Benefits of a Private Limited Company
The main benefit of trading as a limited company is the limited liability bestowed upon the shareholders of the company. Limited companies in Ireland also qualify for corporation tax at 12.5%.
Directors or shareholders personal assets are not at risk in the event of a winding-up or receivership. If a limited company becomes insolvent and is wound up, only the assets of the company are used to try to clear its debts. The officers of the company have no personal liabilities and the shareholders are liable only to the extent of any unpaid shares held which is rare.
By contrast if you trade as an individual, the creditors can claim on all your property, (other than the family home which is protected by the Family Home Protection Act 1976, unless it has been used to raise collateral), to satisfy the debts, and if this is insufficient you may be declared bankrupt.
Incorporate your Business in Ireland
To get started we simply require your proposed company name which we can check at the Irish Companies Registration Office. The Incorporation process for a limited company in Ireland takes 2 weeks..
Ireland Limited Company Benefits
- Limited liability – the liability of shareholders is limited to the amount of share capital they contributed
- Separate Entity – Irish Company has a legal existence separate from management and its members
- Personal assets are not at risk – Directors or shareholders personal assets are not at risk in the event of a winding-up or receivership.
- Protects Company name – The formation of a limited company is a simple and low cost method to protect a company name from use by another limited company
- Shareholders Rights – The rights of shareholders are normally clearly defined and protected
- Borrowing & Bank Loans – It has flexible borrowing powers and it can be easier to obtain finance as a limited company
- Tax Advantages – Personal tax advantages can accrue for directors of a limited company. Directors pay income tax and the company pays corporation tax on company profits, and with current rates of tax company profits earned and retained in the business are assessed to corporation tax at lower rates than if income tax were payable on equivalent profits earned by an unincorporated business
- Company Pension – Company pension scheme to be secured through a limited company
- Business Image – Companies project a much better business image than that of a self-employed person
- Reputation – Greater degree of business credibility of trading through a limited company
- Management – Interests and obligations of management are clearly defined
- Shares – New shareholders and investors can be easily assimilated. Employees can acquire shares
- Company continues – The company continues despite the death, resignation or bankruptcy of the management and shareholders
- Appointments – The company continues to trade irrespective of director or management changes until the company is wound up. Appointment, retirement or removal of company directors is straight forward
- Ownership – Ownership of a limited company can be spread over a greater number of people
Benefits of Incorporating in Ireland
- Ireland’s Corporate Tax Rate of 12.5% is one of the lowest in the world
- Exemption from Corporation Tax in Ireland for the first 3 years of trading – applies to certain new start up companies
- Double tax treaty agreements in place with 72 other countries including the US, China, Japan, Australia, UK and Canada
Protect your Irish Company Name
Registration legally protects the company name against anyone else forming a similarly named limited company either in sound or spelling. The formation of a limited company is one simple and low cost method to protect a company name. Whilst this does not in itself give any rights to the use of the business name, many clients incorporate companies in anticipation of future development of new business or in order to protect the limited company name of an existing non-limited business for the future. Operating as a limited company often gives suppliers and customers a greater sense of confidence in a business. Larger organisations will prefer not to deal with non-limited businesses.
Tax Benefits of a Limited Company
One of the main focus for small businesses will be the maximising benefits to minimise tax.
Benefits to Minimise Tax
- Ensuring that your company makes pension contributions
- Claim the maximum possible expenses allowable under legislation
- Capital equipment used in your business is purchased and capital allowances claimed
- Ensuring that benefits in kind (insurance, health care) are paid out of the company
Other Tax Considerations:
- Keep cash in the business as a loan to the business, so that the company receives interest gross
- Ensuring that other income streams are generated by the company and that expenses are allocated to that income, that way no tax is paid on some income
- Make investments through the company, but ensure sure you use up your own capital gains tax free allowance as well as that of your spouse, first before making investments from the company
- Often it is possible to reduce the corporation tax, with careful planning, by making dividend payments to its shareholders, and by the use of a company pension scheme
Raising Finance
A limited company has an advantage of raising finance by selling issued shares to investors. The value of a share depends on the viability of each individual company, and not the nominal value of a share. It may also raise finance by means of overdrafts, debentures and loans.
Continuity of Business
The death or resignation of any officers of the company does not affect the structure of the company, which may continue to trade as before. Any shares held by them may be passed on to the others.