Step by step – a guide to setting up a limited company

Questions we answer in this guide:

• Is the limited company business model the right choice for you?
• What do you need to set yourself up as a limited company?
• Once you’ve got your new business up and running, what steps should you take to best look after it?

Setting up your own limited company can be a great move for you and your business.

Maybe you’re just starting out, or perhaps you’re a sole trader already, and you’re looking to manage your personal risk position better.

Or maybe you’ve been operating another type of business model, like a partnership, and you’ve made the decision to change.

But before you get started, it’s important to ask yourself…

 

Should my business be a limited company?

 

Before we get going, and in case you’re not absolutely sure whether this structure would be the right fit, you can check out our guide to the different business models available.

This explains the differences between operating as a limited company by contrast to a sole trader, or a partnership or a limited liability partnership.

You can also take a look at our tailored guides for each of these business models:

• How to set up as a sole trader
• How to set up as a general partnership

And if you’ve been trading a while and you’re looking to grow, perhaps in collaboration with others, you might want to consider franchising, licensing, agency and distribution models, for example – all of which are covered in our guide to alternative business models.

This guide walks you step by step through the process of setting up a limited company (or a company that is limited by shares, as it’s sometimes known).

There is another type of limited company, one that is limited by guarantee.

But that model is not included in this guide.

Companies limited by guarantee are commonly used for charities, community projects, clubs, and collectives or societies.

Unlike the vast majority of companies limited by shares, they’re often businesses that are run as not-for-profit companies, meaning they generally don’t distribute profits to their shareholders but instead retain the funds within the company or use them for some other authorised purpose.

And instead of standard shareholders, these companies have guarantors, who commit to contributing an amount of money if the company gets into financial difficulty.

If you’ve taken a look at all of your business model options and have decided that a limited company is right for your business, then this guide has been designed to make the registration process as simple and stress-free as possible!

And to help your newly registered company thrive long after registration we’ve added extra challenges to complete after you’ve registration – from selecting a business bank account to checking whether you need any special trading licences.

So are you ready? Let’s get started!

 

What do you need to set up a limited company?

 

Before embarking on any new adventure, you need to get your kit ready.

As mentioned earlier, there are a number of things to consider and documents to gather before you can register your business as a limited company.

Your essential kit contains:

1. A company name
2. An address that you’ll be happy to use as your registered address (more on how to choose this below)
3. A decision on who will be a director (you only need 1, but you can have more)
4. A decision on shares and shareholders (this might be a very simple case of 1 share and 1 shareholder: you or you might already have others willing to come on board and share the costs (and the ownership) of your business
5. The legal documents recording your set up and laying down the rules you’ll apply to your business (you’ll hear this called a constitution)
6. Your application form to register your business as a limited company with Ireland’s official and only registrar of companies, the Companies Registration Office (CRO).

And with that kit (which we’ll help you collect) and our guidance, your business will be registered as a limited company in no time!

 

STEP 1: Name your business

 

You may feel that your name is super important to the future of your business.

We did from the outset, but not everyone does – and that’s totally fine.

But the key thing is understanding the difference between a registered company name and a brand name.

They can be the one and the same thing, but they needn’t be.

From the outset, what you call your business certainly helps you stand out from the crowd and, if you’re concerned about building a brand (which should be on your radar from the start), then you may well want your registered company name to capture the essence of what your business is all about as well.

Many people do.

But while it’s true that as soon as you’re thinking about registering domain names for a website, and establishing a sense of brand through logos, business cards and other materials, your brand name will definitely matter (not least since it will be starting to generate recognition and reputation for you), you do not have to have the perfect name identified to register your company with the CRO.

You can change it relatively easily later, (so it needn’t be a barrier to getting registered).

Or you can even leave your original registered name in place at the CRO and simply trade under a different name; one that becomes your brand name (and that one should definitely be registered as a trademark).

So, if you’re not sure about how your brand might develop, for now, you could simply pick a registrable name that’s acceptable to you, such as Plugged Enterprises Limited – and then, a bit later, start actually trading with a brand name that you’ve developed, such as Plugged For Business, for example.

Start with the CRO

Don’t forget – before you get too attached to your name, it’s a very good idea to check that it hasn’t already been registered by someone else!

If it has, this means that you wouldn’t be able to use that particular name – it simply won’t be available at the CRO, and there’ll be no way to register it.

The CRO has a facility to check registered names on their website so you can get checking right away.

And if the name that you want is not available at the CRO, that could well be a warning sign that someone else is also trading under that unavailable name and has a brand related to it too.

If they do and you start trading using their brand name, they may be able to attack your business for trademark infringement.

If the name is available at the CRO, that’s a great start.

But it’s only one step to confirming that you can have that name as a recognisable and legitimate brand and trading name.

Next, ask Google

So now you should do an internet search on the name you’d like and see what comes up.

Search globally, not just locally, because international brands may have trademarks existing outside Ireland that are identical or similar to yours and they may well challenge you in your application to register your company name as a trademark.

The internet is great for identifying whether other similar or identical brand names exist.

Always check dictionary definitions – especially the online ones

The internet is also very useful for turning up any unhelpful urban, slang or other dictionary definitions of the name you may have chosen (and if it has a meaning that you’d rather not be associated with your business!)

Now check whether it might infringe someone’s trademark (and if you could make it your own trademark)

You can check the Intellectual Property Office Ireland (IPOI) website to see if there’s a clash anywhere with the name you’ve chosen.

Our trademark essentials guide tells you all you need to know about trademarks.

Is the domain name available?

You’ll also want to check that the website domain name is available.

There are a number of sites offering domain name search services – although you should only need to search one, as they pull off the same databases.

 

STEP 2: Choose a company address

 

You have a number of options here; for example, your home address, an accountant/agent’s address or maybe a co-work or other office address, if you’ll be office-based somewhere from the start.

Take your pick for what best fits your circumstances, bearing in mind that the address will be publicly available on the CRO website, and you may not want to mix up your business post with your home post.

Stationery

You can order (or digitally set up) your business stationery.

You’ll need to include the full registered company name, company registration number, place of registration, registered office address (and business address if different).

We have a handy business stationery checklist to help you.

 

Step 3: Select your limited company director(s)

 

Each limited company must have at least 1 director (which could be just you!).

After that, whether to take on another director is up to you.

Directors are responsible for the day-to-day management of the company and making decisions, and they can be really useful in plugging a skills gap.

For example, they could have a particular expertise in something you don’t.

Of course, you don’t need to rush to fill numbers if there isn’t anyone you really need.

Particularly because taking on a director also means taking on an employee.

Taking on employees is a commitment, so you’ll want to be sure the person you have in mind is worth the effort and investment.

If you want to find out more about who you should consider as a director, check out our guide on who you should have on your board.

To find out what specific duties and liabilities a director has, here’s our guide on directors’ duties and liabilities.

And, if you want to see what your other options are for enlisting help (for example, hiring a non-executive director or a self-employed contractor), check out our guide on the different sorts of help available.

 

Step 4: Consider shares and shareholders

 

A share of the pie

In order to register your limited company, the CRO (Ireland’s registrar of companies) requires that the company has at least one share.

Often with small businesses, there’s only one starting shareholder (also called subscriber), who’s the founder of the company, and, often, new companies are set up with 1 ordinary share with a nominal value of €1.

There’s no limit to how many shares you can issue.

And issuing shares to other people is a good way of raising finance for your business if you need to.

How it works is that they pay you for shares in your company and they, in turn, become shareholders and, therefore, part owners of your company.

You then give them a share certificate as a sort of receipt for their investment and to record the number of shares that they’ll receive in your company in return for their investment.

Shareholders do mean, however, that you have less control over the decisions that you may want to make about your business.

And shareholders do have some duties and liabilities to consider. For information about these, we’ve got a guide to shareholders duties and liabilities that you can reference.

And if possible, try to keep things simple…

 

Step 5: Get your constitution ready

 

Right, now you’ve thought about whether to bring anyone on board, and whether to enlist some shareholders, you’ll need some rules!

You’ll need a constitution.

The Constitution is your company’s rule book, and it contains almost everything you need to know – about the rights and powers you have to make decisions for your company.

The Constitution also sets out the rights of various stakeholders of the company, including its directors and shareholders.

We have a simple constitution for companies starting out.

 

Step 6: Make it official…register your company

 

Right, it’s time to bring your company into being!

You’ll need to register your limited company with the CRO.

The simplest way to do this is to register online via Core

A company secretary

In completing the registration form, you’ll need to say whether you have a company secretary.

Every limited company in Ireland is required to have a company secretary.

A director can also be a company secretary but not if you are a sole director company.

If this is the case, you will need to nominate another person.

The role of a company secretary includes tasks such as reporting any changes to the CRO, issuing share certificates, arranging directors’ and shareholders’ meetings, and preparing annual accounts and tax returns.

The registration fee

No free lunches with this one, sadly.

A fee’s payable when registering your limited company.

But it’s relatively modest at €50.

Alternatively, you can outsource to a company formation specialist… but this will be substantially more expensive.

It’s official …congratulations!

Once you’ve registered your company, it will be what’s known as ‘incorporated’, and you can pat yourself on the back for a job well done.

But hang on! …don’t forget the additional challenges we mentioned at the start of this guide that’ll keep your limited company in tip-top shape (some of which are really crucial).

 

Your next challenge: looking after your limited company

 

You see, now your company is properly set up, there are some jobs to do that are based around how your company’s going to operate now it exists.

So, are you ready for Part 2 of this guide?

Let’s get to it!

 

Step 1: Set up a business bank account

 

As your limited company is a separate legal entity from any directors or shareholders, it needs to have its own bank account.

Unlike personal bank accounts, many banks charge businesses for everyday banking activities, such as withdrawing or transferring money.

Make sure you know what you’re signing up for.

The good news, however, is that a lot of banks now offer great startup and small business deals where, for example, no charges will be incurred during the first year of the account and favourable rates may apply even after that.

 

Step 2: Get to grips with tax

 

Registering with Revenue for corporation tax

When you start a new company, you must inform Revenue.

You’ll need to register your business for corporation tax with Revenue, and file tax returns.

This is because as soon as you start to make a profit, you’ll need to pay tax on those profits.

Registering online (eRegistration) is the fastest, cheapest and most efficient way of registering for tax.

To register, you will need a Companies Registration Office (CRO) number issued by the CRO.

This is the number allocated to your company when you register your company with them.

Every company registered in Ireland has one.

When you register your company with Revenue you will be issued a Tax Registration Number (TRN).

You must use your TRN when trading and filing your tax returns.

Your corporation tax return needs to be filed with the Revenue 9 months after your financial year-end date.

Your financial year-end date is chosen by the directors when the company files its second Annual Return with the CRO.

An accountant will usually help you pick the most suitable financial year-end, so you can rely on them to offer support.

And there are fines if you forget to do this.

Registering right away doesn’t mean you have to pay anything sooner, but it should mean that you get the reminders from Revenue well in advance of having to file the mandatory paperwork.

VAT

This is not compulsory unless your limited company’s VAT taxable turnover (the total value of everything you sell that isn’t exempt from VAT) is more than:

• €40,000 for services; or
• €80,000 for goods

However, you may want to register anyway, as it can bring lots of business benefits – including being able to claim back the VAT on business items and services from others that you pay for.

These amounts often mount up and it’s great to be able to recover them from Revenue and boost your cashflow.

For the extra money back in your account every calendar quarter, it may be well worth the effort of getting registered for VAT and making the claims (or paying someone to help you).

A lot of the bookkeeping software solutions make this far easier than it used to be.

You can register your business for VAT through Revenue Online Service (ROS)

 

Step 3: Protect your intellectual property

 

Trademark your trading name

We mentioned earlier that a business’ trading identity such as its brand name, logo, slogan, is called trademark.

There is legal protection to prevent it – or something confusingly similar to it – from being used by other companies for the same, or confusingly similar, uses.

Your brand is your way of making it easier for customers to choose you and not someone else.

And you’ll absolutely want to protect your brand from being stolen or free ridden on by someone else, who makes money instead of you as a result.

We’ve guidance on how to get a trademark registrable name for your new business so you can start building your own unique brand and avoid any infringements from the start.

And if you’d like to register a trademark, you can either read our guide to trade mark registration

And if you’re interested to find out more about the importance of your brand generally, check out the guide on the importance of branding.

Choosing your company’s trading name

A trading name is distinct from your registered company name.

Sometimes a trading name can sound more marketable.

For example, if your business is registered as Top Training Limited, your trading name might be Top Fitness.

You may also want to use trading names for different branches of the company.

For example, Top Training Ltd could have a trading name of Top Fitness for its workout programmes and Top Nutrition for its dieting programmes.

If you decide to use a trading name, then on your official paperwork, you’ll need to include the registered company name as well as the trading name.

So, based on the example above, you’d write: Top Fitness is a trading name of Top Training Ltd.

(By ‘official paperwork’, we mean business letters, order forms, websites, notices, publications, bills of exchange, promissory notes, endorsements, cheques, parcels, letters of credit, invoices and orders for money or goods that the company has signed for (or has had signed on its behalf.)

 

Step 4: Get your paperwork sorted

 

So you registered your company using Core earlier, but now there’s just a handful of contracts, registers and agreements to finalise…

Get the directors’ service contracts drafted and signed

If you’ve decided to appoint a director, you’ll need a service contract.

These contracts are designed to protect the business’ and directors’ interests – both during the working relationship and if they later decide to go their separate ways.

Here’s our director’s service contract template that you can use

Draw up your shareholders agreement

This document includes details such as how many shares are held in your limited company, what type (called ‘a class’) of shares each shareholder will hold, the process of paying dividends and the removal of shares.

We have a suite of shareholders agreements for you to choose from:

Shareholders Agreement – 50.50 shareholding

Shareholders Agreement – Multiple Shareholders

Our early-stage shareholder agreement template, which keeps the issue of shares in your company nice and simple for this early stage in your company’s development.

You can also take a look at our guide on what it means to be a shareholder for further information.

Create share certificates

We like to describe shares as the reward for investing funds and/or effort into a business and share certificates as being a bit like receipts for the investments of money or time that others contribute to your business – you’ll have invested time and or money and hold shares in it yourself.

You can use our template share certificate if you’re giving others shares in your new company.

However, you can brand or format a share certificate pretty much how you like, provided that it very clearly contains the same content as we’ve set out in our template.

Allocate shares with Form B5

To allocate shares, you’ll also need to complete Form B5, which is a mandatory form produced by the CRO to help officially record the allocations of shares in your business.

This must be filed at the CRO together with other records related to any share issues that you make.

There’s a fair amount of work and paperwork involved in allotting shares.

It’s not simply a case of filling in a form and sending it to the CRO for them to note on a public record.

We take you through the full legal process in our step by step guide to giving shares in your company.

Complete the appropriate entries in your company’s statutory books

Your company’s statutory books are essentially a folder full of the key registers and documentation that every company needs to have when it starts and must maintain throughout its lifetime.

You should record:

• The directors you’ve appointed in your register of directors
• Who the shareholders of your business are – this goes in your register of shareholders (often called a register of ‘members’)
• The allocation of shares to these shareholders (including you), which records the creation of any shares, including their types (there are different types of shares, you’ll usually issue what are called ‘ordinary’ shares, and the volumes of shares you allocated and to whom
• The usual residential addresses of the directors appointed
• The appointment of a company secretary, if you decided to appoint one, (rare for a new company these days). That gets recorded in the register of company secretaries
• Who the beneficial owners are

Consider if anything else needs filing

Generally, you shouldn’t need to file any additional forms with the CRO as your initial online registration via Core should contain all the starting details about directors, shares, persons with significant control, etc.

In addition to the registers that we’ve listed above, you’ll also be expected to keep other statutory registers.

You’ll find these in our guide to statutory registers

And you’ll need to produce and keep (with your statutory books)…

• Copies of decisions and resolutions from director’s board meetings and shareholder meetings. When you set up a new limited company, you’ll need either our sole director’s first ever board resolution, or
• Copies of minutes of board meetings and shareholders’ meetings. There is no prescribed format to these. Just keep them well and sufficiently detailed to leave no doubt about what was discussed. When you set up a new limited company, you’ll need our board minutes to set up a limited company and issue your first shares.

 

Step 5: Appoint a chairperson

 

Of course, small businesses with one director don’t need a chairperson.

But in larger businesses, this is typically a senior board member who sets each board meeting’s agenda, runs the meeting and provides a summary of each meeting’s outcome.

It helps with consistency, but it doesn’t have to be the same person chairing every board meeting.

If you have board meetings, you’ll need a way of taking some minutes.

Check out our guide to board minutes to learn more.

 

Step 6: Find an accountant

 

When you register a new company, you take on certain legal responsibilities, such as the need to file accurate annual accounts with the CRO.

As a small business, you don’t have to appoint an accountant or auditors, like larger businesses do; you may prefer to manage the finances and reporting obligations yourself.

We recommend using an online accountancy software solution if you decide to manage your accounts yourself, since it helps reduce your risk of errors.

A company accountant/auditor

You could, if you prefer, appoint an accountant to check that the company’s accounts are prepared correctly, filed on time, and are in line with Ireland’s laws applicable to how you must run your new company.

 

Step 7: Consider any PAYE and PRSI obligations you may have

 

If your business is going to have employees from the start, then it’s a legal requirement that your limited company pays PAYE, PRSI and USC contributions for those employees.

Many small businesses start out with no employees and resource their needs from contractors until they have a clearer idea of what they need and who might be the right person to help them.

It’s important that these contractors aren’t in fact employees in the eyes of the law, however.

Just calling them a ‘contractor’ will not be enough to avoid this risk.

Take a look at our guide on the difference between an employee and a contractor

Whoever is helping you with your business, you’ll need to provide them with access to your employees, contractors and other workers privacy notice, letting them know, in compliance with your legal obligations, how you’re handling their personal data.

You can find more information here on the data-handling rules affecting small businesses.

 

Step 8: Get your business insured

 

In the early days of setting up your business, you may decide to just get the minimum amount of insurance to save on costs – but don’t forget to keep this under review as your business develops and your risk profile changes…and also remember that not having the right insurance when you need it could actually cost you more money in the long run!

Need to know what types of insurance you must have to be legally compliant and what else may be advisable depending on your circumstances?

Find out all you need to know here in our comprehensive insurance guide for small businesses.

 

Step 9: Check if you need a business licence

 

Operating licences

Some types of business must be licensed before trading is legally permitted.

Examples of businesses that need a licence to operate include:

• Catering businesses (must register their premises with the environmental health service at their local authority at least 28 days before they open.
• Street trading (your local council will be able to give you information about the costs and timeframe for applications in your business’s area)
• Sellers of alcohol in shops, pubs, restaurants and hotels.
• Businesses that lend money, offer credit or undertake debt collection services.
• Businesses that hire, lease or rent out goods to members of the public
• Taxi and private hire vehicles
• Pet shops and boarding kennels
• Childminding
• Indoor sports venues

 

Step 10: Get your trading documentation ready

 

So, what sort of documents are we talking about?

These are the main ones to have on your radar at this stage:

• If you have a website, you’ll need website terms and conditions, a website privacy notice, a cookies policy and website terms of use documentation.

Check out our useful guide on what you need to have a legally compliant website

The exact wording of terms and conditions documents will vary based on to whom you’re selling (other businesses, consumers, or both), how you’re selling (online, offline, via telesales or catalogue (called distance-selling) or a mixture of ways), and what you’re selling, (good, services, digital content or a mixture).

Our guide choosing the right terms and conditions will help you decide which terms are best for your business.

You do need terms and conditions for multiple commercial and legal reasons, like getting paid on time and being able to charge late payment interest where you’re not, protecting your trade secrets, ensuring you own your IP and nobody else can free-ride on it, managing your liability if anything goes wrong and your trading party says it’s your fault, being clear on what standards and expectations apply to your trading relationship, and other things.

If you’re selling goods or services by other means instead or as well, you’ll need separate terms and conditions to cover the non-online aspects of your sales activities.

Terms and conditions are ideal for typically repeat custom arrangements, and those that are relatively swift, low value and you tend to have the negotiating power or do not really need to negotiate terms at all, e.g. where you’re dealing with consumers in a store or business users in an equipment hire service.

You’ll find a suite of website terms and conditions to choose from here

You’ll also need the right data privacy documentation in place, i.e. a general trading privacy notice setting out how you handle any personal data passing between you and any of your trading partners.

You can find more info here on the data-handling rules affecting small businesses.

You might need to consider non-disclosure documents, if you’re exploring ideas with another person or business, and to do so involves you telling them information about your own business and ideas that you wouldn’t want to be publicly known.

We have several of these that can help you, from a simple one-way confidentiality agreement, that you might agree with a freelancer or service provider where only you are disclosing confidential information, or you might want an agreement that covers a two-way disclosure of trade secrets arrangement.

If you move beyond sharing ideas into full-on collaboration mode with your counterparty, you might want to consider a collaboration agreement, as an alternative to contracts for services or goods.

Collaboration agreements are a good call where both you and your counterparty are putting mutual effort into creating or collaborating on something together, rather than it being only one of you providing the other with a benefit.

If you’re hiring freelancers and/or contractors, you’ll need to consider the appropriate contracts for services for them too.

Freelancers or contractors acting as sole traders should be engaged under this sole trader contract for services.

But use this consultancy company contract for services where you engage freelancers or contractors providing their services via a limited consultancy company.

 

Step 11. Review your data protection and data handling obligations

 

You need to comply with Ireland’s data protection regime when it comes to handling personal data.

Our guidance will help you work out what you need to do to ensure this.

Your customers will expect you to be able to demonstrate that you’re compliant, as will others.

Here are two guides to get you started.

If you need more information, you’ll find related content when you click into these guides:

• Data handling rules for small businesses
• Essential steps to GDPR compliance

 

Step 12: Check your company is in line with health & safety law

 

If people are visiting your premises, like contractors, customers, suppliers or other visitors, you’re legally obliged to keep them safe.

And if you employ people, you’re responsible for providing a healthy and safe working environment for them from the outset.

Don’t assume that because you’re renting workspace from someone else that your landlord/office space provider is fully responsible for safety considerations.

Often, you’re still responsible.

And if you’re in the catering or hospitality business, you’re responsible for ensuring that the food and drink you serve is safe.

Check out our health and safety guide to find out more.

Challenge complete! Happy trading – and full steam ahead!

Have you come up for air?

This may all feel like more of a marathon than a sprint.

But this doesn’t need to be done all at once.

So, take one thing at a time focusing first on the areas that are most important to your business, or where we’ve told you here that they’re legally required right now.

Here’s to a wonderful new, fulfilling and prosperous business adventure!