Starting and running a business in Ireland
OTHS has compiled a list of all the most frequently asked questions when starting a business in Ireland.
If you have more queries please get in touch with us on +353-1-624 1344 or email firstname.lastname@example.org
- Do I need to write a business plan to start a business?
A business plan is a road map and it enables you to put your idea out on paper. It starts by defining the products or services you are going to offer and covers the topics as a target market or niche, competitive edge, competitor’s review, marketing strategy, staffing requirements, operations, funding requirements, and financial projections. It is a living document and it may change as you start to operate and work with your customers and other stakeholders.
Free download the business plan template –
- What should be the Business Legal Structure?
You can set up a business as a sole trader, as a partnership or as a limited company. The type of structure you choose depends on the following:
- the kind of business you are running,
- with whom you will be doing business and your attitude to risk.
- It is advisable to get the advice of an accountant when considering the structure for your business.
- What should I consider when choosing a Business Structure?
Sole Trader is relatively simple to set up, they don’t take a wage, any money use for personal reasons is called drawings. Income Tax, PRSI, and USC need to be paid on that income, it could be taxed up to 52%. If your business fails, your personal assets could be used to pay your creditors.
A partnership is when there are 2 or more people agree to run a business, they are jointly responsible for running the business if it fails all partners are jointly responsible for the debt.
The limited Company business is a separate legal entity. If a company gets into debt the creditors generally only have a claim on the assets of the company. Directors can pay themselves a salary, contribute to a pension through the company, and take dividends.
How to register a business in Ireland?
Registration with the Companies Registration Office (CRO):
Sole Traders – they need to register with the CRO if they want to trade under a different name than their own name.
Limited Company – All the Limited Companies need to be registered with the Companies Registration Office (CRO) and if there are any changes in the company details they need to be registered with the CRO.
OTHS can set up your Business Name Registration for Sole Trader or Limited Company with CRO in the easiest and quickest way so for expert advice please contact our Team.
Registration with Revenue:
Sole Traders need to register as self-employed with Revenue.
Limited Company needs to register for Corporation Tax with Revenue.
Sole Traders and Limited Companies pay taxes to Revenue but the type of tax depends on their activities. It is important to register your business for relevant taxes, it also means that your business needs to file the tax returns to Revenue.
- Do all businesses need to file tax returns to Revenue?
All businesses need to file tax returns to Revenue, even though they are not trading or making any profits. It is important to file the tax returns to Revenue in a timely manner to avoid fines, interest, and penalties. If you want to stay in compliance with Revenue get in touch with us and we will make sure all your tax returns are filed on time.
- Do all businesses need to file returns to CRO?
Limited Companies need to file an annual return (Form B1), whether trading or not, to CRO. It must be delivered to CRO no later than 56 days after its effective date. If delayed it potentially resulting in the company incurring late filing fees and losing any entitlement to claim audit exemption for two years.
- Do I need a physical office for business in Ireland?
If you want to start a business in Ireland you don’t need a physical office. You can work from home, in a coworking space, or use your home address to set up a company. You can outsource to an address service provider if you don’t want to show your home address on marketing material and invoices.
- Do I need to open a Bank Account for my business?
It is best practice to have a business bank account but it is not required to be necessarily in Ireland. Irish banks require one face-to-face meeting to open a bank account, it is difficult for you to open a bank account if you are not a resident in Ireland. If you want to open a business bank account in your resident state instead, you may need your company documents to be apostilled.
- How do I employ staff, set up and process payroll?
Sole Trader or Limited Company you need to register with Revenue as an employer before you can hire staff. You can do these registrations yourself or outsource these services from OTHS.
If you don’t want to hire and pay your staff initially, you may not need to do the employer registration. If you are a Company Director and process your salary you need to register your company as an employer with Revenue.
Once you hire an employee, you need to set up and process your staff’s payroll through payroll software and do the payroll submission to Revenue on or before the payment date.
Give us a call on +353-1-624 1344 or email email@example.com and we will help you to choose the right business structure for your new venture or if you want to change from Sole Trader to Limited Company.
Employees Facing Tax Liability for 2020
Thousands of workers who benefited from Pandemic-related State Subsidies in 2020 can expect some unwelcome news, as Revenue moves to collect unpaid taxes arising from the schemes.
So, if your Employer benefitted from the Temporary Wage Subsidy Scheme (TWSS), you will be more than likely to face a Tax liability. Here are some Q&As to help you understand your tax liability.
- When Will You Know If You Will Face A Tax Liability For 2020?
The Preliminary End of Year Statement for 2020 will become available in your inbox on Revenue’s myAccount service from Friday, 15th January 2021. This will detail any balance of Income Tax and USC underpaid/overpaid by you for 2020, according to Revenue’s records, as an employee who received payments under the TWSS or the COVID-PUP.
- Why Will Employees Have A Tax Liability For 2020?
When the TWSS was paid out to Employees, it was not subject to tax deductions through payroll. This Income, however, is taxable so therefore this will give rise to tax liability at the year-end of 2020. TWSS payments are subject to Income Tax and USC, while COVID-PUP payments are subject to Income Tax only.
- What Options Do Employees Have If They Have A Tax Liability For 2020?
Employees will have a few options if they do have a liability:
- Pay off the shortfall in full through their own funds;
- Reduce liability by unclaimed tax credits such as those on medical expenses;
- Hope their Employer will pay it (see details further on); or
- Agree to an adjustment of their tax credits for four years from January 2022 to gradually pay off the liability – this depends on whether the liability is below €6,000 – see below.
- Tax Liability Below €6,000
- Tax Liability Below €6,000
Any underpayment of Income Tax or USC of less than €6,000 in 2020 may be paid in full or partially by a taxpayer, or, the remaining liability will be collected, interest-free, by reducing the employee's future tax credits from 2022 over a maximum period of four years.
- Can Employers Pay the Liability on Behalf of Employees?
Revenue has confirmed that they will facilitate Employers who want to pay the 2020 Income Tax and USC liabilities of Employees, which arose due to the TWSS, without the application of Benefit-in-Kind (BIK).
The Employer must engage directly with their Employees on the matter and agree to the mechanism to pay the liability involved. The Employees’ Preliminary End of Year Statement (noted above) should assist in determining the amount of underpaid Income Tax and USC due to the TWSS.
To pay the liability, the Employer may:
- Provide funds to each employee to meet their Income Tax & USC liabilities, as shown in their Preliminary End of Year Statement. Each employee must then pay their liability; or
- Amend their last payroll submission of 2020 to add additional ‘Income Tax’ paid and ‘USC’ paid that equals the liability shown on the Preliminary End of Year Statement. This must be done for each employee concerned.
Please note, for both these options, each Employee must complete their 2020 Income Tax Return.
Further, this facility, enabling an employer to make payments on behalf of employees, will only apply up to the end of June 2021. Revenue has advised that it is very important for Employers to retain documentation of their arrangements and agreement with employees.
- Does the Employer Receive Tax Relief If They Pay Employees Tax Liability?
Employers paying amounts to settle these employee liabilities will not receive a deduction for these payments under Section 81 (2) (a) TCA97. These payments would not be regarded as wholly and exclusively incurred for the purposes of the Employer’s trade or profession. Furthermore, Section 81(2)(p) specifically denies a deduction in respect of any taxes on income.
While employees can ignore the bills for the time being by not logging into their accounts on ROS, Revenue says it will issue letters to all those who are due refunds or face tax bills, towards the end of the first quarter.
- Summary of What Will Happen In 2021:
Revenue will make an Employment Detail Summary (EDS) and a Preliminary End of Year Statement (PEOYS) available to you and view liabilities/refunds due if any;
- If you wish to claim additional credits, reliefs, or expenses, such as health expenses or declare other incomes you will then need to complete your 2020 Income Tax Return;
- Revenue will then generate your Statement of Liability confirming your tax position;
- Any overpayment of Income Tax or USC will be refunded to the bank account on record for you. Please ensure your bank account details are correct on myAccount.
- Depending on how much is actually owed, any underpayment may be:
- Paid in full or partially through RevPay on myAccount;
- the remaining liability will be collected, interest-free, by reducing your future tax credits from 2022 over a maximum period of four years (less than €6,000).
- Becoming an Employer in Ireland? It is easy with OTHS.
If you are thinking to employ people in Ireland. Welcome to OTHS Your Trusted Payroll Partner. You are in safe hands.
Let us explain what you need to know, how the system works, the best options for you and your employees. We are ready to become your Payroll Department and ensure to provide the full services for a payroll operator without even using a desk in your office.
We provide services to Irish residents and Non-resident, and UK companies. We offer full service to start-ups who need to understand their obligations and employees’ entitlements.
We work with employers to ensure their payroll operates compliantly, efficiently, and economically. Our main focus will be to pay your employees the right amount at right time.
The following service will be required:
- Registration with Revenue as Employer
- Create a structure of payroll with our advice
- Benefits of non-cash setup
- Set up bank logins for payment
- Setting up required reports to ensure the accuracy
- Managing bank rights and authorizations
- Process of payroll with minimum efforts on every pay date
OTHS will provide you peace of mind as an employer so you can focus on day-to-day business activities.
Feel free to contact OTHS for outsourcing payroll from 1 employee to 1000 employees at firstname.lastname@example.org
- How does the outsource Payroll Service work?
In OTHS, we tailor our services to fulfill your needs and minimize your involvement in the process. All you have to do is to forward any payroll changes to our specialized team members on designed templates especially for your business or load the information on a secure online portal specially created for clients. Once we get the timesheets/hours your payroll is done and you can leave the rest on us.
Our experienced team members will take care of registering your business as an employer, entering your periodic details, updating amendments to employee details, calculating the correct amount of tax liabilities for employers and employees. We will ensure to set up other deductions or additional payments as well.
We offer full services to manage the transfer of funds from your online bank accounts, we will provide you payroll reports with details of Tax deductions, hours analysis, and Gross to the net.
In addition to that, we can provide a nominal journal customized to your accounts system and financial management team to satisfy their requirement.
All you need to click on the email link email@example.com.
- How do I know my payroll will be processed correctly?
Here is OTHS, we have a team of specialists and segregation of duties between them. One will process, cross-check and then his work will be examined by more experienced team members to ensure payroll is not only processed correctly but there are maximum tax efficiencies in there.
All team members in OTHS are qualified through the Irish Payroll Association (IPASS). They are fully aware and up to date with the payroll calculations and employment laws. Payroll specialists regularly do manual calculations checks to ensure systems are correct. For processing, the most up-to-date payroll software is used and any updates are installed immediately.
All these practices, experience, and expertise ensure that your payroll is in the best hands. After all that you get an opportunity to review your payroll before it is finalized ensuring you remain in control. Our payroll team members are available to answer any queries and work with you to ensure your payroll will meet all requirements by Revenue, WRC, and Social welfare when required.
(Link: view existing clients testimonials all verifiable)
- Concerned about being in control of your payroll.
Absolutely. Just because you outsource your payroll does not mean that it is out of control. As we process your payroll, we discuss alterations, probable matters, or prospects for optimization with you.
Before we finalize the transfer of any funds to employee bank accounts, we entail confirmation from you that you are content for us to proceed. We will only accept changes to payroll with verification from you or your authorized representative. All data sent by e-mail is encrypted going to and from our offices.
OTHS teamwork with you, in partnership, to ensure the most efficient outcomes with transparency throughout the process.
OTHS have experts on hand should you need assistance in any of the above areas, contact us today on +353-1-624 1344 or email firstname.lastname@example.org