they can be held in breach of their official duties.

7. What is company formation?

Company formation is the process of getting your company incorporated. It sounds like it would be pretty complicated but it isn’t. To incorporate your company you must:

Complete Form A1
Submit a copy of your constitution along with your Form A1

Now although this isn’t an overly complicated step it is one that if there are any mistakes made it can be very difficult and time consuming to correct and as with most things, there will be fees. We offer a variety of company formation services and packages to help you in the formation of your limited company helping you avoid the common mistakes that are made.

Once your company has been incorporated it’s time to order your company seal. Your company seal will have the company name engraved on it and it will be used to seal certain documents such as share transfers and other important company documents.

8. Registering your company for tax

Now that your company is officially incorporated and you have a true Limited company on your hands it’s time to get down to the real nitty gritty of your financials. Registering with Revenue will be at the top of your list now that you are bumping things up a gear.

There are a variety of taxes that you, as a company, may be liable to register for and pay. The following taxes are easy to register for through the Revenue website using a TR2 form.

Corporation Tax
PAYE
VAT
Relevant Contracts Tax

To register your company for tax purposes with Revenue you must have your Company Registration Certificate. This is the certificate you receive after your company’s incorporation.

Once your company is registered with Revenue you have to make all filings and payments online through the Revenue Online Service (ROS).

9. Setting up a bank account

To set up a bank account in Ireland for your Limited Company you will need to be able to interact with the bank face to face. Also before being able to set up an account you will need documentations, such as your Company Registration certificate, your company constitution and a copy of your Form A1. So you do have to have your company incorporated before you can consider opening a business bank account.

You will also need to have registered the beneficial owner with the Register of Beneficial Owners (RBO). You have a maximum of 5 months after incorporation to complete this registration.

We know setting up a Limited Company can be overwhelming sometimes and that is what we are here for.

We hope our guide has broken down some of the steps to setting up a Limited Company within Ireland into more manageable and understandable sections but if you still have questions you can schedule a free zoom consultation with us or request a free quote. At Nexus Accounting we are ready to support and guide you through this next exciting chapter of your business.

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Setting up a Limited Company in Ireland: What do you need to know?