Decide the structure first
Almost everything else follows from this decision, and it is the one people make last.
| Sole trader | Limited company | |
|---|---|---|
| Set-up | One Revenue registration | Incorporation with the CRO, a few working days |
| Liability | Unlimited — your personal assets | Generally limited |
| Tax on profit | Income tax, USC and PRSI, up to about 52% | 12.5% corporation tax on trading profit |
| Annual filings | Form 11 | CT1, B1 and financial statements |
| Accounts on public record | No | Yes |
| Running cost | Low | Materially higher |
Moving from sole trader to a company later is routine. Unwinding a company is not. If you are genuinely uncertain whether the business will work, starting as a sole trader and incorporating once it does is the lower-risk sequence — unless liability or client requirements force a company from day one.
Register with Revenue
- Sole trader: register for income tax on Form TR1, or through eRegistration on ROS.
- Limited company: register the company for corporation tax on Form TR2, separately from your own registration.
- Register for employer PAYE before you pay anybody, including yourself through a company.
- Register for VAT when you pass, or expect to pass, €42,500 for services or €85,000 for goods in any continuous twelve months.
Registering for a tax you do not need creates filing obligations you then have to meet. Registering late for one you do need creates liabilities. Register for exactly what applies, at the point it applies.
Register the name
A sole trader trading under anything other than their own exact name must register a business name with the CRO on Form RBN1 within one month of first using it. A company registers its name as part of incorporation.
Neither gives you ownership of the name. A registered business name is a record of who trades under it; a company name stops another company being registered identically. If the name has commercial value, look at trade mark registration with the Intellectual Property Office of Ireland, and check domain and social handle availability before you commit.
Open a business bank account
Start this early. It routinely takes longer than the incorporation did, and the business cannot really operate without it.
Irish banks will want the certificate of incorporation, the constitution, proof of address and identity for every director and beneficial owner, and a description of the business and its expected turnover. Businesses with non-resident directors should expect additional scrutiny and should allow weeks rather than days.
Insurance and legal obligations
- Employer's liability insurance is required once you have employees.
- Public liability insurance is expected by most commercial clients and many landlords.
- Professional indemnity insurance is required for regulated professions and by most corporate clients for consultancy work.
- Register as a data controller obligations under GDPR if you handle personal data, and have a privacy notice that reflects what you actually do.
- Check whether your activity needs a licence — food, alcohol, transport, childcare, financial services and several trades do.
Set up records before you need them
Revenue requires records supporting every figure to be retained for six years, and a company also has a statutory duty to keep adequate accounting records. Directors can be held personally liable where that duty is not met and the company later becomes insolvent.
- Use proper accounting software from day one. Reconstructing a year from a shoebox costs more in fees than the software costs.
- Keep purchase invoices, not just bank statements. A bank line is not a valid VAT invoice.
- Record mileage as you travel, not annually from memory.
- Separate the tax reserve into its own account as income arrives.
- Reconcile monthly so that problems surface while they are still small.
State supports worth knowing about
Ireland has a dense support landscape, and most of it is undersubscribed by exactly the businesses it is designed for.
| Support | What it does |
|---|---|
| Local Enterprise Office | Grants, training and mentoring for businesses with fewer than ten employees, through 31 offices nationwide |
| Enterprise Ireland | Support for scaling, export-focused and manufacturing businesses above LEO thresholds |
| Start-Up Refunds for Entrepreneurs (SURE) | Income tax refund for someone leaving employment to start a company, based on prior PAYE paid |
| Section 486C start-up relief | Reduces corporation tax for a new trading company's first five years, capped by employer PRSI |
| R&D tax credit | 35% of qualifying expenditure, repayable in cash even if loss-making |
| Microfinance Ireland | Loans to businesses that have been declined by a bank |
Start with the Local Enterprise Office. The trading online voucher, the business start-up training and the mentoring are practical, and the office knows which national schemes you would actually qualify for.
The tax bill nobody plans for
A sole trader's second year is the one that hurts. On 31 October, or the ROS date in November, you pay the balance for the previous year and preliminary tax for the current one. That is close to two years of tax in a single payment.
A company faces the same structure in a different shape: preliminary corporation tax is due before the accounting period has ended, not nine months after it.
Move a fixed percentage of every payment received into a separate account from the first invoice. It is the least sophisticated piece of financial management available and the one that prevents the most damage.