Congratulations on the new contracts! In general, incorporation is advantageous if your intention is to retain some of the profits within the business i.e. you are making more than you need for day to day living. As you probably know already, the rate of tax that companies pay is lower than individuals, plus they pay no PRSI on their profits. The corporation tax rate is currently 12.5% while the marginal tax rate for individuals can be as high as 55% so you could stand to benefit from some tax savings.
Another advantage is that you will be protected by ‘limited liability’ if you form a company. This basically means that your personal assets cannot be taken to pay off company debts. The company name, once registered, is also protected and cannot be used by another company.
In terms of what you need to consider, first of all, you will need to register your company with the Companies Registration Office (CRO). The company’s details and accounts will be held on public record, as well as information about the director(s), secretary and shareholders- this isn’t the case with sole traders of course. You will also have more filing obligations, such as filing an annual return with a set of accounts each year with the CRO so you need to be ready for some more administration work.
Directors who own more than 15% of the shares of the company must also submit an income tax return separate from the company’s own tax return. So, even if you intend to pay yourself through the PAYE system you should be aware of this.
TaxAssist Accountants work with thousands of individuals on their company accounts every year. For more information contact us here.
Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.