Setting up limited company ?

deadl0ck

Hi,
A friend of mine has sarted contracting and she needs to set up a limited compnay.

What's the easiest way to do this ?

If she need to do this quickly can't she get a pre set up company ? If so, any idea where you "Buy" these off the shelf companies ?

Any web links / info would be great !!

Thanks !

Mr. Presentable

www.cro.ie

It can take a couple of weeks to get VAT registration, but a company can be formed in a couple of hours if you call into the CRO in person and have your cheque book with you. IIRC it costs €30.00 to form a company.

steve_O_

This may be of interest:

http://www.askaboutmoney.com/showthread.php?t=10306

Mr. Presentable

You *can* get a formations company to do it for you. Or you can as easily do it yourself at the CRO (they are there to help you, and won't intimidate you) and keep the €370 you saved for something useful........

democrates

If you want to know where to buy a shelf company, search Golden Pages with the term 'Company Formation' and select your county from the list.

Ask them when the first/next annual return is due for the shelf company, if you get a shelf company just recently formed it will give you more time before you need to file.

From CRO

A new company is exempt from the obligation to annex accounts to its first annual return, which return is required to be made up to a date not later than six months from its date of incorporation. It is, however, required to annex accounts to its second annual return, which return is required to be made up to a date not later than 18 months from its date of incorporation, and filed within 28 days. Many new companies will have difficulty in having accounts ready for filing 19 months post-incorporation. One option available is to extend the company's second ARD to a later date to obtain the optimum gap of nine months between its financial year end and its ARD.

Make sure they know it is for a single member company, again from CRO:

A single member company is a private company limited by shares or a guarantee company having a share capital, which is incorporated with one member, or whose membership is reduced to one person. However, the company must have at least two directors and a secretary. The sole member, if he/she so decides, can dispense with the holding of General Meetings, including Annual General Meetings (AGMs). However, certain modifications laid down in the European Communities (Single-Member Private Limited Companies) Regulations 1994, have to be made. Also the accounts and reports that would normally be laid before the AGM of a company still need to be prepared and forwarded to the member.

ArthurDent

As a contractor does she need to set up a limited company?
Many contractors go down the route of self employed - lot less hassle in terms of paperwork etc. Downside don't have limited liability protection a company offers. she should get some professional advice before she decieds what avenue to go down. Many accountants will offer a free one-off consultation to help see what options suits a person best.

democrates

I agree ArthurDent, a lot less hassle without the 'ltd'. I nearly became an IT contractor just before y2k and asked the very question as I had already been a sole trader, but the guy in the agency said companies won't deal with contractors unless they have limited liability.

I don't know whether that was true or if he was just closing down an enquiry he couldn't be bothered following up. In fairness, any contractors I know are ltd. It didn't make much sense, I'd have thought greater liability would have been more attractive to them doing the hiring, since they could take your house if you fail to deliver. Is there some other angle on this? I guess seek professional advice is definitely the best advice.

Mr. Presentable

Get Ltd liability. A sole trader is personally responsible for his company debts.
Also, having worked for one myself, I am slightly wary of sole traders. Mine was a fly-by-night.

StickyMcGinty

deadlock, i work in the ODCE, if you want booklets on "the powers and responsibilites of Directors and secretaries" PM me your name & address. if you set up a company with limited status its a good idea to read ALL necessary booklets on odce.ie

masterK

I was an IT contractor for several years and was set up as a sole trader, none of the companies I worked for had any objections to that.

As for liability, if you're a contractor working in the offices of an IT company what possible liabilities or debts could you possibly have?

democrates

I was an IT contractor for several years and was set up as a sole trader, none of the companies I worked for had any objections to that.

As for liability, if you're a contractor working in the offices of an IT company what possible liabilities or debts could you possibly have?

Good question masterK, I was assuming there were potential liabilities for contractors based on the existence of contractors insurance, from a uk example I just got on google http://www.coulsonpritchard.com/itcontractorinsuranceintro.asp:
"As well as reward and great satisfaction through personal achievement such duties attract responsibility and significant risk. Professional Indemnity Insurance insures you against your error, neglect, act or omission which could cause financial loss to your principals."

And from the Rescon Guide to Contracting :
"As a company is a separate entity from its directors, no director can be held personally liable for the debts of the company, unless a personal guarantee is given in any case."
Would be nice if they gave examples.

I've never heard of any individual irish IT contractor being sued, maybe there's some protection in the contract? The insurer is going to sell what they can of course, so that may just be scare-mongering.

So perhaps in practice it's not a big issue, nevertheless if it was a case of spending a few hundred euro for peace of mind that my home is not on the line, I'd personally choose not to take the risk.

Merrion

An IT contractor can face significant costs if they breach their contract - for example if unable to work through illness - and for this reason I would recommend going Ltd liability route. Not much more hassle really.

BobBuckley

I have been a sole trader IT contractor for the last 3 years with no issues. There are a load of things to consider. If you earn more or less than a certain amount you will pay more or less tax as a LTD company, as a sole trader it costs very little to close down your business, and your accounts will be much simplified, a sole trader may not be accepted by some companies as you could be entitled to employee benefits after 11 months, however you can offset this by invoicing them in a certain manner. You need professional advice relating to your circumstances before making this decision, not opinions from know it alls.

RicardoSmith

When I was a contractor it was the agencies and not the companies that required to to operate as a limited company. I suspect that liability is only partly the issue. I was told that there can be an issue about PRSI liability if you are contracting for an extended period of time to the same client. I have no idea if this was more of the agency "spin" though.

democrates

BobBuckley wrote:

You need professional advice relating to your circumstances before making this decision, not opinions from know it alls.

Laudible contribution until the last few words.

I don't think deadl0ck who asked the questions or those who replied are deluding themselves that boards threads are equivalent to professional advice. No-one expects professionals to give free consultations here, though it would be great if they'd do a little pro-bono work with ads for their firms in their sigs.

Anyhow, it is expected therefore that people express opinions based on their own learning and experience, just as you did Bob, surely that doesn't warrant any insult?

AARRRGH

As far as I know, the amount of tax you'll pay will be significantly less if you are a sole trader than a registered company (assuming you will be earning under 120k.)

For the benefit of limited liability I'm not sure if it's really worth it in your case (it's prob unlikely you will ever be sued - companies do not like going to court.)

Also, I read something recently (can't remember the details - sorry) that directors of limited companies are not as protected as they used to be.

BobBuckley

democrates wrote:

Laudible contribution until the last few words.

I don't think deadl0ck who asked the questions or those who replied are deluding themselves that boards threads are equivalent to professional advice. No-one expects professionals to give free consultations here, though it would be great if they'd do a little pro-bono work with ads for their firms in their sigs.

Anyhow, it is expected therefore that people express opinions based on their own learning and experience, just as you did Bob, surely that doesn't warrant any insult?

Statement wasn't intended as an insult - and I included myself in the dismissal of know it alls. I am just suggesting he would be mad to take advice from anyone other than an accountant. He will need an accountant at some point anyway so might as well get one from the start.

chump

dublindude wrote:

As far as I know, the amount of tax you'll pay will be significantly less if you are a sole trader than a registered company (assuming you will be earning under 120k.)

Provided you're earning around this level, that you've no intention to reinvest large sums back into your 'business', liability isn't a significant issue (size of jobs, liklihood of failure, money paid up front etc.), significant sums (hardly at 120k p.a anyway) aren't immediately needed to be invested into pension funds, and you want admin costs kept to a minimum it's a no-brainer to go for the sole-trader option.
Also with a ltd company taxation issues will be terrible for someone wanting to draw a monthly wage, never mind the general hassle of the whole thing...

dublindude wrote:

For the benefit of limited liability I'm not sure if it's really worth it in your case (it's prob unlikely you will ever be sued - companies do not like going to court.)

Agree with this big time.

dublindude wrote:

Also, I read something recently (can't remember the details - sorry) that directors of limited companies are not as protected as they used to be.

You're right, if it can be proven they were negligent. I don't believe many (any) cases have been taken yet - and certainly would not be against a small ltd. company - would not be worth the expense and unless you're rolling in the dough why would they bother?

PRman

I've heard this debate come up a few times - limited company or sole trader! It depends on the line of business and the projected turnover but most contractors would go down the route of a limited company. Just make sure your returns go in on time. I would recommend using a formation agent try www.companyformations.ie I used them before and I thought they were excellent. If you need any PR for your business pm me!! Best of luck

MrPudding

Any contracts I have gone for the only option has been either work through an umbrella company or my own LTD. I was talking with three agencies here in Ireland and two in the UK, none of them would dela with a sole trader.

I went LTD. I was worried about the whole tax thing but to be honest it is a piece of p1ss.

MrP

ifah

there are also other benefits to working through a ltd company as opposed to Sole Trader - what is your martial status and the employment status of your partner (for instance).

Also Mileage and Travel Expenses allowances vary between ltd and sole trader - ltd can claim at civil service rates for travel to/from work (if based outside of your office which is usually your house if IT contractor) ie for 1.6l car - first 4000 miles @ €1.26 per mile and reduced after that.

for sole trader - only claim actual cost - ie cost of petrol per mile (€0.0x per mile based on your miles per gallon)

RainyDay

ifah wrote:

Also Mileage and Travel Expenses allowances vary between ltd and sole trader - ltd can claim at civil service rates for travel to/from work (if based outside of your office which is usually your house if IT contractor) ie for 1.6l car - first 4000 miles @ €1.26 per mile and reduced after that.

It's not that simple. It doesn't really matter where your registered office is located. Revenue will not allow expenses for travel between home and your normal place of work (typically your client office).

qwertz

Maybe somebody can shed some more light on this:

At least TWO Directors are required - one of which must be a resident in Ireland (See Notes).

When you form a LTD company or buy one ofd the shelf, and this is specifically in relation to a non Irish resident director, what kind of identification is required by law or do you just give the details and that's that? Thanks in advance!

Our man in Havana

You just give the details. You could say anything.

GerardKeating

RainyDay wrote:

It's not that simple. It doesn't really matter where your registered office is located. Revenue will not allow expenses for travel between home and your normal place of work (typically your client office).

Not sure about that, there was a court case a few years ago about this, milage expenses are allowed when you travel between different places of work, and if you work at home, then travel from home to client is allowed.

Revenue lost the case, but of course they make have had the law/regulations since then to close this "loophole".

gerard

RainyDay

GerardKeating wrote:

Not sure about that, there was a court case a few years ago about this, milage expenses are allowed when you travel between different places of work, and if you work at home, then travel from home to client is allowed.

If you genuinely work at home, and travel to different clients on occasion, then you might get away with it. If your company just happens to be registered at your home address, but you work 9-5 M-F at another office location, you won't get away with it.

MudPuddles

Can someone (maybe VinnyL ?) help with this query:

A Private, limited company, has 2 directors, and no other officers or employees. Each has 50% share holding. One also holds the position of secretary.

In the event of a deadlock on a matter which requires majority agreement - for example, one director wants things done one way, the other wants another - how is this resolved?

Does the person acting as Secretary have the deciding vote? Is such a situation covered in any part of the Companies Acts?