Which legal form of business to choose in Ireland?
You are thinking of setting up a business in Ireland you can choose between three possible structures : Sole trader, Private limited company and Partnership. Discover how to register a company in Ireland and the characteristics of each legal form of business.
How to register a company in Ireland
The way in which a businessman can open a business in Ireland is regulated by the Companies Act. The law on business companies in Ireland was amended in 2015. Its legal framework has been modernized and adapted to meet the needs of all entrepreneurs today.
Among the amendments to the Irish Companies Act, one fact concerns the replacement of limited liability companies with new types of corporate structures. Local and foreign investors can also set up other types of companies, such as unlimited companies, partnerships or sole traders.
3 possible structures for a business in Ireland
Sole trader is the easiest way to set up a business in Ireland and own your own business. As a sole trader you are legally liable for the business that’s why you don’t have any protection if the business fails or have debts. If the business goes bankrupt, all of your assets (business and personal) can be used to pay off your creditors
A partnership is an agreement between two or more people to set up a business together. If they go into a business that fails, each partner is liable for all losses. In this type of company, a "partnership act" describes the obligations of each partner.
Foreign investors wishing to start small businesses in Ireland can register as sole trader with the Companies Registration Office in Ireland or can find a partner and set up a partnership. They can create either a general partnership or a limited partnership.
The Companies Act also allows them to set up a limited liability company, which consists of the structure of a partnership but with the advantages of Irish legal persons.
Private limited company
A private limited company is a legal entity separate from its shareholders. In the event of company bankruptcy, shareholders are only responsible for the amount remaining due on the share capital they subscribe.
The private company limited by shares is the most popular and chosen legal entity for investors who want to register a limited liability company. The regulations regarding the registration of a private company limited by shares (LTD) are described in Part 2 of the Companies Act. If the company has a commercial activity and carries out import and export operations, it must complete the EORI registration steps in Ireland.
An Irish LTD can be incorporated under a constitution, instead of drawing up the articles of association and memorandum, it can have only one director, its shareholders have limited liability for the debts of the company and it is incorporated into the share capital.
Other features of Irish LTD are as follows:
- the manager and the directors of the company must have the legal capacity to exercise this function, they must therefore be at least 18 years old;
- the manager of the company must be a natural person, legal persons cannot be appointed directors;
- the LDI must appoint a company secretary who must also be of the minimum legal age of 18;
- the LTD is not required to hold an annual general meeting and can be represented by a maximum of 149 members;
- when the company is dissolved, the liability of the members is limited to the value of the shares they hold in the company;
- the LTD can be incorporated by a single shareholder, in which case the LTD will be designated as a single member company;
- it can benefit from an audit exemption when its turnover is less than 8.3 million euros.
It is highly recommended that you consult an accountant or solicitor before choosing an ownership structure for your business