Tax tips
Our People
Tell a Friend

Self-Employed Versus Incorporation? 

Before you start up a new business, you should consider whether to trade using a company or under your own personal identity.

A Company must be registered with the Companies Registration Office in Carlow.

It is important to note that a  company is a separate legal entity from the persons who formed it.

Trading through a company can have some very important advantages for you and your business. These include:  

There is a very low Corporation Tax rate in Ireland of 12.5% . This can rise to a rate of 25% for companies that supply services. This compares favourably with the current combined high rate of over 50% for income tax, PRSI and levies for self-employed taxpayers.  
The low rate of Corporation Tax can allow a company to accumulate wealth in a very tax-efficient manner.  

This is especially relevant if substantial sums are being borrowed to finance investment. 

Very favourable provisions for tax relief on directorsí pensions
The availability (in some cases) of the Seed Capital Scheme. Under this Scheme an employee, who leaves employment and invests in a newly-trading company, may be entitled to claim refunds of income tax paid in previous years. 
Limited liability - The liability of company directors and shareholders in relation to the business of their company is restricted to their investment in the company. It is worth noting that limited liability protection may not apply in certain circumstances. Also many banks and even trade suppliers now often require personal guarantees from the directors.
A limited company identity can often, of itself, lend a certain prestige to a new or growing business. 

On the other hand, you should consider the following matters before deciding to incorporate your business:

The Companies Acts impose strict obligations on company directors to comply with Company Law.

This places important responsibilties on directors to ensure that company affairs are conducted in a proper manner and that returns are made correctly and on time to the Companies Office. 
The possible need for an annual company audit. 

Most small companies can now avail of audit exemption, subject to certain terms and conditions.  

Potential future tax planning difficulties in accessing company funds for personal use.  

If a company owns property, there may be additional tax complications if the property is sold and the company shareholders need to access the sale proceeds for personal use.


The cost of liquidation and/or winding up of a company that has ceased to trade.  

Site Map