What is corporate structure for company formation in Ireland?

As the Ireland, country of opportunity of growth provides variation on setting up a business as a sole trader, as a partnership or as a limited company. All type of structure you choose depends on the kind of business you are planning to do in Ireland, with whom applicant will be doing business/trade and your attitude to risk and rewards. It is advisable to get the advice of a lawyer or accountant when considering the structure for your business/trade. The Companies Registration Office (CRO) has more information about these different structure on its website (www.cro.ie.). Hence required information can be pulled from website.

1. Sole Trader formation in Ireland

It is relatively simple to set up business as a sole trader but if your business fails, your personal assets could be used to pay your creditors meaning thereby have high risk on personal assets if fails to deliver. Your main legal obligation is that you must register as a self-employed person with Revenue. If you wish to use a unique business name rather than your own name then you must register your business name with the Companies Registration Office (CRO).

2. Partnership formation in Ireland

One business where multiple people are engaged and interested but do not want to have company then there is way out for such needy people as a Partnership under which 2 or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor/lawyer. The partners are jointly responsible for running the business and if it fails all partners are jointly and severally responsible for the debt.

3. Limited Company formation in Ireland

If you want to set up your business/trade as a limited company, the business will be a separate legal entity. If the company gets into debt, the creditors generally only have a claim on the assets of the company. The company must be registered with the CRO under the rules and regulation prescribed by applicable companies act and the company reports and accounts must be returned to the CRO each year as per Companies Act, 2014.

What is Company formation procedure in Ireland?

The first stage for incorporation has to be decided from the formation of entity and the name they choose to develop the brand/ identity of business. Suppose if the name is other than the original name then they need to register the name of business desire to incorporate first. Specifically, registration of a business name is required only on the matter is as stated below:

• An individual uses a business name which differs in any way from his/her true surname. It makes no difference whether the individuals’ first name or initials are added. So registration is required if, for example, Mr. John Murphy traded as Murphy Builders but not if he traded as Murphy or John Murphy);
• A firm uses a business name which differs in any way from the true names of all partners who are individuals and the corporate names of all partners which are bodies corporate;
• A company uses a business name which differs in any way from its full corporate name;
• A person having a place of business in the State carries on the business of publishing a newspaper.

As per Companies Act, 2014 to register a business name, submit one of the following forms, along with the registration fee (€40 for paper filing/€20 for electronic filing), to the CRO within one month of adopting the business name:

• Form RBN1: for an individual
• Form RBN1A: for a partnership
• Form RBN1B: for a body corporate

As per Ireland Companies Act, 2014 types of company available there in Ireland for registration are:-

1. Limited Company registration in Ireland

The shares in a company are owned by its shareholders. If the company is a limited liability company, the shareholders' liability, should the company fail, is limited to the amount, if any, remaining unpaid on the shares held by them. A company is a separate legal entity and, therefore, is separate and distinct from those who run it. Only the company can be sued for its obligations and can sue to enforce its rights.

The Several types of Ireland limited company are

• A Private Company Limited by Shares (LTD company): The members' liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. The maximum number of members is 149. An LTD company can have only one director if it chooses. An LTD company does not have stated objects and can undertake any activity. Part 2 of the Companies Act 2014 refers.
• A Designated Activity Company (DAC) – (limited by shares). The members' liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. The maximum number of members is 149. A DAC company must have at least 2 directors. Constitution includes a memorandum and articles of association. The memorandum will include stated objects. Part 16 of the Companies Act 2014 refers
• A Designated Activity Company Limited by Guarantee (DAC) – (limited by guarantee). The members have liability under two headings; firstly, the amount, if any, that is unpaid on the shares they hold, and secondly, the amount they have undertaken to contribute to the assets of the company, in the event that it is wound up. The maximum number of members is 149. A DAC company must have at least 2 directors. Constitution includes a memorandum and articles of association. The memorandum will include stated objects. Part 16 of the Companies Act 2014 refers.
• A Company Limited by Guarantee (CLG) (limited by guarantee not having a share capital): The members' liability is limited to the amount they have undertaken to contribute to the assets of the company, in the event it is wound up, not exceeding the amount specified in the memorandum.
• A Public Limited Company (PLC): The liability of members is limited to the amount, if any, unpaid on shares held by them. It should be noted that it is unlawful to issue any form of prospectus except in compliance with the Companies Act 2014. The nominal value of the company's allotted share capital must not be less than €25,000, at least 25% of which must be fully paid up before the company commences business or exercises any borrowing powers. Part 17 of the Companies Act 2014 refers.

2. Single Member Company registration in Ireland

• A single member company is a company which is incorporated with one member, or whose membership is reduced to one person. However, the company must have at least two directors and a secretary. (Unless it is an LTD company, which can also be a single director company).
• The sole member registration in Ireland, if he/she so decides, can dispense with the holding of General Meetings, including Annual General Meetings (AGMs). The financial statements and reports that would normally be laid before the AGM of a company still need to be prepared and forwarded to the member. All company types can be single member companies.

3. Unlimited Company registration in Ireland

In an unlimited company, as provided in Companies Act, 2014, there is no limit placed on the liability of the members. Recourse may be had by creditors to the shareholders in respect of any liabilities owed by the company which the company has failed to discharge. There is no doubt on constitution of company because an unlimited company can be either public or private. In a nutshell, the registration process of company in Ireland can be sum up with the three major steps:-

• Reserve a company name online using CRO which has a fee of €25
• Draft constitution of company i.e. MOA & AOA
• FORM A1 to be submitted along with other Incorporation documents stating details of the company name, its registered office, details of secretary and directors, their consent to acting as such, the subscribers and details of their shares. It incorporates a declaration that the requirements of the Companies Act have been complied with, and as to the activity which the company is being formed to engage in.

Registration Foreign Company Branch in Ireland

Any company which is incorporated outside the State and establishes a Branch in the State must be registered with the Companies Registrar Office (CRO) under the Companies Act 2014. The registration must take place within one month of the establishment of the branch in the State The Companies Act, 2014 requires disclosure in respect of branches opened in a Member State by certain types of company governed by the law of another State which are set out in Part 21 of said Act. There are some differences between the requirements imposed on a company from a Member State of the European Economic Area and companies from other countries. The European Economic Area (EEA) consists of the 28 member states of the European Union (EU).

1. Companies from a Member State of the EEA file Form F12 to register.
2. Companies from a non-EEA member state file Form F13 to register

Limited Partnership

A partnership in which a minimum of two persons involved to conduct business with a view of making a profit. It must consist of at least two persons and there is normally a maximum of 20.

A partnership can be formed by natural persons and bodies corporate or combination thereof. It is not a separate legal entity. A partnership that adopts a name that does not consist of true names of the partners without any addition must register the name as a Business Name.

The Limited Partnership Act 1907facilitates the formation of a partnership in which some members can have limited liability for the debts of the firm. Their liability is limited to the extent of their contribution. As like a general partnership, a limited partnership is also not a separate legal entity.

The requirement of limited partnership as per applicable act it must consist of at least one general partner and one limited partner. The partnership should not consist of more than 20 persons or, if carrying on the business of banking, of more than 10 persons. The general partner(s) is/are liable for all the debts and obligations of the firm. The limited partners contribute a stated amount of capital and are not liable for the debts of the partnership beyond the amount contributed.

A limited partnership mandatory required to be registered with the CRO and in accordance with the 1907 Act; otherwise the partnership is a general partnership.

Required Steps

To form a limited partnership, submit the following forms, together with the registration fee, to the CRO:

1. Form LP1 (Application for registration of a limited partnership) this form must be signed by both the general and limited partners.
2. Form LP3 (Statement of the capital contributed by the limited partners) Statement of the capital contributed by the limited partner(s). The form must also be signed by any one of the general partners.

After all these incorporation issues, the person doing business/trade in Ireland should need to have knowledge of taxation in country. Taxation rules and regulation very easy and friendly department with transparency in transaction, business need not have to face any complexities in taxation matter of company in Ireland.

Step by step analysis of Corporate Taxation in Ireland?

How your business is taxed depends on whether it is incorporated as a company. If it is company then it is liable for Corporation tax (CT). If your business is not incorporated you are considered to be a sole trader and you pay tax under the Self-assessment system.

Corporation tax in Ireland?

Companies resident in Ireland must pay Corporate Tax (CT) on their worldwide profits. These profits include both income and capital gains. Non-resident companies that trade through a branch or agency in Ireland must also pay CT. The CT that a company pays is charged according to Income Tax rules. A company must use the Revenue Online Service to file its return and pay any tax due under mandatory eFiling and ePayment.

There are two rates of Corporation Tax (CT):

• 5% for trading income
• 25% for non-trading income, for example, rental and investment income.

CT is charged on the profits in a company’s accounting period. This period cannot be longer than 12 months. If the tax rate changes in the accounting period, profits will be apportioned on a time basis and taxed accordingly as per the rules and manners provided by Income Tax of Ireland.

Capital allowances for plant and machinery can be claimed at a rate of 12.5% per annum over eight years while those for most industrial buildings can be claimed at a rate of 4% per annum over 25 years. For energy efficient equipment, allowances are claimed at an accelerated rate of 100% in year 1.

A company might have incurred certain expenses in the three year period before they start Business/trading. These expenses can be included as a deduction when calculating a company’s profits (i.e. incorporation related expenses are also eligible revenue expenditure and can be claimed on Statement of Profit & Loss (SPL) in the 3 year period block).

A company may make a charitable donation to a Revenue approved charity or organization which is allowable expenditure on SPL which help to reduce the CT amount due. The minimum single donation is €250 per year.

Self-Assessment tax in Ireland?

Self-assessment is where you make your own assessment of the Income Tax (IT), Universal Social Charge (USC), Pay Related Social Insurance (PRSI) and Capital Gain Tax you should pay for a tax year. You must self-assess when filing your annual tax return. Under self-assessment, you must file your tax return on or before 31 October in the year after the year to which the return relates as per the prevailing Income Tax Act of Ireland. You must file Form 11 online through the Revenue Online Service (ROS). You can register for self-assessment by using the eRegistration service or by completing Form TR1. You do not need to register for self-assessment if:

• You have Pay As You Earn (PAYE) income
• Your taxable non-PAYE income does not exceed €5,000 (Five Thousand euro only) and is taken into account in calculating your tax credits and standard rate cut-off point for PAYE purposes. It may also be taxed at source, providing the gross non-PAYE income does not exceed €30,000 (thirty thousand euro only). In this case you must submit a Form 12 online through PAYE Services in my Account as per the rule stated on Income Tax Act.

You will have to pay a surcharge (here is as a late fee) if you send your tax return after the deadline, as follows:

• within two months of the filing date: 5% of your tax due, up to €12,695
• Over two months: 10% of your tax, up to €63,485.

Note that even if you pay and file on time for Income Tax, a 5% surcharge may apply if your Local Property Tax obligations are not met. You must pay “Pay Related Social Insurance” (PRSI) if you are self-employed and you meet the following two requirements:

• you have a minimum annual income of €5,000
• You are aged between 16 and 66.

Your PRSI is calculated on your gross income once any capital allowances have been deducted. If you are self-employed, you usually pay PRSI at Class S. This rate is 4% of your gross income, with a minimum payment of €500.

The abundance of resources built up with modern and technological economy and transparent government of Ireland do always have been attracting the investors on their country supported by friendly laws, regulation and rules. Moreover tax laws and incorporation rules for investors are always been welcoming address of government of Ireland.

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