Setting up as a sole trader is the easiest way of establishing a business. However, sole traders can only be registered to individuals; if you find yourself in a situation where you are registering a business with another individual or indeed, more than one other person, the business can be registered as a partnership.
In order to set up a sole trader or a partnership, a TR1 Tax Registration form must be filled out and sent to the Revenue Commissioners. On this form, businesses can register for income tax, register as an employer, and also register for VAT and RCT (Relevant Contracts Tax), which mainly relates to businesses in the construction industry. Registration takes roughly four weeks but Revenue may request further information if the business is registering for VAT. In some cases, Revenue may ask for a copy of a lease of premises if the business is renting, for example.
The deadline for submission of tax returns for sole traders and partnerships is October 31st each year so if you register your business in 2011, your submission of income tax return is due on or by October 31st 2012.
In some instances sole traders or partnerships can register a business name so that they can trade under that name – for example, Mary Smith T/A Dublin Photographers. To register a business name, a form must be sent to the CRO (Companies Registration Office) or alternatively, it can be filled out and sent online at www.cro.ie.
Once you have registered with the CRO, the next step is to open a bank account for your company. This is a relatively straightforward process and is similar to setting up a personal account in that the bank will require photo id (a driving license or passport) and proof of address (a utility bill dated within three months). If the business is trading under a registered business name, the bank will require copy of the business name registration as supplied by the CRO.
For sole traders and partnerships it is vital that proper and up-to-date accounts and records are maintained from the day you start your business – if the books aren’t in order from the beginning, it tends to be much more difficult to prepare annual accounts, which could possibly lead to higher fees come tax return time.
For new businesses, it is always a good idea to meet with your chosen accountant and have them explain the records that need to be kept on a daily basis. If after the accounting process has been explain to you and you still don’t understand it, chances are your accountant isn’t explaining it properly, which could land you in serious trouble with Revenue when it comes time to file your accounts.
A minimum of two people are required to set up a limited company, which, like a sole trader or partnership, can be registered through the CRO.
It is important to remember that once the limited company is established, it becomes a separate legal entity and that members’ liability is limited to the amount of share capital each has subscribed to. In all cases, members become directors of the company so it is crucial that everyone involved is aware of their legal duties, responsibilities, and obligations as a company director.
To register a limited company for VAT and PAYE and other taxes, a TR2 Tax Registration form must be forwarded to the Revenue Commissioners. This can only be done after the company has been set up through the CRO. Once you have received your company number, registration for all tax heads can take up to four to six weeks.
Setting up a bank account for a limited company is slightly different than if you were applying as a sole trader or partnership. As well as proof of identification and address from two directors, the bank will require your certificate of incorporation and certified copies of both your memorandum and articles of association.
For a limited company, financial statements and a corporation tax return must be prepared each year. Financial statements have to be in format as prescribed by the various companies’ acts and filed with the CRO, normally within nine months of the accounts year end.
How can DCA Accountants and Business Advisors help?
In most cases, anyone setting up a business will need to be advised of their options. Our experts will take you through every aspect of setting up the business you have in mind and recommend the specific structure that suits your requirements.
We can also submit and follow up with all documentation required for the Revenue Commissioners and the CRO, as well as assisting with opening bank accounts, and ensuring that all other issues are addressed, such as ensuring your business has appropriate insurance so you can start trading.
Once the company is up and running, DCA can provide a full bookkeeping service to ensure that your monthly VAT and PAYE returns are forwarded to Revenue on a timely basis, which will help you to avoid interest payments and penalties.
Above all else, however, our expert full service accounting package for SMEs ensures that you, the business owner, can concentrate on getting your business off the ground safe in the knowledge that your accounting records are compliant and maintained properly.
DCA Accountants and Business Advisors