What is a Limited Company?
A limited company, as it is a separate legal entity, is a slightly more complex form of business than a sole trader. The main difference is a limited company has limited liability. This means that if a company is a limited company, unlike a sole trader, it is a separate legal entity. If debt accrues on this business, it accrues on the business alone, the owner’s assets are not at risk.
Setting Up a Limited Company
Setting up a limited company can be the most complex of the three types of business to set up. Unlike a partnership’s and sole trader’s unlimited liability, where the business owner risks his/her personal assets and their liabilities are not limited, a limited company has limited liability, meaning the company is a separate legal entity, it has the advantage that if the company accrues substantial debt, it is purely the company’s assets that are at risk, the shareholders personal assets are, in general, safe.
The first step to setting up a limited company is registering a business name for the company with the Central Registration Office.
Every Limited company must have at least one shareholder, at least one director and at least one secretary (this can also be a director and secretary).
A limited company must also have a registered office; this is an address that any CRO and official legal notices will be sent to, if you don’t have an office for the business, it can be your solicitor’s office or accountant’s office address if it is required.
The company must also have a company constitution. This is a document setting out the rules and regulations governing the company. It also defines the relationship between the company, shareholders and officers of the company. It is a binding agreement between the company and its shareholders and officers.
Once the company is registered, you will receive a certificate of registration. This certificate is very important and should be kept in a safe place.
Once these steps have been completed, the business can then be registered for tax.
If your company has a tax agent/accountant, they will inform Revenue of the existence of your company, if you do not have a tax agent you must do this yourself.
Your tax agent or accountant, if you have one, will submit an online registration application on your behalf through the Revenue Online Service (ROS). If you are not represented by a tax agent, you must submit a Form TR2 to Revenue; this form can be used to register for Corporation Tax, Employer Pay As You Earn, Value Added Tax and Revenue Contracts Tax. You will be given a tax reference number to use when trading and filing your tax returns.