Company Formation
Getting your business structure right from the start is important, In this post we look at the basic structures of a limited liability company.. continue reading
5 Big Mistakes Made By Start-ups
Start-up businesses can fail for a large number of reasons. It goes without saying that the fewer mistakes made the less likely failure will occur. People provide many tips on how to start businesses successfully but perhaps it would be easier to actually continue reading
What is a Business Feasibility Study, and can you afford to skip it?
Most successful entrepreneurs will tell you that conducting a feasibility study is vital in that very first stage of developing a business. But if we’re honest, how many of us actually understand what a feasibility test really is? continue reading
Full-Time Employee To Full-Time Entrepreneur
Making the transition from full-time employee to full-time entrepreneur is no mean feat. Keeping on top of a full-time job, while starting up a new business, is exhausting work. For those of you who find yourself in this situation, continue reading
Why use a Company Formation Agent? – Andrew Lambe from Company Bureau explains
Why use a Company Formation Agent?
Most people setting up a limited company in Ireland will use a company formation agent to register the company on their behalf instead of going directly to the Companies Registration Office (CRO). This is the easiest and ultimately the most cost-effective way to register a company in Ireland.
Generally a company formation agent will set up your company either directly or indirectly. Some entrepreneurs will go direct to company formation agent that may have been recommended to them, or they found on an internet search, whilst some will go through their professional advisor (Accountant or Solicitor). Most professional advisors will then outsource this to a company formation agent (unless they have their own dedicated Company Formation/Company Secretarial Department)
If you are unsure of the type of company you want, it is a good idea to go to an Accountant or Tax Advisor in advance to seek their professional opinion on what type of company is best for you.
Whichever route you choose to incorporate your limited company, you will first need to decide on:
The company name
The precise activities of the company
Who the directors will be
Who will own shares in the company
Who will be the company secretary
Where the registered office will be
The benefits of using a Company Formation Agent can be summarised as follows:
As they are generally a member of the CRODisk scheme, Company Formation Agents are guaranteed to have a company registered within 5 working days (usually 2-3 working days) Submitting the documents yourself can take up to 6 weeks (longer if there is mistakes or omissions on forms)
The availability of your company name is checked by a professional, who should be familiar with the multiple rules the CRO have governing the availability of names.
All fees are generally included in the fee quoted: CRO filing fee of €100, Solicitor/Commissioner for Oaths fees, VAT, Drafting and printing of Memorandum & Articles of Association.
Company Seal is usually included (You should check this with the formation agent prior to ordering company) This can cost up to €50 as a ‘stand-alone item’
The Combined Statutory Register and minute book is usually included. (Again, you should check this with the formation agent prior to ordering company)
No need to go to a Commissioner for Oaths or a Solicitor to get the A1 form witnessed, as the Company Formation Agent should arrange to get this done as part of the service
Share Certificates and First Company Board Minutes are usually included with incorporation documents
Mistakes on application are very rare, since the Company Formation Agent deals with applications on a daily basis
Full ‘after sales’ service should be included
Form-filling websites
We strongly advise against using one of the various ‘form filling’ websites, who claim to be able to register your company in the ‘fastest’ and ‘cheapest’ way. Unfortunately this is not the case, and they are not disclosing the full facts and the steps than you then need to take to register your company. They disadvantages of such sites are as follows:
The availability of your company name is not checked by a professional. Unfortunately due to the many rules the CRO have on names you need a professional to check the name. A computer system can’t do this.
You will have to go to a Commissioner for Oaths or a Solicitor to get the A1 form witnessed (Will cost €20-50)
You will have to search the index of NACE codes (Government business classification codes) and select the one appropriate for your business.
On top of the fee paid to the website, you will have to pay a €100 filing fee to the Companies Registration Office
Once you print the documents, you have to make your application yourself under the ‘old scheme’ which takes 4-6 weeks.
As the application is not managed from start to finish by a professional, errors on the application may occur, which can set you back up to 2 weeks each time documents need to be returned to you by post.
You will have to pay €50+ for a company seal
Share Certificates look unprofessional printed on normal paper, and don’t include a notary seal
No ‘after sales’ service of note
Some of these websites are based in other countries with different time zones (One of them is in New Zealand for example)
To do it yourself
Some entrepreneurs are determined to do it themselves, and if you have plenty of time on your hands and aren’t in a particular hurry to register a company, this may be the option for you. The steps are as follows:
You will need to go to a law stationer to get a Memorandum & Articles of Association. You will have to draft part of this yourself, based on you type of business.
You will have to search the index of NACE codes (Government business classification codes) and select the one appropriate for your business.
You will have to complete and sign the CRO form A1
You will have to go to a Commissioner for Oaths or a Solicitor to get the A1 form witnessed (Will cost €20-50)
You will have to pay €100 filing fee to the CRO, and make the application under the ‘old scheme’ which takes 4-6 weeks.
You will have to pay €50+ for a company seal
You will have to pay €30+ for a Combined Statutory Register and minute book, which will need to written up by you.
You will have to draft Share Certificates and First Company Board Minutes for your company
You should make yourself aware of and read most of the applicable CRO Guidance Booklets to ensure you are up to date with your obligations
It’s important to note that if there is any mistake whatsoever with the forms and documentation, The CRO will post the documents back to you and ask you to amend. This can set back the application by two weeks for each time it is returned.
Once your company is incorporated, you can open a company bank account with the Certificate of Incorporation and Memorandum & Articles of Association. You are also required to register for taxes with your local Revenue office using the form TR2. It can take a number of weeks for the company to be registered for taxes, so the form should be completed and submitted to your local tax office as soon as the company is formed.
Information provided by Company Bureau www.companyformations.ie
Two of the most frequently asked questions for people looking at a startup scenario are:
1) How do I setup a company, and
2) What type of company should I set up
How do I set up a company?
The Companies Registration Office (CRO www.cro.ie) is the government body responsible for registering all Irish businesses. The offices are on Parnell square in Dublin opposite the entrance to the garden of rememberance. The staff are generally quite helpful and will be able to point you to any forms that you will require. The CRO have a very good website and most things can be now done through their online filing system.
An easier alternative is to use the services of one of the many formation companies that will register the company on your behalf. They will provide you with a company seal (required for many legal docuements such as leases etc.), articles and memorandum of association etc.
Note: Do not be tempted to rush through this stage in your enthusiasm to get started!! The name of the company, list of Directors and Shareholding structure of the comapny, naming of Chairperson, secretary etc are extremely big decisions and should not be taken lightly. For example if down the road you fall out with your partners these details will be deciding factors in who has the upper hand legally!
A formation company will charge about €300 to register the company on your behalf. I have used www.formations.ie and found them to be very professional.
What type of company should I set up?
For most people the choice is either Sole Trader Or Limited liability company. Your accountant should advise you on the best structure for you. Generally speaking sole trader suits an individual running a business primarily on their own i.e A window Cleaning service, Painter etc. It can be a good idea to start the company as a sole trader and then move on to Limited liability if the business grows and more people become involved. The paperwork requirements for a sole trader are significantly less than for limited liability companies.
The idea behind a limited liability company is that an entity (the company) is seperate from the directors and shareholders. For example if a company does not pay its bills the company is sued not the directors. In reality, particularily in the current climate, most suppliers will look for personal guarantees from directors of the company before they will supply. This negates the protection of the limited liability. If a number of people are involved and if the company turnover is likely to be significant than forming a Limited company is recommended. It is important to be aware however that the filing and returns required by the CRO for limited companies are taken very seriously. If you are late with annual returns, significant fines will build up, also companies are entitled to an audit exemption for the first few years. If you do not file your returns on time you will lose this exemption. Furthermore shutting down a limited company is quite difficult and costly (you need to put an advertisement in the paper etc!!). Many people ignore the boring responsibilities of setting up a company in their initial enthusiasm, unless you are aware of your obligations you will find yourself and fellow directors spending lots of money on accounting audits and fines. If you put your head in the sand and ignore your CRO obligations , the company may be handed over to the Office of Corporate affairs who have the power to prosecute companies who breach the regulations. Don’t say I didn’t warn you !!!
