Setting up a limited company, what are the advantages?

FillSpectre

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I am being told that setting up a limted company as an IT contractor is the best way forward but I am not sure about it all.
As far as I can see you could end up paying income tax on top of coporation tax. What am I missing?
Do you have to stay restricted to one type of business type e.g. must remain an IT contractor and do property management? I want to try setting up a review website as well.

P.s. I do have an accountant but I am bit unsure of him.
 
It depends on a lot of things....... your accountant should have gone into detail with you based on your own circumstances.
Such a question can't really be answered here without full details of all your circumstances.

If you are unsure about your accountant - think about changing accountants, or at least getting a second opinion from another accountant, having given all of the facts.
 
Some Advantages of setting up a Limited Company are as follows:

The company name is protected – Setting up a limited company prevents another limited company from using your company name

Setting up a limited liability company offers just that - limited liability - As long as the business is operated legally and within the terms of the Companies Acts, directors or shareholders personal assets are not at risk in the event of a winding up or receivership.

For sole traders and in partnerships, the individuals personal assets are at risk if there is a claim against the organisation.

The company has flexible borrowing powers.

The interests and obligations of management are defined.

Ireland's Corporate Tax Rate of 12.5% is one of the lowest in the world

A limited company has a greater ability to raise finance by the issue of shares and also under the Business Expansion Scheme.

Shareholders looking for outside investors to invest may be able to take advantage of the tax incentive Relief for Investment in Corporate Trades, otherwise known as the Business Expansion Scheme (BES). The Scheme provides individual investors with tax relief in respect of investment in certain manufacturing, service, tourism, research, constructing and certain music recording activities. This can substantially reduce the cost to an investor or his investment. It also enhances the ability of eligible companies to attract outside investment. (Source: Revenue Commissioners)

New shareholders and investors can be easily assimilated and the rights of shareholders are normally clearly defined and protected.

Taxation:
Sole Traders pay income tax. Sole traders income is taxed as the proprietors' income, regardless of how much profit is retained as working capital, and interest on loans to the business is taxed as their income. Directors of Limited Companies pay income tax and the company itself pays corporation tax on company profits, and company profits earned are retained in the company.

Shareholders in a limited liability company are only liable to lose the share capital they subscribe.

There may be a greater degree of business credibility of trading through a limited company.

A company is a legal form of business organisation. It is a separate legal entity and, therefore, is separate and distinct from those who run it. The company (and not the individual shareholders) is the appropriate person to be sued in the event that debts are incurred by the company which remain unpaid, despite demand.

Scope for greater company pension scheme to be secured through a limited company.

....just a few thoughts.
 
FillSpectre

Also meant to reply in relation to how many activities your company can carry out. For Incorporation purposes only, the Companies Registration only allow two distinct activities when setting up your company. This is if your company is set up through a registration agent who can normally register a company in 3-5 working days. If you opt to manually submit the company for incorporation, you can have as many different activities as you like, but it will take approx 5 weeks to incorporate.

My advice would be to set up your company with two different activities. Once the company is set up, you can then add as many different activities on as you like. These activities are outlined in the Memorandum of Association which a company formation agent or your accountant will be able to prepare for you.
 
I know the OP only wanted to know the advantages of setting up a limited company but some of the disadvantages are set out here I'm sure there are many more
 
Anyway the bit I am a bit confused on is the profit and income aspects. If I pay corporation tax on profit how do I get this profit without paying income tax on top of it?

I didn't know you could add activities later on. Do accountants usually charge for such changes?
 
My accountant told me I could claim some things I was unsure I checked with another accountant. That is two accountants telling me I can claim my mortgage. Now I am sure. I was also reassured by fellow contract workers.

I wanted to ask two specific questions to a general place that might know.
One question has been answered. Either answer the remaining question or leave the thread.
 
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