This is a question we are often asked, Sole Trader or Limited Company – what best for me?
The answer very much depends on what your business is as there are some pros and cons for both.The simple table below shows some of the differences between the two. We hope this helps you decide which option might be best for your business.
To conclude, sole trader route is the cheapest route but it may not be the best! You can however, take this route initially and then form a limited company should the need arise.
Sole Trader |
Limited Company |
|
| Costs associated with structure | Cheaper for sole trader | More expensive for a limited company |
| Accounting Fees | Cheaper for sole trader | More expensive for Limited companies |
| Annual filing Fees | n/a | CRO fee €20/40 (companies office) |
| Annual Tax Returns | Form 11 Return to Revenue(income tax return) | CT1 return (Corporation Tax)And B1 to CROForm 11 returns for directors also. |
| Tax rates | Similar to PAYE but you lose your PAYE tax creditI.e. profit €33,800 at 20% with balance at 40% | Corporation tax rate 12.5.Director’s salary at PAYE levels with no PAYE tax credit. |
| PRSI Rates | 4% with a minimum of €500 | No PRSI on company profits, PRSI on directors pay at 4% |
| Employer | If it is just yourself then there is no need to register as an employer | Directors are employees so you must register and file P30 / P35s etc. (extra cost). |
| Liability for debts | Unlimited – your personal assets can be | Limited to the company only. |
| Cessation | Simple to cease business | Expensive to cease business with CRO |
| Disclosure of Accounts | Public does not get to see accounts as they are only filed with Revenue. | Public can access summary accounts if the pay small fee with CRO. |
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