There are number of types of limited company but the most common one is a company limited by shares. If the company is a limited liability company, the shareholders’ liability should the company fail is limited to the amount, if any remaining unpaid on the shares held by them. A company also requires 2 Directors and a Company Secretary although one of the directors can undertake the secretarial role. Many start-ups are slightly apprehensive about the procedure involved in forming a company but we can remove this worry by doing everything for you. The process usually takes a week from start to finish. We can also complete the required registration for taxes that all companies must carry out before they start to trade.

The main advantage of a limited company is that it is a separate legal entity from the individual directors. In other words, the company is distinct from the directors and the shareholders. It may be more suitable for certain types of business than others. On the flip side the administration costs are higher as an annual return must be made to the Companies Registration office and there are also Corporation Tax filing obligations. We would advise that you speak to a professional adviser such as ourselves to ensure that you can make the best decision for your business.

This concludes the 3 part series on the options available to anyone looking to set up a business. We hope you found them useful and should you have any questions, please do not hesitate to contact Robert or Ciarán at our office in the centre of Dublin.

A Partnership is formed when two or more people join together to engage in an economic enterprise. It can be seen as a number of Sole Traders joining together to start a business. It is usually defined by a partnership agreement that sets out such items as the number of partners, the percentage of the partnership owned by each person and various other rules by which the partners should abide. We would recommend that you find a solicitor who can draw up a Partnership Agreement for you as it is a very important document. It should be stressed that a Partnership is NOT a Limited Company and each partner is jointly and severally liable for the debts of the Partnership. In other words, if a partner accumulates debts on behalf of the partnership and is unable to repay them, then all other partners are liable for these debts.

The main advantage of a Partnership is that it removes the fear of “going it alone” that worries many would be entrepreneurs. For example, if you are a mechanic and would like to set up in conjunction with a friend/ former work colleague, Partnership could be a structure to allow you to start up a business together. You would register the partnership with both the CRO and the Revenue (using a TR1 form, similar to a Sole Trader) The administration costs are lower than for a Limited Company and there are less regulatory requirements. However these lower costs need to be balanced against the greater risk to which a partner will be exposed. We would advise that you speak to a professional adviser to ensure that you understand both sides of the debate and can make an informed decision.

In Part III we will look at the final option available to business start-ups, the formation of a Limited Company. In the meantime if you have any questions, please don’t hesitate to contact the office.

One of the first decisions a person starting a business will have to make is whether to register as a Sole Trader, a Partnership or whether to incorporate a Limited Company. In the first of a series of three articles we will look at some of the issues to consider if you are thinking of setting up in business. In this article the focus is on becoming a Sole Trader. Future articles will look at considerations relating to Partnerships and Limited Companies. At the end of the series, you will hopefully have some idea of which is most suitable for your particular situation. I should also stress that these articles are general in nature and it is essential that you speak with a professional advisor such as an accountant to ensure that you are choosing the correct option for your individual circumstances.

A Sole Trader is usually defined as someone who is in business in a personal capacity. They may have employees and a Business Name but ultimately, it is the individual who is in business. An example would be a shopkeeper who rents a shop and starts selling goods. He/ she could register a business name, e.g. Sound Music or they could use his own name, e.g. Pat Smith. In either case the person is the business and they are indistinguishable. One advantage of starting a business as a Sole Trader is that there are less administrative costs associated with being a Sole Trader than either a Partnership or a Limited Company.  A downside of registration as a Sole Trader is that they are personally liable for any debts the business may be unable to repay.

Whilst it is optional to register a Business name, it is mandatory to register with the Revenue Commissioners as a Sole Trader. This is done using a TR1 form and is available on the Revenue’s website (www.revenue.ie) If you are unsure about completing it, your accountant can do this for you. On this form you will register for Income Tax, and possibly for VAT, Relevant Contracts Tax and as an Employer for PAYE purposes depending on your situation.

In addition to registering as a Sole Trader with the Revenue Commissioners and the Companies Registration Office, a Sole Trader will also need to consider other issues, for example whether to rent or buy any equipment required or how best to acquire their premises. If they wish to obtain bank funding they will require a Business Plan as a bank will usually require this to support any loan application. In addition to complying with your bank manager, experience tells us that producing a Business Plan is a very good exercise for a start-up business to undertake as it focuses the business on what they intend to do, instead of simply making general statements such as “I will have sales of €50,000 in my first year of trading” without specifying how this will be achieved. By creating a specific plan you will have a roadmap for the early days of the business, when there is the greatest amount of uncertainty with most entrepreneurs. As the business grows the plans will change and evolve. This is natural and is part of the challenge that entrepreneurship brings.

In Part II of this series I will look at Partnerships and some factors to consider if you are thinking of this route to Self-Employment. As always, if you have any questions, please don’t hesitate to contact the office.

Seven days later on the 7^th February two men became the first couple under Irish law to be registered as civil partners.

So, where does this leave the happy couple from a tax point of view?

At present, nothing has changed and at the time of writing, they will still be treated as single persons and possess single tax allowances and credits. The change legislation has been drafted however, but the tax changes have been deferred until the formation of the new government, which, as it happens, is today! So as we listen from our new offices on Nassau Street to the chanting of the Social Party marching with their new members to the Dáil, we await the passing of this long awaited bill to give equal rights to all. It’s not perfect but it’s a big step in the right direction.

We are eagerly awaiting more information on the changes from the Departments of Finance and as soon as they are available we will pass them on. If you, the reader needs to speak with us in person, we would be delighted to sit down and talk you and your partner through it.

Go n-eírí an bother libh le chéile.

In the end the idea was scrapped, but not before it had worried a lot of people. Whilst it would have been good news for accountants and tax advisers such as ourselves who haven’t enjoyed a break during the October Bank Holiday weekend since God knows when, it would have been bad news for everyone else as they would have had a month less to get their 2010 Self Assessment Tax Returns completed and submitted to the Revenue Commissioners! They would also have a month less to find the money required to pay this bill. Hence, the proposal caused much worry before it was eventually shelved.

As the old saying goes, “Forewarned is Forearmed”. By having your 2010 Self Assessment tax Return completed earlier this year, you will ensure that you meet the revised deadline and thus avoid any penalties for the late submission of returns. From a cash flow perspective it will also allow you to budget for the amount you will be required to pay. For example, if you have your return completed now and find that you will be required to pay €4,000 to the Revenue Commissioners in October 2011, you can put away €500 per month for the 8 months between March and October inclusive and avoid the last minute scramble that most Self Assessment taxpayers are familiar with to find the money required to pay their tax bill.

If you would like to stay in control of your personal tax requirements, please don’t hesitate to contact the office to discuss your 2010 Self Assessment Income Tax Returns (Form 11, Form 11E and Form 12). We offer a professional, friendly reliable service and all staff are fully qualified accountants. We do not employ any unqualified or part-qualified accountants so you can be confident that the person who produces your Income Tax Return is fully qualified to do so. Our fee structure is fully transparent and agreed upfront with each individual client so there will be no surprises. By taking this approach, we believe that we can generate long term relationships with our clients and that they will not hesitate to refer new clients to us.

This VAT Return details the VAT charged on their Sales (Output VAT) and the VAT paid on their Purchases (Input VAT). They are also required to disclose the amount of Sales of Goods to other EU countries, together with Purchases from Other EU countries.

By subtracting the Input VAT from the Input VAT, the amount of VAT to be paid/ refunded is calculated. This payment must be made by March 19th. In the event of a repayment, there is an option to have the amount refunded to your bank account or to have it offset against other Tax Liabilities, e.g. Employers Returns (P30).

Depending on a taxpayers circumstances this is often a good idea as by leaving money ‘on account’, it will reduce future liabilities. For example, if you are an Employer and you often struggle to make your P30 payment it may be a good idea to request the Revenue Commissioners allocate a VAT refund to your future PREM liability.

If you have any queries, please don’t hesitate to contact the office and we will be happy to advise you. All our staff are fully qualified accountants as we don’t employ trainees. This ensures that the quality of our advice is second to none.

Robert King & Company is pleased to announce the appointment of Mr. Ciaran Doyle, ACMA TMITI as partner with the firm. “Ciaran has finally given in to my consistent headhunting and I am looking forward to a prosperous and sincere relationship with him”, states Robert King, Principal. “We have worked together in practice in the past and I have always been impressed by Ciaran’s straight talking and business acumen. As well as being a friend, Ciaran has also been a mentor to me. After our initial meeting and instantaneous friendship, it was only a matter of time before we worked together again”, admits Robert.

Before taking up the position of partner with Robert King & Company, Ciaran Doyle was busy building his own practice, Doyle & Associates which was eventually sold in 2008 to a larger firm of accountants. Ciarán possesses over 19 years experience in both Ireland and the UK in both Industry and Practice. In addition to his accountancy qualification with the Chartered Institute of Management Accounting, he is also a member of the Irish Taxation Institute.

“The knowledge that Ciaran brings to the table is outstanding, both in terms of accounting statutory compliance and Irish and International taxation. This will strengthen our market position but most of all, it will benefit the clients, both new and old of Robert King & Company.”, explains Robert King.

According to the partners, Robert King & Company is now ideally positioned to take on the next round of entrepreneurs from the new Irish knowledge economy.

The good news is that there are 2 possible solutions that we would recommend to this problem:

1. Purchase some Payroll Software and learn how to use it properly. If you contact the office, we will be glad to recommend our preferred product. It is not expensive and does everything you will require from a payroll system. We also recommend that you take a training course in using the Payroll Software, regardless of which product you purchase. If you are new to payroll and purchase software without taking a training course, you may as well buy a printer and refuse to buy ink for it. It won’t work properly and will lead to both problems and frustration.
2. Outsource your Payroll Services: As accountants, we believe that self-employed people should focus their energies on what they do best and find others to provide whatever other skills are required to run their business efficiently. At Robert King & Co we can offer a professional, cost-efficient payroll service to all Employers, regardless of size. We deal with all aspects of payroll from the calculation of payments to employees and the issue of payslips, to the submission of all Employers filing obligations with the Revenue Commissioners. Payslips can be issued in paper or in electronic format. We will also deal with the documentation of Employees who join or leave during the year. For a quotation, please don’t hesitate to contact the office.

Regardless of which option you choose, we cannot emphasise strongly enough the importance of using a proper system for your payroll. It will also ensure that your submissions to the Revenue are correct and will satisfy the requirements of any checks or audits you may be subjected to. Payroll is an essential component of the financial management of your business and without a great investment of time or money, it can run smoothly and without any headaches. Businesses have enough to worry about at the moment without adding to the list.

A P60 shows the Gross Salary earned by each employee during 2010 and the amount of PAYE & Employees PRSI deducted, together with the class/ classes of PRSI paid by the Employee during the year. Total PRSI paid during the year is also shown and by deducting the Employees PRSI from this we get the amount of Employers PRSI paid during the year.

Any employees who were on the payroll at the start of 2010 but have left during the year will have received a P45 on leaving and will not receive a P60. For Employees who joined the payroll during 2010, their P60 should contain the total Gross Salary and Deductions for all employments during 2010, provided that the details of their previous employment were properly entered on the payroll system when they were added to your payroll. If you are unsure about this, you should check with your accountant.

• Gross Salaries paid
• PAYE deducted
• Employees PRSI deducted
• Any other deductions made from payroll, e.g. PRSAs
• The PRSI Class(es) paid by each Employee during the year (commonly referred to as the ‘Stamp’)

The P35 Return also calculates the overall amount payable by an Employer to the Revenue Commissioners for 2010.  In theory, this should equal the amounts paid with the individual P30s that were submitted during 2010. If there is a shortfall, this payment must be submitted along with the 2010 P35 Return. This facility gives the Employer the opportunity to correct any errors that may have been made during the year. If you are using Payroll Software, the P35 will be automatically created for you as part of the Year End run. The most common errors in generating a P35 Return are incorrect or missing PPS numbers.

As mentioned earlier, there are penalties for those Employers who do not file their P35 by February 15^th so you should ensure you do not miss this filing deadline. It is also worth noting that if there are any changes to the 2010 Payroll after the P35 has been paid, e.g. the payment of a Bonus, it is possible to file a revised P35 Return. This is known as a Supplementary P35.