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Sole Trader or LTD.

  • 06-03-2011 4:16pm
    #1
    l8rm8
    Closed Accounts Posts: 6 ✭


    I'm an 18 year old college student and want to set up a small business. I have to decide whether to become a sole trader or limited company. I heard sole trader is easier to become and less hassle although can have its dangers. I have no assets except a couple of hundred euro. What is the dangers of becoming a sole trader in this case? I'd be aiming to start the business in the marketing sector.


Comments

  • #2
    Voltex
    Registered Users, Registered Users 2 Posts: 1,581 ✭✭✭Voltex


    At its most basic ...the sole trader has his arse and shirt on the line for what the company owes in the event the company goes pop. The principles of a Ltd company simply depart with thier Capital and the Compnay takes on its own legal being.

    Anyway...you have no assets really to lose, so Id say for ease of doing business you will be a sole trader.


  • #3
    T1977
    Closed Accounts Posts: 44 ✭T1977


    A sole trader is a good option when you first start out if you are small and don't have much to lose. As your business grows it may be more tax efficient to convert to a limited company as well as for security reasons.
    In the recent Finance Bill the government extended the scheme wherby limited companies newly registered and starting to trade would be exempted from Corportation Tax for 3 years provided their liability was less thean €40k but there were some other criteria applying to this exemption.


  • #4
    Lantus
    Registered Users, Registered Users 2 Posts: 3,027 ✭✭✭Lantus


    Financially as a sole trader you are personally responsible for any debts or losses that need to be repaid. As a Ltd company it is the company that is liable for any debts. However, dont be thinking, thats great a ltd ompany means I have no risk. As a director you would be responsible for paying that debt back and even if the company went bust you would still have any loan to be repaid and it would never go away. In either case you can declare yourself bankrupt but thats not really a good idea.

    There are tax benefits to a ltd company but they only kick in once your earning big money (in excess of 50k PROFIT) a year. After that you can do all sorts of wonderful things with pensions and tax deductable stuff to massage the system.

    Remeber you can transfer from a sole trader to a ltd company at any time.


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