T
The catch is that the 100k that you leave in the company and pay corporation tax on, is the companies money, you will have to pay tax when you take the money out of the company.I have started a business in the services sector about a year ago. It's doing well, has very low overheads (really only premises rental, which is quite cheap), thus most of my takings are profit which is taxable.
My accountant has said that I should form a company. He says that if I were to earn 130,000 Euro per annum gross, that I would pay myself 30,000 and be taxed normally on that and the rest would be taxed at 12.5%. This would leave me paying about 20,000 Euro tax as opposed to about 50,000 (all very rough figures!).
Where is the catch??? How do I access the profits, what do I do with them and are they taxed again before I get my stick paws on them? It all seems to be too good to be true that I simply walk away with the profits!
Apologies for my financial ignorance.
Do not set up a company under any circumstances until and unless you have a good understanding of all the issues. If in doubt, stay as a sole trader until and unless it suits you to switch.
The people who do best out of companies are accountants themselves, who charge high fees to look after / audit them etc.
there is usually no need for a liquidation to take place when closing down a company.
Forming a company can generate big tax savings for many individuals
I have found that the fees charged by accountants to be higher than the fees charged to sole traders ....but I have only a limited numbers of cases to base this opinion on. I know of one company director who was charged about four thousand euro alone just for advice on how to get rid of the limited company....a four or five page letter .... no wonder some accountants are so well off.and it is ludicrous to say that their accountants benefit most from this.
My understanding is that if a company has assets eg property, then for the company to be closed down for the directors to personally own the assets the company must be put in voluntary liquidation.
I have been pointing out for a number of years on AAM that:It can also gererate big tax liabilities for many individuals eg in the example above Capital Gains Tax has to be paid by both the company and the individuals.
Does this surprise you? Limited company accounts standards and formats must conform with the requirements of the Companies Acts. Also they must be filed annually with the CRO. There is no such requirement for sole trader accounts. For these reasons alone, their preparation will involve considerably more work and therefore will be more expensive.I have found that the fees charged by accountants to be higher than the fees charged to sole traders
Its a free market out there and consumers can choose expensive or better-value advisors depending on their preference. Just because one accountant charges four grand for advice doesnt mean that all do. Just because one car costs €200,000 doesn't mean that all do. Just because one house costs €10m doesnt mean that all do.I know of one company director who was charged about four thousand euro alone just for advice on how to get rid of the limited company....a four or five page letter .... no wonder some accountants are so well off.
I might have a go- The leglislation will not be that different.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?