When a business is set up, it is necessary to decide on the ownership structure best suited to the needs, ie. sole trader, partnership or limited company. This arrangement will determine what type of registration to take. When deciding on this, you should be aware of the potential risks and liabilities for the business, the time and money spent putting the structure in place and maintaining it. what taxation would mean to take account of all the different options.
Legal advice or other professional advice should be obtained in determining the body’s legal structure. The most common structures used for small businesses are:
Sole Trader: This is the simplest in terms of business structure and involves only an individual trading alone. It is the person who controls and manages the business. This is easy to set up and has little cost. You must register with the local tax office by completing a TR1 form and a business name may be required to be registered with the Companies Registration Office if it is not the same as the person’s name.
The income of the business is personal income and many business costs can be offset against tax revenues. The most significant disadvantage is that you do not have any protection if the business fails and all your assets are available to pay your creditors.
Partnership: The partnership is an agreement between two or more people to do business together. There is no limit to the number of partners that can be in the business and they do not necessarily have to work full-time in the business.
Money can be raised through the introduction of new partners and each partner is personally liable for the debt of the partnership, even if it is caused by other partners.
A comprehensive agreement should be drawn up setting out the responsibilities of each partner and all those partners signing up to avoid disputes at a later stage.
Limited Company: a legal entity net of the shareholders, directors and employees involved. A company can sue the law and it can be sued in its own name. In general, the liability is limited to the amount invested in the company when shares were being purchased. There is a disadvantage as the requirements of the Companies Act legislation can have cost and time.
Among the formal measures involved in the criminalization of a company, it is necessary to set out a Memorandum and Articles of Association. There are a number of advantages to a company limited in liability compared to a sole trader or partnership, including: limited liability status – your liabilities are limited to the amount you invested in the company, it is easier to collect money, tax advantages.
Registration of your business name
You can trade in your name but if it is decided to do business under a name that is not your own, the name of the business must be registered.
Register a business name:
Form RBN1 in the case of an individual, Form RBN1B in the case of a partnership or Form RBN1B in the case of a body corporate (download from www.cro.ie)The form is sent with the appropriate fee to the Registrar of Companies, Companies Registration Office, Parnell House, 14 Parnell Square, Dublin 1
The business name registered must be displayed on the premises of the undertaking, on the undertaking’s stationery and addressed to any person with whom you have a business relationship and who requests it.
Certain names are not allowed:
It should be noted that the registration of a business name does not protect against the second use of that name nor does it mean that the name is acceptable as a company name (which may not be acceptable) is already used as a company name). It is not an authorization to use the name of registering the name if it could be used for other reasons, ie. trade mark rights.