What​ ​Are​ ​the​ ​Differences​ ​Between​ ​a  Sole​ ​Trader​ ​and​ ​Limited​ ​Company?    “This​ ​is​ ​a​ ​Sole​ ​Trader​ ​Accountants​​ ​key​ ​question​ ​for​ ​many​ ​of​ ​our​ ​clients,”​ ​says​ ​Accountant​ ​Online  founder​ ​and​ ​CEO​ ​Larissa​ ​Feeney.​ ​“To​ ​put​ ​it​ ​simply,​ ​the​ ​benefit​ ​of​ ​starting​ ​out​ ​as​ ​a​ ​sole​ ​trader​ ​is​ ​that  it​ ​is​ ​quicker​ ​and​ ​easier​ ​if​ ​you​ ​are​ ​doing​ ​it​ ​all​ ​yourself.​ ​But​ ​it​ ​may​ ​cost​ ​you​ ​in​ ​higher​ ​taxes​ ​and​ ​greater  liabilities​ ​for​ ​claims​ ​against​ ​your​ ​business.”As​ ​a​ ​sole​ ​trader​ ​you​ ​will​ ​be​ ​personally​ ​liable​ ​for​ ​the​ ​debts  of​ ​your​ ​business.​ ​In​ ​other​ ​words,​ ​your​ ​personal​ ​assets​ ​(such​ ​as​ ​your​ ​home)​ ​can​ ​be​ ​used​ ​to​ ​settle​ ​any  financial​ ​issues​ ​your​ ​business​ ​is​ ​facing.​ ​This​ ​is​ ​a​ ​risk​ ​many​ ​people​ ​do​ ​not​ ​wish​ ​to​ ​take.   

    “On​ ​the​ ​other​ ​hand,​ ​there​ ​are​ ​a​ ​lot​ ​more​ ​steps​ ​and​ ​regulations​ ​involved​ ​in​ ​setting​ ​up​ ​a​ ​company​ ​in  Ireland,​ ​unless​ ​you​ ​outsource​ ​some​ ​of​ ​this​ ​hard​ ​work.​ ​However,​ ​the​ ​benefit​ ​is​ ​that​ ​you​ ​will​ ​pay​ ​much  lower​ ​rates​ ​of​ ​tax​ ​and​ ​may​ ​be​ ​better​ ​protected​ ​against​ ​liabilities.”    To​ ​make​ ​the​ ​sole​ ​trader​ ​vs​ ​limited​ ​company​ ​decision​ ​easier​ ​for​ ​you,​ S ​ ole​ ​Trader​ ​Accountants​​ ​has  drawn​ ​up​ ​a​ ​summary​ ​of​ ​key​ ​points​ ​of​ ​differences,​ ​advantages​ ​and​ ​disadvantages​ ​for​ ​becoming​ ​a  sole​ ​trader​ ​or​ ​limited​ ​company:    Pros​ ​And​ ​Cons​ ​Of​ ​Setting​ ​Up​ ​A​ ​Limited​ ​Company​ ​In​ ​Ireland    Pros​ ​Of​ ​Limited​ ​Company 

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pros​ ​and​ ​cons​ ​of​ ​starting​ ​up​ ​a​ ​business​ ​as​ ​a​ ​limited​ ​company  How​ ​do​ ​limited​ ​companies​ ​benefit?  The​ ​main​ ​benefit​ ​of​ ​a​ ​limited​ ​company​ ​is​ ​getting​ ​a​ ​corporate​ ​tax​ ​rate​ ​of​ ​12.5%​ ​on​ ​profits.  This​ ​benefit​ ​compares​ ​very​ ​favourably​ ​to​ ​personal​ ​income​ ​tax​ ​rates​ ​of​ ​between​ ​20​ ​–​ ​40%​ ​as  well​ ​as​ ​PRSI​ ​@​ ​4%​ ​and​ ​USC​ ​of​ ​up​ ​to​ ​11%  Personal​ ​tax​ ​benefits​ ​such​ ​as​ ​private​ ​pension​ ​are​ ​better.​ ​This​ ​allows​ ​company​ ​directors​ ​to  put​ ​profits​ ​into​ ​their​ ​pensions​ ​virtually​ ​tax-free  You​ ​have​ ​the​ ​advantage​ ​of​ ​more​ ​credibility​ ​as​ ​a​ ​business.​ ​If​ ​you​ ​are​ ​seeking​ ​business​ ​from  corporate​ ​or​ ​public​ ​sectors,​ ​they​ ​often​ ​insist​ ​that​ ​you​ ​operate​ ​as​ ​a​ ​limited​ ​company  Limited​ ​companies​ ​setting​ ​up​ ​in​ ​Ireland​ ​benefit​ ​from​ ​more​ ​startup​ ​grants​ ​and​ ​support​ ​e.g.  the​ ​New​ ​Frontiers​ ​programme.  Protection​ ​of​ ​your​ ​company​ ​name;​ ​nobody​ ​else​ ​is​ ​permitted​ ​to​ ​use​ ​the​ ​same​ ​name​ ​as​ ​your  limited​ ​company  Limited​ ​liability​ ​on​ ​claims​ ​against​ ​your​ ​business.​ ​Personal​ ​assets​ ​of​ ​directors​ ​or​ ​shareholders  generally​ ​cannot​ ​be​ ​seized​ ​to​ ​pay​ ​off​ ​company​ ​debts.​ ​However,​ ​there​ ​are​ ​exceptions​ ​to​ ​this  e.g.​ ​where​ ​directors​ ​are​ ​deemed​ ​to​ ​have​ ​been​ ​trading​ ​recklessly,​ ​or​ ​if​ ​directors​ ​have​ ​signed​ ​a  personal​ ​guarantee.​ ​It​ ​would​ ​be​ ​normal​ ​for​ ​banks​ ​to​ ​ask​ ​for​ ​a​ ​personal​ ​guarantee​ ​for  overdrafts/loans​ ​and​ ​some​ ​trade​ ​suppliers​ ​may​ ​also​ ​seek​ ​personal​ ​guarantees. 

  Cons​ ​Of​ ​Limited​ ​Company    ● Setting​ ​up​ ​a​ ​company​ ​has​ ​more​ ​steps​ ​involved.  ● There​ ​are​ ​significantly​ ​more​ ​ongoing​ ​statutory​ ​requirements​ ​in​ ​order​ ​to​ ​keep​ ​your​ ​business  compliant.  ● The​ ​formal​ ​company​ ​secretarial​ ​requirements​ ​add​ ​to​ ​the​ ​cost​ ​of​ ​running​ ​your​ ​business​ ​and  closing​ ​it​ ​down  ● A​ ​company​ ​officer​ ​or​ ​board​ ​member​ ​has​ ​far​ ​more​ ​legal​ ​responsibilities​ ​than​ ​a​ ​sole​ ​trader.  ● Disclosure​ ​of​ ​personal​ ​information​ ​and​ ​trading​ ​information;​ ​Once​ ​you​ ​are​ ​a​ ​director​ ​of​ ​a  company,​ ​any​ ​member​ ​of​ ​the​ ​public​ ​can​ ​find​ ​out​ ​your​ ​date​ ​of​ ​birth,​ ​your​ ​home​ ​address​ ​and  information​ ​about​ ​your​ ​business​ ​from​ ​your​ ​published​ ​accounts​ ​in​ ​the​ ​Companies  Registration​ ​Office.​ ​However,​ ​if​ ​the​ ​registrar​ ​of​ ​Companies​ ​believes​ ​that​ ​your​ ​home​ ​address  should​ ​remain​ ​confidential​ ​for​ ​any​ ​reason,​ ​we​ ​can​ ​arrange​ ​this​ ​application​ ​for​ ​you.  ● Even​ ​though​ ​you​ ​do​ ​pay​ ​less​ ​corporation​ ​tax​ ​as​ ​a​ ​limited​ ​company,​ ​you​ ​also​ ​must​ ​pay​ ​tax​ ​on  the​ ​salary​ ​you​ ​pay​ ​yourself​ ​(if​ ​this​ ​is​ ​how​ ​you​ ​plan​ ​on​ ​taking​ ​money​ ​out​ ​of​ ​the​ ​business),​ ​so  the​ ​benefits​ ​here​ ​really​ ​depend​ ​on​ ​how​ ​much​ ​money​ ​the​ ​business​ ​is​ ​generating​ ​and  whether​ ​you​ ​want​ ​to​ ​take​ ​money​ ​out​ ​in​ ​dividends​ ​or​ ​salary.    Contact​ ​Details    Sole​ ​Trader​ ​Accountants  72​ ​Market​ ​Street  Dalton-in-furness  La15​ ​8aa  Website:​ ​Https://www.simplexaccounting.co.uk/sole-trader  Google​ ​Site:​ ​https://sites.google.com/site/soletraderacctsuk  Google​ ​Folder:​ ​https://goo.gl/SXjwDB  Https://www.facebook.com/simplexaccounts 

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