This article is written for business founders and legal professionals who need to understand the various corporate structures available in Ireland.
Key Takeaways
Limited companies are the most appropriate structure for 99% of businesses in Ireland, offering flexibility and liability protection.
Sole traders face unlimited personal liability but benefit from simplified compliance requirements.
Companies Limited by Guarantee (CLGs) are ideal for non-profit organisations, removing the profit distribution element.
Designated Activity Companies (DACs) are preferred for businesses with specific objectives or operating in regulated sectors.
Investment vehicles like UCITS and ICAVs offer specialised structures for collective investment with different regulatory requirements.
Section 110 companies provide tax-efficient structures for securitisation and structured finance transactions.
The choice of business structure should align with the company's purpose, liability concerns, regulatory requirements, and tax considerations.
Frequently Asked Questions (FAQs)
What is the most appropriate business structure for a start-up in Ireland?
For most start-ups, a private company limited by shares (LTD) is the most appropriate structure. It provides limited liability protection, flexibility in ownership, and relatively straightforward compliance requirements. However, if the business has highly specific purposes or operates in a regulated sector, a DAC might be more suitable.
How difficult is it to change from a sole trader to a limited company?
Converting from a sole trader to a limited company involves incorporating a new company, transferring assets and operations, and establishing new banking and tax arrangements. While not prohibitively complex, it requires careful planning, particularly regarding tax implications, transfer of contracts, and potential stamp duty considerations. Professional guidance from an accountant and solicitor is highly recommended.
What are the main differences between a Company Limited by Guarantee and a Limited Company?
The main differences are that a Company Limited by Guarantee (CLG) has no share capital or shareholders, instead having members who guarantee to contribute a nominal amount if the company is wound up. CLGs typically reinvest profits rather than distributing them, making them suitable for non-profit organisations. Limited companies, conversely, have shareholders who can receive dividends and typically operate for profit.
What ongoing compliance requirements do Irish companies face?
Irish companies must file annual returns with the Companies Registration Office (CRO), prepare financial statements in accordance with appropriate accounting standards, maintain statutory registers, hold Annual General Meetings (unless dispensed with), comply with relevant tax filing and payment obligations, and adhere to industry-specific regulatory requirements where applicable. Directors have ongoing fiduciary duties and must ensure the company maintains proper books of account.
.svg)
