It is important to note at the outset that a limited company is a distinct legal entity separate to its shareholders and directors. A limited company may be incorporated with only one director and a company secretary. A director of a company has various legal rights and obligations and proprietary directors must file an annual income tax return.
The administrative and compliance obligations of a limited company are more onerous than that of a sole trader however the limited liability structure can offer major taxation advantages if the business makes good profits and the flow of income (e.g. salary or dividends) to the directors is controlled with a view to minimizing PAYE / PRSI or income tax.
If a business is incorporated the trading profits are liable to corporation tax at 12.5%. The director would normally then extract a salary from the company but he / she may be able to minimize it so that income tax is only paid at the standard rate cut off point. Therefore there is an opportunity to control tax leakage when trading through a limited company.
Given that there are also corporation tax exemptions for certain start-up companies it may well be worth contacting us with a view to setting up a new company.
If you are unsure as to whether a limited company is the most suitable vehicle for your business please contact us for a complimentary meeting, email or discussion.
Clarus Taxation provides the following taxation compliance and accounting services for limited companies and directors:
- Company set up.
- Tax registration.
- Tax efficient salary planning.
- Preparation and filing of VAT returns and payment advice.
- PAYE returns in conjunction with running a director and employee payroll.
- Preparation bank reconciliations.
- Preparation of end of year trading accounts.
- Preparation of company’s corporation tax computation and return (Form CT1).
- Advice on payment of correct amount of corporation tax on a timely basis.
- Verification of final corporation tax notice of assessment from the Revenue Commissioners.
- Preparation and filing of director’s income tax return (Form 11).
- Preparation and filing of company secretarial returns.
If you contact us for a fee quotation we can offer all or some of the tax and accounting services above that you need during the tax year as one package with one price.