Overview: setting up a business

When you become self-employed it means you are carrying on your own business rather than working for an employer. Much of the process of preparing for self-employment is about starting a business.

Different supports and regulations apply, depending on your particular situation. You may be employed or unemployed. You may be 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.

I am not an Irish citizen – how can I set up a business in Ireland?

If you are from the European Economic Area (EEA) or Switzerland you do not need permission to set up a business in Ireland. In general non-EEA nationals must get permission 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 to come to Ireland to set up a business.

What are the legal structures for businesses?

When you start a business you can do so either as a sole trader, partnership or limited company. The type of structure you choose depends on the kind of business you are carrying on, 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: This is where you set up a business on your own. It is relatively simple to set up as a sole trader but if your business fails, all 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 ‘How do I pay tax?’ below). If you wish to use a business name you must register your business name with the Companies Registration Office (see below).

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.

Do I need to register my business name?

You may carry on your business using your own name. If you wish to use a business name you must register your business name with the Companies Registration Office. You will then be issued with a Certificate of Business Name which you must display prominently at your place of business.

You should have a business account with your bank. This allows you to keep your business income separate from your personal income. In general, you will need your Certificate of Business Name to open a business bank account.

To register your business name you apply to the Companies Registration Office (CRO) using Form RBN1 or online using CORE (Companies Online Registration Environment). Read more about registering a business name online.

How do I pay tax on my business?

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. 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.

If your business is not incorporated you are considered to be a sole trader. In order to set up as a sole trader you must register as self-employed for income tax with Revenue (see below). As a self-employed individual you pay tax under the self-assessment system. You pay Preliminary Tax (an estimate of tax due) on or before 31 October each year and make a tax return not later than 31 October following the end of the tax year.

Find out more about paying tax.

You must keep proper records to allow you to fill out your annual tax return. Read more about the records you need to keep.

How do I register for tax?

To register with the Revenue Commissioners as a self-employed sole trader you must complete the tax registration form TR1 (pdf). This form can be also be used to register for VAT. You will receive a “Notice of Registration” confirming that you are registered for income tax and, if applicable, for VAT.

You must register for Value Added Tax (VAT) if your annual turnover exceeds or is likely to exceed the following annual limits: €75,000 in respect of the supply of goods or €37,500 in respect of the supply of services.

When you register with the Revenue Commissioners you are automatically registered for Class S PRSI.

Do I need insurance?

Although you are not legally obliged to be insured when you are carrying on a business, it is generally advisable to have insurance cover for various situations. In particular if the public have access to your premises you should have public liability insurance.

You may also want to look into other types of insurance such as health insurance. The Irish Insurance Federation provides a free insurance information service where you can obtain information and advice on all aspects of insurance.

What else do I need to know?

If you are working from home you may need planning permission. For example, if you are using part of your home for business purposes or if you were to build a shed or an office in your garden. You should contact your local authority for advice about planning permission.

If you are thinking of employing someone to work in your business, you need to know about employers' obligations and employees' rights.

What supports are available for people setting up businesses?

The Back to Work Enterprise Allowance (BTWEA) Scheme and the Short-Term Enterprise Allowance (STEA) Scheme encourages people getting certain social welfare payments to become self-employed.

Our document on sources of information lists all the available sources of support for new businesses. You can also read about dealing with debt and getting credit.