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Sole Trader - Single Member Limited Company

  • 02-02-2010 4:49pm
    #1
    Spr1ngsteen
    Registered Users, Registered Users 2 Posts: 52 ✭✭


    Hi there,

    I'm in the process of changing over from being a sole trader to a single member limited company. I have registered and set up my company with a company formation website, and I have spoken with the Revenue office about which Taxes I must register for and which forms I've to fill out (TR2).

    I am a contractor, providing a service to a company. Recently they have told me that they can no longer employ me as a sole trader, that I must be registered as a Limited Company in order for me to keep my job (new company guidelines).

    I have a few questions though about the running of the company once it is set up, and I hope someone here may be able to help.

    I am confused as to how I pay myself for starters. I am the only shareholder in the company and I'm the only person working in the company. Does this mean that whenever I get an invoice paid into my account that I can just withdraw the money? Or do I have to pay myself a salary or something?

    Also, is it imperative for me to set up a bank account in the name of the Company, or can I continue to get money paid into a personal account (as I did when I was a sole trader)?

    Clueless on this type of thing, any advice greatly appreciated


Comments

  • #2
    Bookkeeper09
    Registered Users, Registered Users 2 Posts: 266 ✭✭Bookkeeper09


    Hi there,
    You will need to set up a new bank account in the company name.
    With regard to the salary, you will need to register the company as an employer with you being the employee. Your paye/prsi will be payable monthly/quarterly.
    Also bear in mind that your company's first annual return will be due 6 months after your date of Incorporation. If this is returned late you will lose your audit exemption and need to have your accounts audited


  • #3
    Spr1ngsteen
    Registered Users, Registered Users 2 Posts: 52 ✭✭Spr1ngsteen


    Thanks a million for taking the time to respond Bookkeeper. Cleared things up for me. :)

    Cheers


  • #4
    wishful thinker
    Closed Accounts Posts: 78 ✭✭wishful thinker


    Hi Spring,

    Firstly, when you change over from a ST to a company, there are possible tax implications that arise - such as Stamp Duty, CGT. This depends on what your ST business comprises of when you change over to the company. There are exemptions available but it is dependent on criteria.

    Secondly, you as director (and in this case shareholder) is a employee of the company. Which as stated already means you would operate PAYE/PRSI. There are ways to simplify the filing requirements.

    FYI, as an employee of the company, you are entitled to have a company pension. The positive aspect of this is that it reduces your company's taxable profit, you invest in your pension and there is no personal tax due on this benefit that the company pays on your behalf.

    Also note, you may know of the Corporation Tax Exemption that was introduced in 2009 and extended for 2010. This in most cases will not apply when you are an existing business and incorporating in 2010.

    If you have any questions...pm me


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