Starting a new business in Ireland is an exciting venture, but it can also be a daunting experience, especially when it comes to legal and financial obligations. As an entrepreneur, it is essential to understand your responsibilities as a new Limited Company to ensure that you comply with all relevant regulations and avoid any penalties.
At Amergin, we understand the challenges that come with starting a new business, which is why we offer a range of company formation and compliance services to help you navigate the legal and financial obligations of starting a new Limited Company in Ireland.
Here are seven steps to guide you through the key things you need to do to ensure your company is legally compliant:
1- Register with the Central Register of Beneficial Ownership of Companies (RBO)
Under EU anti-money laundering laws, every company operating within Ireland must register its Beneficial Owners with the Central Register of Beneficial Ownership (RBO). A Beneficial Owner is any individual who owns or controls more than 25% of a company’s shares, voting rights, or ownership interest. This also includes any individual who indirectly controls a company through other means, such as a CEO who has natural control over a corporate entity owning more than 25% of a company.
If there is no individual Beneficial Owner, the name and details of the person holding a senior managing official position, such as a managing director, must be registered. Beneficial Owners or their representatives can file their details with the RBO online at https://rbo.gov.ie/ , or Amergin can help you to set up your new company.
The information required to be submitted to the RBO includes personal details such as the Beneficial Owner’s name, date of birth, personal public service number (PPSN), nationality, and residential address. The submission must also include details of the Beneficial Owner’s interest in the company, such as the number of shares they hold, as well as details of their association with the company, such as the date of their appointment as Beneficial Owner.
Failure to register all of a company’s Beneficial Owners with the RBO is a criminal offence that can result in a fine or conviction. Furthermore, if a Beneficial Owner knowingly provides incorrect details to the RBO, they can also be subject to criminal sanctions. If any incorrect information is provided accidentally, the RBO will reject the submission and contact the individual or company directly.
2 -Register for Tax
After incorporating your company in Ireland, it is essential to register for the relevant taxes on the Revenue website before engaging in any trading activities. Seeking advice from an accountant can also prove beneficial in determining the tax registration requirements for your company and ensuring proper tax filings are prepared and submitted.
Some of the taxes that may apply to your company in Ireland include:
- Corporation Tax: Limited companies in Ireland are obligated to pay Corporation Tax on their profits. The tax rate for companies owned and controlled in Ireland is relatively low compared to other European countries, making it an attractive location for starting a business.
- Value Added Tax (VAT): VAT is added to goods and services at every stage of production or distribution. It is worth noting that VAT registration is only necessary once certain thresholds are reached. Therefore, it is advisable to consult with an accountant before registering.
- Relevant Contracts Tax (RCT): This tax is applicable to certain payments made by contractors to subcontractors in the construction, forestry, and meat-processing industries.
As your company expands, employer taxes will become relevant when you start paying salaries or hiring employees. As an employer in Ireland, you must register for and pay employer taxes to Revenue, including:
- Pay As You Earn (PAYE): PAYE is the tax that Irish employees pay on their earnings. As an employer, you are required to calculate and deduct PAYE from your employees’ earnings and remit the payment to Revenue on a monthly or quarterly basis. This includes Income Tax, Universal Social Charge (USC), Pay Related Social Insurance (PRSI), and Local Property Tax (if applicable).
3- Prepare and File Your Annual Return
Once your company is incorporated, it is important to note that you will need to file Annual Returns with the Companies Registration Office (CRO) every year, regardless of whether or not you have started trading yet. Filing your Annual Return can be complex and time-consuming, so it is a good idea to work with a professional accountant to ensure accuracy.
Your first Annual Return is due six months after incorporation, and the CRO will allocate a specific date for your company which you can check on their website. You must file your return within 56 days of this date.
For your first Annual Return, you will only need to file a Form B1 which includes details about your company such as directors, company secretary, and shareholders. This form must be signed by one director and the company secretary, scanned, and uploaded to CORE. Subsequent Annual Returns are due every 12 months after your first return, and you will need to prepare and file abridged accounts (also known as financial statements) along with a Form B1 to CORE.
It is important to note that even if your company has no profit or is not trading, you still need to file your Annual Returns. Working with a professional accountant can ensure you meet all the requirements and avoid any penalties for late or incorrect filing.
4- Prepare and File Your Directors Returns
If you are a proprietary director of an Irish Limited Company owning more than 15% of the company’s share capital, it is necessary to file a self-assessed Director’s Return with the Revenue Commissioners by October 31st every year. This return provides information about your directorial income and any taxes that are due. You must furnish details of all sources of income, including salary, dividends, and any benefits or expenses you received as a director.
It’s crucial to note that your initial Director’s Return is due in the year following your company’s incorporation. Seeking guidance from an accountant or tax specialist can help you ensure that you’re complying with all your obligations and submitting your return accurately and on time. Failure to file your Director’s Return before the deadline can lead to fines and penalties, so it’s essential to be aware of your filing requirements and to meet them.
5- File Your Tax Returns
Filing your tax returns on time is crucial to avoid fines and penalties. Each tax has different payment due dates, so it’s important to keep track of them. Below are some of the most common taxes and their deadlines.
- Corporation Tax: Limited Companies in Ireland are required to file their Corporation Tax return within nine months after the end of their financial year. For example, if your company’s financial year ends in December, your Corporation Tax Return is due by the end of September of the following year. Missing this deadline can result in hefty fines. To ensure that you meet this deadline, you can seek the assistance of an accountant who can prepare and file the return for you.
- Value Added Tax (VAT): Once you have registered for VAT, you must start charging VAT on the goods and services you sell. You are required to pay the VAT collected to Revenue via a VAT Return, usually on a bi-monthly basis. You can choose to manage this process on your own or outsource it to a VAT expert, such as Amergin Group.
- PAYE Returns: As an employer, you must file and pay monthly returns for the PAYE tax liability through Revenue’s Online System (ROS) by the 23rd day of the following month. For instance, if you’re filing for January, you must file and pay by February 23rd if you file and pay online. It’s essential to meet this deadline to avoid penalties. An accountant can also assist you in preparing and filing your PAYE returns.
6- Set Up Payroll for Your Employees
As your business expands, you may require additional personnel, but before you do, several steps must be taken. Firstly, you must register as an employer with Revenue and register for the necessary employer taxes, such as Pay As You Earn (PAYE) and Pay Related Social Insurance (PRSI). If you hire subcontractors in the construction, forestry, or meat-processing industries, you may also need to apply for Relevant Contracts Tax (RCT).
If you are uncertain about the taxes you should register for, it is advisable to seek guidance from an accountant. Once you have employed staff, you must deduct the relevant taxes from their salaries every month and pay them to Revenue.
To simplify the payroll process, you can consider outsourcing it to a payroll provider, such as Amergin Group.
7 – Set Up a Bookkeeping System
Bookkeeping is the process of recording all your business transactions, including invoices and receipts, throughout the year. Maintaining a good bookkeeping system can give you an accurate overview of your finances and make it easier to create your yearly accounts, which can potentially reduce your accounting expenses. We recommend using an online bookkeeping software such as Xero to digitize and store all your financial documents in one place. This eliminates the need to keep boxes of physical receipts and invoices as they can be uploaded to the software digitally.
A reliable bookkeeping system will help you keep track of your financial performance and make informed business decisions.
In conclusion, starting a new Limited Company in Ireland requires compliance with legal and financial obligations. It is crucial to understand the steps involved in starting a new company to ensure that you comply with all regulations and avoid any penalties.
At Amergin, we offer a range of company formation and compliance services to help you navigate the process.
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