Business Structures and Books & Records

Business Structures

Both businesses (A) and Private clients (B) may avail of our services 


(A) Businesses trade through two basic types of structures as follows:

  • Sole Traders/Partnerships
  • Limited Companies.

There are advantages and disadvantages to both. Clients often ask which one is better but it depends on each person’s situation and objectives.

Below are some of the general factors to consider.

Limited Liability

  • As a sole trader/partnership you are the business. That is to say that there is no legal distinction between the business and you.
  • A limited company is a separate legal entity to you even though you might own (i.e. be a shareholder) and be a director of the company.
  • Therefore if the business is ever sued and there is not sufficient insurance, your own personal assets (such as house, car, savings, shares etc) could potentially be liable. As a limited company, its liability is limited to the value of the company’s assets.


Compliance

  • As a sole trader, you are obliged to make an income tax return every year and comply with the Taxes Consolidation Act 1997.
  • Companies are governed by company law, currently the Companies Acts which originated in 1963. Each year generally brings new legislation in terms of the statutory requirements of what companies, directors and their shareholders are obliged to do.
  • For a summary of directors responsibilities click on the following link http://www.odce.ie/en/company_companies_responsibilities.aspx.
  • For a summary of shareholders responsibilities click on the following link http://www.odce.ie/en/company_shareholders_responsibilities.aspx.
  • A set of the company’s (abridged) accounts must be filed with the Companies Registration Office once a year together with a form B1 within 28 days of the company’s annual return date (ARD). Click here to find out more about this return http://www.cro.ie/ena/annual-return.aspx


Taxation Rate

  • Sole traders and Partnerships are potentially liable to income tax on their profits at the higher rate (called the marginal rate) currently 41%.
  • Companies are liable to corporation tax on their profits which is currently 12.5%.


Money

  • As a sole trader, the money the business earns is your money. Remember you are liable to income tax on the profits of the sole trade and not the money you take out of the sole trade to live on (called drawings).
  • As a company, the money earned by the company is the company’s money and not that of the directors and shareholders.
  • As a director of a company, you are an employee and therefore Payroll Taxes (PAYE/PRSI/USC) should be operated on money taken from the company.
  • As a shareholder, you will be entitled to a dividend from the company if the directors decide to declare a dividend.
  • There are other different methods to remunerate directors and shareholders all of which will depend on your circumstances.


(B) Private clients

You may not be in business but may wish to speak to us because you

  • have bought and/or sold an investment
  • have received an asset or money by way of an inheritance or gift
  • wish to see if you are entitled to a tax refund as an employee
  • have a rental property or other types of non-business income
  • wish to plan for your children’s future
  • wish to generally review your finances
  • wish to apply for a grant
     

Please contact us to arrange an appointment if you wish to seek specific advice in relation to any of the above.