Starting a Business in Ireland

You can set up a business as a sole trader, as a partnership or as a limited company. The type of structure you choose depends on the kind of business you are running, with whom you will be doing business and your attitude to risk. It is advisable to get the advice of a solicitor or accountant when considering the structure for your business. The Companies Registration Office (CRO) has information about these different structures on its website, cro.ie.

Sole trader

It is relatively simple to set up as a sole trader but if your business fails, your personal assets could be used to pay your creditors. Your main legal obligation is that you must register as a self-employed person with Revenue (see ‘Tax and PRSI’ below). If you wish to use a business name you must register your business name with the Companies Registration Office (CRO).

Partnership

This is where 2 or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor. The partners are jointly responsible for running the business and if it fails all partners are jointly responsible for the debt.

Limited company

If you set up your business as a limited company, the business is 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 Companies Registration Office (CRO) and the company reports and accounts must be returned to the CRO each year.

Companies Act 2014

The Companies Act 2014, which replaced the Companies Acts 1963-2013, came into effect on 1 June 2015. Under the Act, private companies limited by shares can be registered as an LTD (private company limited by shares) or a DAC (Designated Activity Company). You can read more about the requirements for different types of companies under the Companies Act 2014.

You can register your business name and file company returns online with the CRO using CORE (Companies Online Registration Environment).

Microfinance Ireland provides loans to small businesses with no more than 10 employees, including sole traders and start-ups. The loans of between €2,000 and €25,000 are for commercially viable proposals. Forms and details of how to apply are available on microfinanceireland.ie.

JobsPlus is an employer incentive which encourages and rewards employers who employ jobseekers on the Live Register.

Under the Trading Online Voucher Scheme vouchers of up to €2,500 may be available to businesses who demonstrate that they have a credible plan for trading online. Further details are available from your Local Enterprise Office.

Credit difficulties

If you have a small or medium business and your application for credit is refused by one of the participating banks you may apply to the Credit Review Office to have your case reviewed. To be eligible for a review your application must have been in writing. Details of the application process are available, here. The fee for the review ranges from €100 up to a maximum of €250.

The Credit Guarantee Scheme aims to encourage additional lending to small and medium businesses who are commercially viable but have difficulty in accessing credit. Under the Scheme eligible applicants will be assisted in obtaining a loan and in establishing a favourable credit history. You can find out more in the information booklet about the Scheme. There are also Customer Frequently Asked Questions (pdf) and eligibility criteria.

If you are having difficulties with your creditors the Chartered Accountants Voluntary Advice service - CAVA (pdf) can give free advice and assistance on your business affairs. Contact your local Citizens Information Service or Money Advice and Budgeting Service (MABS) to see if they offer their services.

Tax

How your business is taxed depends on whether it is incorporated as a company. If it is a company then it is liable for corporation tax. If your business is not incorporated you are considered to be a sole trader and you pay tax under the self-assessment system. Further information on tax is available in our document on tax for self-employed people and from Revenue.

Earned Income tax credit: In 2020, self-employed people can claim an Earned Income tax credit of €1,500 (increased from €1,150 in 2018 and €1,350 in 2019). It is also available for business owners or managers who are not eligible for a PAYE credit on their salary income. If a taxpayer also qualifies for the PAYE tax credit, the combined value of these 2 tax credits cannot exceed €1,650.

SURE tax refund: The Start Up Refunds for Entrepreneurs (SURE) is a tax refund scheme that allows eligible people to get a refund of up to 41% of the capital they invest in starting a business. Under the SURE scheme you may be entitled to a refund of PAYE income tax that you paid over the 6 years before the year in which you invest. You can read the Revenue guide IT15 for further details of the SURE scheme. You can use the online calculator on sure.gov.ie to estimate your potential refund.

Start-up companies: New companies may get tax relief on the first 3 years of corporation tax and the value of the relief will be linked to the amount of employers’ PRSI paid by a company in an accounting period subject to a maximum of €5,000 per employee.

PRSI

If you are self-employed you pay Class S social insurance contributions. A helpful guide is available at this link: PRSI for the Self-Employed (pdf download).

Employing staff

If you are starting up a business and decide to recruit staff you must register for PAYE and PRSI with Revenue. You can find information in our document Employers' obligations in Ireland. The Workplace Relations Commission govern employee rights in Ireland and have produced a guide for employers who are starting a new business with a paid employee (pdf).