Starting a business in Ireland, much like anywhere else in the world, is a long process that involves many steps. There are lots of important things to consider, such as what type of business it will be defined as, how funding will be achieved, and whether or not the business will be offshore or not.
Ireland is a very popular base for people to set up their companies, in part thanks to the highly-skilled workforce and tax laws. Let’s take a further look into the groundwork that goes into starting a business in Ireland, and why so many do it.
Types of Businesses
There are three main types of businesses in Ireland:
- Limited company
- Sole Trader
Each of these serve their own purposes for prospective business owners. Perhaps the most common is a limited company. This separates the individual(s) who are setting up the business from the business itself. Setting up a limited company is one of the safest options, as if the business ever comes into debt, only company assets, rather than personal, can be seized. Anybody who wants to run a limited company must register it with the Companies Registration Office (CRO).
A sole trader refers to an individual who is the only owner of a business, meaning there are no ‘business partners’ and the sole trader in question must be legally registered as self-employed. People can become sole traders either under their personal name or by registering their business name. It’s typical for freelancers and creatives to be sole traders, but there are also a number of small businesses that will have this kind of legal structure.
As for a partnership, this is likely to be the set-up when companies refer to themselves and other founders as ‘partners’. It means that more than one person is responsible for the running of the business, and each of them is liable to pay income tax, pay related social insurance (PRSI), and universal social charge (USC) on their profits.
Setting up an Offshore Business
A popular choice for many individuals who want to start their own business is to set up an offshore company in Ireland. Ireland constitutes the ideal place to build an offshore empire, with it being one of the most powerful and wealthiest countries in the world. Recent statistics have shown that the GDP per capita in Ireland is equal to 701% of the world’s average. On top of this, the Irish government has a corporate tax rate of only 12.5%, which unsurprisingly draws in many international business owners.
Setting up an offshore company in Ireland is not as complicated as it may sound. Businesses need to register their name and nature with the CRO, which can take some time. But once processed, offshore organizations are free to do their dealings in Ireland. There are already many sectors taking advantage of what the country has to offer to offer inspiration for your future business. This includes tech companies like Google and Microsoft, online casinos, of which there are now a wide selection of offshore options, and e-commerce organizations.
Getting Funding for Your Business
To turn daydreams about being a business owner into a reality, funding must be acquired. It is arguably the most important part of setting up a company in Ireland, or anywhere else for that matter. One of the ways that budding businesses can receive financial aid is through applying for grants or loans from various organizations.
The Irish government has a number of schemes available to employers, including the Future Growth Loan Scheme and the Community Services Programme. However, to be successful in acquiring this aid, the business must fit within the parameters of the funding requirements.
Local Enterprise Offices (LEO) across Ireland also provide advice and financial support for those looking to start their own company. For example, they help individuals with sustainability and market research into their business idea, offer the Business Expansion grant for those looking to expand their businesses, and much more.
Many organizations that offer financial help or advice are primarily open to those who already own a business, rather than unemployed people looking to open one for the first time. This is not to say that there are not still options out there, but they require a little more digging to find.
The Benefits of Setting up a Business in Ireland
There are many benefits to setting up a business, offshore or otherwise, in Ireland – not least of which being the favorable tax rates! In addition to low corporate tax (although this may rise to 15% in the near future), the government rewards any start-ups tax relief for three years if their total payable corporate tax is €40,000 or more. The majority of businesses will also be exempt from painstaking audits if they have an annual turnover of €12 million or under and under 50 employees.