Benefits of a Private Limited Company

The main benefit of a limited company in Ireland is the shareholders of the company have a limited or capped liability for the debts of the business.

Directors or shareholders personal assets are not at risk in the event of a winding-up or receivership.

Limited companies qualify for corporation tax at 12.5%, whereas, Sole Trader or Business Name registrations do not.

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 incorporated businesses.

The formation of a limited company is a simple and low-cost method to protect a company name.

If a limited company becomes insolvent and is wound up, only the assets of the company are used to clear its debts. The officers of the company have no personal liability 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), to satisfy the debts, and if this is insufficient you may be declared bankrupt.

Further Limited Liability Benefits

  • The company is a separate and distinct legal entity and is separate and distinct from the individuals who own and operate that company
  • It does not have an objects clause because it has unlimited capacity to carry on any legal business
  • A limited company is owned by the shareholders who in the event of the business failing are protected by the limited liability bestowed upon them
  • A limited company can have 1 director if desired
  • The maximum number of shareholders is 149
  • If the company fails, the shareholders liability is limited to the amount of share capital contributed by them
  • Personal assets of directors and shareholders cannot be used to pay off the company debts
  • A limited company continues to trade irrespective of changes in directors, secretary, management and/or ownership
  • A limited company is entitled to take legal actions in its own name, as opposed to the name of its owners
  • A Private Company Limited by shares is the most widely used type of company
  • Enter legal contracts and own property
  • The company’s name is protected – incorporation of a limited company protects the name from use by another company
  • It has flexible borrowing powers
  • The company continues despite the death, resignation or bankruptcy of management and members
  • The interests and obligations of management are defined
  • Ireland’s Corporate Tax Rate of 12.5% is one of the lowest in the world
  • New shareholders and investors can be easily assimilated
  • Employees can acquire shares
  • Appointment, retirement or removal of directors is straight forward
  • 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
  • Setting up a limited liability company offers just that – limited liability
  • For sole traders and in partnerships, the individuals personal assets are at risk if there is a claim against the organisation
  • A company is a legal form of business organisation. It is a separate legal entity and, therefore, is separate and distinct from those who run it. The company (and not the shareholders) is the appropriate person to be sued in the event that debts are incurred by the company which remain unpaid
  • Scope for a greater company pension scheme to be secured through a limited company
  • A limited company has a greater ability to raise finance by the issue of shares
  • Looking for outside investors, you may be able to take advantage of the tax incentive the Business Expansion Scheme. The scheme provides individual investors with tax relief in respect of investment in certain activities. It also enhances the ability of eligible companies to attract outside investment.
  • Ownership of a limited company can be spread over a greater number of people
  • There may be a greater degree of business credibility of trading through a limited company
  • The rights of shareholders are normally clearly defined and protected
  • Unlike a sole trader or partnership, a Limited Company has a separate legal identity – this means that it is the company itself which owns a property and that it is the company which may sue and/or be sued in respect of the business of the company
  • The company continues to trade irrespective of director or shareholder changes until the company is wound up

The Tax Benefits of a Limited Company

One of the main focus for small businesses will be the maximising benefits to minimise tax, this can be achieved by:

  • Ensuring that your company makes pension contributions
  • Claim the maximum possible expenses allowable under legislation
  • Ensuring that benefits in kind (insurance, health care) are paid out of the company
  • Capital equipment used in your business is purchased and capital allowances claimed

Other Considerations:

  • Keep cash in the business as a loan to the business, so that the company receives interest gross
  • 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 shares to investors. The value of the shares depends on the viability of the company.

The company can also raise finance by means of overdrafts 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.

Protection of your Irish Company Name

Incorporation legally protects the company name against anyone else forming a similarly named limited company either in sound or spelling.

Private Limited Company

We are committed to incorporating your private limited company on time and at a fixed fee, it takes less than 10 minutes to complete our easy online application.

We then prepare and email you the completed documents that will require your signatures and a statutory declaration.

We electronically submit your proposed company’s documents and submit the originals to the Companies Registration Office (CRO).

Registration normally takes 3-4 business days.

We can advise on all aspects of incorporating your company in Ireland.