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WHAT TYPE OF BUSINESS STRUCTURE WILL YOU SET UP?

Sole Trader, Partnership, Limited Company-Which One? By Wendy Merrigan

· Top Stories,Inform-Investigate

"Know your short and long-term financial goals and use this as the basis for deciding what type of entity you want to use for YOUR BUSINESS."

So, which business structure suits you and your business?

Various options include; sole trader, partnership or limited company.
There are various advantages and disadvantages for each of these. The more important question to ask is; what you want to get from your business? What are your business goals and objectives?
There are differing tax implications for the set up of each of these types of business.
However, tax rationale I believe, should NOT be the deciding factor. What the business is to achieve and the goals of the business are the starting point, how this is then done in a tax efficient manner is the next step.

Which business? Chartered accountant Wendy Merrigan writes for Self Starter Magazine April 2018

SOLE TRADERS

If you trade as a sole trader, you operate a business. Your business name is registered with the CRO however, it is not protected and can be copied, unless you have protected it using a trademark.
If something went wrong within the business and your insurance did not cover it, potentially your personal assets may be at stake (your home or your savings).

Definitely, something to consider as you grow your business.

PARTNERSHIPS

When working in partnership with others (whether you have a formal partnership or not) what many people don’t realize is if things go wrong and the business has liabilities, you will personally be liable for all of these (if your partner/partners cannot take care of their share).

LIMITED COMPANY

A limited liability company means just that. You as a director of a company will have ‘limited liability’ (unless there are fraudulent issues arising). The limited company is a separate legal entity to you as a business owner. Therefore, personally, there is a lot less at risk if something does go wrong.
Setting up a limited company could cost a few hundred euro. But having a limited company also means there are additional reporting obligations. You must have annual accounts prepared and filed with the Companies Registration Office (CRO) and file a company tax return as well as filing an income tax return.

This article is not written in a legal format. For full information on your own business or structure of your business and tax advice, please seek professional advice specific to your own needs. The article above is only a guide note.

The writer has no legal responsibility to any reader for specific actions taken on the advice of the above.

Chartered accountant Wendy Merrigan in Self Starter Magazine 2018

How to make the decision?

The cost of compliance is definitely a factor when deciding how to structure your new business.
Always discuss costs with your financial advisor, accountant or bookkeeper up front so you never have any nasty surprises. Requesting your accountant to do additional work or asking for a lot of assistance (on top of your compliance work) without discussing their pricing structure first might shock you when you receive a bill for the time cost involved.

If you don’t take time out regularly to work ‘on your business and not in it’, you will find you are constantly busy but maybe not feeling in control of the direction or growth of your business. In order to stay focused, it’s great practice to take time out at least once a month (if not twice) and review your targets, what’s most important for YOUR business action wise and ensure that gets done first.

Wendy Merrigan is a Chartered Accountant with a practice in Dublin. She enjoys working with business owners setting financial goals, targets and putting action plans together the insure targets are reached.

If you wish to talk to Wendy or attend one of her workshops, email wendy@williamsmerrigan.ie and set up a call or meeting.

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