If you decide to start a business, the first decision you will have to make will be whether to form a company, or trade as a Sole-trader/Partnership (if more than one person).
There are many factors to consider, but in practice it will come down to the following, given in order of priority:
- Risk/Limited Liability
- Cost Administration
In theory, if you trade via a company, your risk is limited to the amount of share capital you invested (usually €100 in small companies).
However, banks and some large suppliers may seek personal guarantees prior to advancing credit, and in effect this restricts the limited liability benefit. However, the limited liability can still be useful in many worst case situations (so long as the company has traded honestly and filed all of its returns with the companies’ office)
Regardless of whether you start to trade as a company or a sole trader you need to inform the Revenue Commissioners that you have started trading and request a business tax registration number. This is done by us filing the appropriate tax registration on R.O.S.
Generally speaking there is very little cost involved in starting and deregistering as a sole-trader.
However, a company may cost €200- €300 to start, and another €200-€300 to deregister with the Companies’ Office if the company has no asset or liabilities or has not traded..
It is not unusual for people to start off as a sole trader then incorporate the business at a later stage.
Registration of a business name is obligatory if any individual or partnership or anybody corporate carries on business under a name other than their own true names.
Its purpose is to make public the identities of those individual(s), partnerships or corporate bodies being the legal entity behind the business name.
Specifically, registration of a business name is required if:
An individual uses a business name which differs in any way from his/her true surname. It makes no difference whether the individual’s first name or initials are added. So registration is required if, for example, Mr. John Doherty traded as Doherty Builders but not if he traded as Doherty or John Doherty).
A company uses a business name which differs in any way from its full corporate name.
To register a business name, we can submit an electronic form with the CRO at our first meeting. (The company office Filing fee is €20)
The registrar issues a certificate of registration for each business name registered. A copy of the certificate of registration must be displayed in a conspicuous position:
- In the case of a firm or individual, at the principal place of business and in every branch, office or location where the business is normally operating.
- In the case of a body corporate, at its registered office in the State and in every branch, office or place where the business is normally operating.
- You will need the certificate of registration together with I.D in order to open a bank account in the name you intend trade as. Companies will also require a signed copy of the memorandum and articles of association (see section on company formation).