Sole trader vs Company Ireland

ragar

Hi,

I'm a salaried worker who's planning to start a business in Ireland and I have some doubts that you guys maybe can help me to solve before deciding going as a sole trader or establish a company.

What's the best option for keep being a salaried worker and start a business in Ireland?

What if I want to keep being a salaried worker and run the new business but I don't want to appear as a owner or administrator of the new business? Is there any legal formula to operate in such way? or should I establish the new business under the ownership of a third party?

Thanks for any help you may provide.

Regards.

Eoin

This might be a better forum to ask: http://www.boards.ie/vbulletin/forumdisplay.php?f=106

The sole trader option is probably a bit less hassle, and might be a good option for the time being. Not sure what the downsides are - liability might be one.

Felix Culpa

The problem with being a sole trader is you don't have the same flexibility with business expenses and tax.

(Correct me if I'm wrong)

The corporate tax rate in Ireland is 12.5%, whereas your personal rate can go up to 50%. Say you need to buy machines, telephone plans or even a salaried worker; it'll be more cost effective to run as a limited company.

jimmii

Felix Culpa wrote: »

The problem with being a sole trader is you don't have the same flexibility with business expenses and tax.

(Correct me if I'm wrong)

The corporate tax rate in Ireland is 12.5%, whereas your personal rate can go up to 50%. Say you need to buy machines, telephone plans or even a salaried worker; it'll be more cost effective to run as a limited company.

With a LTD the same rates of tax still apply for money they pay themselves. The 12.5% is for retained profits which if they were then to pay themselves would essentially have been double taxed.

This post was ignored in EB&M as the OP is seemingly wanting to hide the fact that it is them running the business which is never a good sign.

Eoin

jimmii wrote: »

This post was ignored in EB&M as the OP is seemingly wanting to hide the fact that it is them running the business which is never a good sign.

Could be purely to hide it from the OP's employer.

jimmii

Eoin wrote: »

Could be purely to hide it from the OP's employer.

Yeh in which case it is likely to be in their contract so at best its breach of contract.

ragar

Eoin wrote: »

Could be purely to hide it from the OP's employer.

That's correct.
I don't want that the fact of running a business affect to my current situation.
I'm trying to create a business to test the option to quit my job in a middle term if everything goes well.
The new business will not affect or interfere with my current position, but I don't want my employer finds out that I'm trying to create a new income sources that eventually might replace my current one.
I'm not trying to hide this fact to my employer because I think that I'm doing something contrary to the company, but as a way to find alternatives for the future and don't create false alarms at job.

Eoin

That's understandable - but your wording in the first post made it sound a bit dodgy!

Maybe try googling limited company vs sole trader, and see which one makes more sense. Here's one result that shows some of the differences: http://blog.sage.ie/blog/index.php/sole-trader-limited-company/

ragar

Thanks everyone for the replies.

Limited company seems to be a most appropriate option. I don't know how will this affect to my tax status if I have incomes from two sources...I'm afraid that it will have an high impact most likely.
I suppose that's possible to receive just a symbolic salary -or no salary- from the LLC and keep living from my current salary for a time. Am I right?

Thanks!

Stheno

ragar wrote: »

Thanks everyone for the replies.

Limited company seems to be a most appropriate option. I don't know how will this affect to my tax status if I have incomes from two sources...I'm afraid that it will have an high impact most likely.
I suppose that's possible to receive just a symbolic salary -or no salary- from the LLC and keep living from my current salary for a time. Am I right?

Thanks!

NO. You are not right as the earnings from the LLC will then be taxed as company profits, it's an extremely complex area of taxation

You can either post in Business and hope this time they answer you, do a search there, or seek out a tax accountant to advise you

jimmii

ragar wrote: »

Thanks everyone for the replies.

Limited company seems to be a most appropriate option. I don't know how will this affect to my tax status if I have incomes from two sources...I'm afraid that it will have an high impact most likely.
I suppose that's possible to receive just a symbolic salary -or no salary- from the LLC and keep living from my current salary for a time. Am I right?

Thanks!

The most likely outcome for any new business is very little profit so at the start it's likely there will be little issue you just need to declare the additional income in a yearly filing. In the long term if you continue with a prsi income and an additional income that grows its sensible to hire an accoutant.

Stheno

jimmii wrote: »

The most likely outcome for any new business is very little profit so at the start it's likely there will be little issue you just need to declare the additional income in a yearly filing. In the long term if you continue with a prsi income and an additional income that grows its sensible to hire an accoutant.

That's a very simplistic view imo

If the Oh is thinking of setting up something that is offered as a service as opposed to a product that they sell on, there are differences in terms of insurance requirements.

There are also differences in terms of VAT required to be charged, and OP needs to know those

OP needs to seek proper advice

jimmii

Stheno wrote: »

That's a very simplistic view imo

If the Oh is thinking of setting up something that is offered as a service as opposed to a product that they sell on, there are differences in terms of insurance requirements.

There are also differences in terms of VAT required to be charged, and OP needs to know those

OP needs to seek proper advice

Without a doubt professional advice should always be sought. I am assuming this is a micro business ebay/amazon market style not a proper business. If the OP is planning on running a proper business then a forum probably isn't the best place to look for advice on this!

Mrs OBumble

Moved from Work and Jobs



OP I do something similar as a sole-trader, IMHO this is adequate for the risks I face, especially as I am well under the VAT threshold. Don't have an accountant yet, because the cost of their fees (upwards of E400/year from what I hear) would outweigh the amount of tax I could save by claiming for things that are too complex to do myself (portions of rent, electricity, etc).

Stheno

Mrs OBumble wrote: »

Moved from Work and Jobs



OP I do something similar as a sole-trader, IMHO this is adequate for the risks I face, especially as I am well under the VAT threshold. Don't have an accountant yet, because the cost of their fees (upwards of E400/year from what I hear) would outweigh the amount of tax I could save by claiming for things that are too complex to do myself (portions of rent, electricity, etc).

400 a year would be dirt chap, double it for future reference

goz83

Stheno wrote: »

400 a year would be dirt chap, double it for future reference

I have paid less than this. If you keep neat records, instead of throwing a shoe box of receipts at your accountant, then the fees will be low enough.

goz83

goz83 wrote: »

I have paid less than this. If you keep neat records, instead of throwing a shoe box of receipts at your accountant, then the fees will be low enough.

I can't edit the above, so wanted to add that when I paid less than 400, it was for preparing and filing a tax return for a limited company with small levels of trading.

I now require the assistance of an accountant once again, because I have two businesses, one of which is a small earner, which pays a small amount to me and the other is taking off. The accountant will be costing 2k + vat per year. That doesn't include vat returns, but I plan to have my Personal Assistant do payroll and vat returns anyway. This is for a limited company. The cost for a sole trader was 750 + vat.