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Advantages of a Limited Company Ireland

Are you wondering why or how to start a limited company in Ireland?

Ireland is an ideal place to start a limited company for various reasons, the main being that we have one of the lowest corporate tax rates in the world!

Limited Company Set Up Ireland

When first establishing your company in Ireland, it isn’t uncommon for businesses to start out as a sole trading entity and incorporate as a limited company.

The sole trader business model attracts many entrepreneurs because of the freedom that it offers. It’s fairly easy to establish, manage and shut down a sole trader because there are less startup costs involved.

However, when compared to a limited company, there are various downsides to a sole trading business model that have new business owners shifting their mindset.

What are the Advantages of a Limited Company?

Register a company in Ireland with StartSmart and reap the various benefits of a limited company establishment:

#1. Lower Tax on Profits

As we previously mentioned, Ireland has one of the lowest corporate tax rates for limited companies in the world.

Unlike sole traders, who are taxed at the individual income tax rate of up to 50%, limited companies are subject to pay 12.5% of their profits on corporate taxes.

Keep in mind that a lower tax rate is only beneficial if you plan to make a profit. Year after year, if your business is breaking even and barely surviving, a limited company isn’t a favorable business model for you.

This is a decision that you should analyze long before committing to a business model.

#2. Lower Risk & Liability

Business owners are fully responsible for any risks or debts incurred as a sole trader.

Before establishing your company as a sole trader, you’ll have to sign various contracts that’ll legally bind you to your business.

On the other hand, limited companies are viewed as separate entities that hold their own accountability. Therefore, your personal assets are protected from the company, and you can only lose what you invest.

If your business is a high-risk company, you should consider starting as a limited company to avoid any risks with leases, employees, customers, and so on.

#3. Higher Reinvestment Potential

Since limited companies have a lower tax rate, they have a higher potential for growth. Unlike sole traders, a limited company isn’t spending a hefty chunk of its profits on taxes and can afford to make significant reinvestments.

#4. Protected Pension

Limited company directors are allowed to deduct their pension contributions from the company profits before deduction of tax. Therefore, the employer pension contribution is higher as it is regulated by more generous pension funding rules.

#5. Viewed as a Reliable Business Model

Consumers and suppliers view limited companies as more reliable, credible and professional businesses when compared to a sole trader.

#6. Access to Significant Funding Programs

A Limited company can obtain financing from banks and other funding programs much easier than a sole trader.

#7. Multiple Owners

Ownership of a limited company can be spread over multiple individuals. In this case, there are clear, legal ownership regulations for each founder.

Multiple owners generally leads to more shareholders and investments for the business.

#8. The Business Continues On

Even if a limited company’s management and/or shareholders pass, resign or declare for bankruptcy, the business still continues on.

How to Set Up a Limited Company Ireland

There are countless benefits to establishing yourself as a limited company in Ireland.

While you can make an educated guess on which business model is better for you after reading through our article, you should still do further research before committing to a final decision.

Don't hesitate to reach out to StartSmart if you have any questions, comments or concerns about limited companies in Ireland.

Our professionals would be happy to assist you during your startup journey!


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