Registering a limited company & legal obligations.

xha1r

Good morning,

Having just turned 18, it's time to put my plan into practice. I've got the business plan near completion and have a reasonable amount of finance in place; enough to get me to a point where the business should be able to pay for itself.

The one thing on my mind, the one thing I'm having doubts in myself about, is the legal obligations etc. Firstly, what forms to file (I've got the A1 and RBN1B beside me and will get to work on them in the morning). Then when we launch and start doing business, what will I legally be required to do etc.

So, my questions to the highly intelligent and very knowledgeable people of boards.ie are;

1. What forms do I need to file to the CRO for a start-up, and also to register for required tax (as I didn't see the form for this on the CRO site).

2. When I start business, what am I legally entitled to do? For example, after receiving payment, the business bank account, filing of accounts etc.

Any response is much appreciated as usual.

Kind regards,
Jonathan.

homeOwner

First of all think seriously about whether or not you need to have a limited company. There are lots of rules and regulations for limited companies that have to be followed and unless your business is earning enough for you to live on, the costs and hassles are not going to be worth it. Most useful thing about LTD company is that you have limited liability, if this is not a concern then i'd stay clear. Alternative is sole trader, just file a company name with CRO and thats it you're done.

Anyway, back to your questions:
1. to set up you need form A1 plus the fee (€100?) plus Articles of Memorandum and Association. Unless you have an accountant in your family you are going to have to pay someone to do up these for you...its basically a load of jargon about what your company is going to do etc.....

2. You need at least 2 directors to form a LTD company, pick someone you trust obviously (your mum?) , but you can have the bank account in your own name with you as the sole person allowed to sign for cheques etc...

3. you need a bank account in the name of your business. this is seperate to your own personal bank account.

4. you need to be audited every year (you can get an audit exception after filing 2 years of accounts if company has turnover less than 200K??? i don tknow the exact figure).

5. you need to keep good accounts and have a set of accounts filed with CRO every year, most people get an accountant to do this. accountants usually charge around 1500 for this plus VAT, and they will audit for you too.

6. there are a bunch of other forms you need for revenue for your own personal income and your companies, dont have list but call revenue and they will tell you. (B1, CT1, Form 12, VAT3, P60...)

7. if you are going to charge VAT, then you need to register, again check with revenue how to do this.....

8. you will have to file every month a P30 (PAYE/PRSI form for salary taken) and if you are VAT registered a VAT form every two months.

Thats all i can think of before I've had my coffee.

Good luck.

PRman

Fair play to you home owner - thats a detailed reply!! If you decide to go down the road of a limited company you are much better off going to a company formations agent who can set up your company in a week. www.companyformations.ie are a good bet. I set my company with them not so long ago and their service was excellent. Just remember that there is a lot of red tape with a company, but you will be taken more seriously. Good luck ; )

MartMax

just few points i would like to mention and maybe repeating the other replies :

- there are many formation agents out there who can help you setting up companies but i suggest if you are getting an accountant probably the best deal is to have all round package (formation, audit/accounts prep, personal tax);

- accounts need not be audited even if it is first year of trading, provided the exemption criterias are met for the year in concern (and previous accounting year if it is not first year of trading);

- nothing can go wrong with limited companies (annual returns, tax returns, etc) as long as you know-how-to and properly planned. if the company is audit exempted, the exemption is revoked should you fail the annual return on time.

- a limited company may have one shareholders but requires 2 directors (as described by homeOwner); a company secretary is also required.

- regarding VAT, it can be simple and complicated, depending on what business are you in, different class of items and services are charged different rate and maybe VAt exempt. you need to make sure that you are registered and make return accordingly and correctly;

- regarding VAT and other taxes like PAYE/PRSI and RCT returns, Revenue has introduced simpler way of doing returns to choose the appropriate frequency of making returns and payments;

If you think limited company is a difficult route, consider going sole-trader or partnership. The main drawback is once taxable profit passes the tax band, you will be liable a higher income tax rate. Having said that, corporation tax rate is generally 12.5%.

Best of luck, plan and run the business seriously; recipe of not going all wrong!

Mart

zappb

nice answers guys, one quick point, the audit exemption threshold has been increased to 7.3million euro.

Remember:
Directors Form 12; (personal tax return),
Companies Office Returns (6 month return and annual return)
Corporation tax returns.
Abridged Accounts (Balance sheet + notes)

Eurorunner

homeOwner wrote:

unless your business is earning enough for you to live on, the costs and hassles are not going to be worth it.

What level of earnings would make it worthwhile?

homeOwner

Eurorunner wrote:

What level of earnings would make it worthwhile?

Thats like asking how long is a piece of string.
It really depends on your circumstances.

An accountant will charge around 1800 + 21% VAT per year to do your accounts (some charge more). Alot more if he also does your monthly bookkeeping. At the end of the day it is your responsibility to make sure all the necessary forms etc are filled in and that is hassle (I do all my own accounting and form filling and it is tedious). You have to keep on top of the P30 & VAT returns etc.... and this is on top of running the business.

You also need to know what forms are to be filed and this requires reading endless publications from CRO and revenue and keeping on top of the budget changes. It depends on how busy you are with the business as to whether or not you have time to be doing this.

If your company does not make enough money for you to live day to day and pay the bills after tax, I would say you are wasting precious time and money doing the above. Dont under estimate the amount of time it takes to do the bookkeeping/legal side of things. That's time you could be spending on the bussiness. But that is just my opinion. If you can live off the cash you earn and support your family, then you might not miss 2K+ for fees or hours and hours of time you spend on the accouting side of things.