Setting up a business
If you are thinking of starting a business there are a number of issues you need to consider. Different supports and regulations apply, depending on your particular situation. You may be employed, unemployed or someone who is coming from outside Ireland to set up a business. This document highlights some of the important information you need to know with links to relevant topics.
The website selfemployedsupports.ie has information on the services and entitlements available if you are self-employed and your income is reduced.
If you are unemployed you may be eligible for the Back to Work Enterprise Allowance (BTWEA) or the Short-Term Enterprise Allowance (STEA). If you are starting a business, you also may get extra supports under these schemes, for example grants for training, market research, business plans and access to loans to buy equipment.
Regional micro-enterprise networks provide free training, mentoring and access to start-up loans to assist umemployed people to set up a business or become self-employed. You can find further information on micro-enterprise networks on the First-Step website.
Nationals of the European Economic Area (EEA) or Switzerland do not need permission to set up a business in Ireland. In general non-EEA nationals must getpermission from the Minister for Justice and Equality in order to set up a business in Ireland. There are also a number of other steps required if you wish tocome to Ireland to set up a business.
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 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 a solicitor or accountant when considering the structure for your business.
Sole trader: It is relatively simple to set up as a sole trader but if your business fails, your personal assets could be used to pay your creditors. Your main legal obligation is that you must register as a self-employed person with the Revenue Commissioners (see ‘Tax and PRSI’ below). If you wish to use a business name you must register your business name with the Companies Registration Office.
Partnership: This is where 2 or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor. The partners are jointly responsible for running the business and if it fails all partners are jointly responsible for the debt.
Limited company: If you set up your business as a limited company, the business is a separate legal entity. If the company gets into debt, the creditors generally only have a claim on the assets of the company. The company must be registered with the Companies Registration Office (CRO) and the company reports and accounts must be returned to the CRO each year.
There is more information about these different structures on the CRO website. You can register your business name and file company returns online with the CRO using CORE (Companies Online Registration Environment).
Business plan and funding
City and County Enterprise Boards provide supports including grants to local businesses that are starting up or in development. You can find information about training and financial supports on their website.
As confirmed in Budget 2012 a partial loan guarantee scheme for companies and a micro-finance loan fund are to be established in early 2012. Under the Temporary Partial Loan Guarantee Scheme the Government will partially guarantee loans by traditional lenders to viable businesses that are at the margins of commercial lending decisions and have difficulties accessing credit. The Micro Finance Loan Fund will provide loans on a commercial basis for start-up businesses and micro-enterprises. In addition, the Government has set AIB and Bank of Ireland targets of €3 billion each in 2011, €3.5 billion each in 2012 and €4 billion each in 2013 for loans to small and medium enterprises (SMEs).
Many small businesses have difficulty getting credit. Your Business Your Bank (pdf) is a guide on getting funding for small and medium businesses. It includes information on how to prepare a bank credit application.
If you have a small or medium business and your application for credit is refused by one of the participating banks you may apply to the Credit Review Office to have your case reviewed. To be eligible for a review your application must have been in writing. There is a bank lending application form on the website of the Credit Review Office. The fee for the review ranges from €100 up to a maximum of €250.
In February 2009 the Financial Regulator published a Code of Conduct for Business Lending to Small and Medium Enterprises (pdf . The Central Bank has published a revised Code of Conduct for Business Lending to Small and Medium Enterprises (pdf) which will come into effect on 1 January 2012.
If you are having difficulties with your creditors the Money Advice and Budgeting Service (MABS) is a free and confidential service for people in Ireland with debt and money management problems. You can find out more in our document on dealing with debt.
How your business is taxed depends on whether it is incorporated as a company. If it is a company then it is liable for corporation tax.
Start-up companies: New companies may get tax relief on the first 3 years of corporation tax. Since 2011 the value of the relief will be linked to the amount of employers’ PRSI paid by a company in an accounting period subject to a maximum of €5,000 per employee. It was announced in Budget 2012 that this tax relief will be available for companies that commence trading in 2012, 2013 and 2014.
Foreign earnings deduction: It was announced in Budget 2012 that a targeted foreign earnings deduction will apply where an individual spends at least 60 days a year developing markets for Ireland in Brazil, Russia, India, China and South Africa, and will incentivise companies to place staff overseas to encourage export sales.
Research and development: in Budget 2012 various improvements to the research and development tax credit were announced.
If your business is not incorporated you are considered to be a sole trader and you pay tax under the self-assessment system. Further information is available in the Revenue booklet IT48 Starting in Business (pdf).
PRSI: If you are self-employed you pay Class S social insurance contributions. There is a guide PRSI for the Self-Employed-SW74 on the website of the Department of Social Protection. If you are an employer and you create new and additional jobs in 2010 and 2011 you may qualify for an exemption of employer’s PRSI for those jobs.
Employment rights and employers’ obligations
If you are starting up a business and decide to recruit staff you must register for PAYE and PRSI with the Revenue Commissioners. You need to know your obligations and duties as an employer and what are the rights of employees. There is a guide for employers who are starting a new business with paid employees on the website of the National Employment Rights Authority. You can also read our documents on topics such as the minimum wage, social insurance (PRSI), leave and health and safety.
There is more information in our documents on becoming self-employed and closing or selling a business. The guide to self-employment, Toil and Trouble (pdf),is available on the Department of Social Protection’s website. You can download a leaflet on starting your own business (pdf) from the website of the Irish National Organisation of the Unemployed.
Your local City or County Enterprise Board provides information, advice, and financial support to small businesses.
Enterprise Ireland is an Irish Government agency which is responsible for the development of Irish industry. It provides advice and financial support to High Potential Start-Up (HPSU) businesses. You can find information about starting a new business on its website.
IDA (Irish Development Authority) Ireland is an Irish Government agency with responsibility for securing new investment from overseas in manufacturing and internationally traded services sectors. It can provide information about setting up a business in Ireland and may provide grants to companies wishing to locate in Ireland or expand their existing operations in Ireland.