The Benefits of Setting up a Private Limited Company

Why invest in a PLC?

There are a number of benefits associated with controlling your own private limited company including but not limited to, business expenses, retained profits, multiple business interests, hiring others, or, most commonly, the increased capacity for pay retention, tax efficiency and long-term financial success.
The most important thing to understand is that starting a private limited company is not for every independent professional and that it is as fulfilling for many to operate under an umbrella company as it is for others to set up their own private limited company.

The most important why comes from you personally – we can give you all the details you require to help you decide, but the initial desire to incorporate your own company should ideally, be your own.

Business Expenses

Many independent professionals purchase high value assets through their private limited company.

Before you jump on the phone to that car dealer that you have on speed dial, please note that this does not mean that you can expense a brand-new Tesla to get in and out of the office in.

However, if your business requires high value assets for business purposes, as long as they are in line with business requirements and the nature of work, they should be deemed an allowable business expense by Revenue.
You can discuss this further with your account manager who can assist and guide you in more specific detail based on your query.

Retained Profits

The potential to retain and reserve company profits introduces a number of different possibilities and opportunities for company director(s).
On top of the company making executive pension contributions on their behalf, many of our clients opt to take a reduced salary to avoid paying the higher rate of Income Tax.
By doing this, many of our clients retain profits and invest these reserves elsewhere - whether it be investing into other areas and niches or expanding their current business.

Multiple Business Interests

Contracting is as flexible as it is lucrative for many independent professionals.
This gives many an urge and opportunity to become extra proactive and increase their earning capacity through expansion into multiple business interests.
Whether that is to invest in cryptocurrency or to sell products through an e-commerce platform, many independent professionals use their extra time as a way of providing multiple streams of income.

Hiring Others

Employing a family member or spouse can often be an efficient way to gain more time to focus on the business’ core responsibilities. Many of our clients employ a family member or partner to assist with administrative, marketing, or general business assistance duties. Please be mindful that the salary paid should be in line with the duties carried out by the new company employee.
We generally recommend a small salary to assist with administrative duties which can also increase tax efficiency and again, create more time for you to focus on what you do best.

Retain more of Your Income through Long Term Financial Planning

Entrepreneurial relief when planned properly and carried out efficiently over a course of 5 years can reduce a tax liability from 56% through a dividend, over 50% through salary to 27% after liquidation expenses. If you would like sample calculations, please get in touch with me directly and I will be happy to provide based on your specific circumstances.

How?

Discuss the potential of moving to a Private Limited Company with your account manager, it may not be a requirement to move from your current solution to facilitate a request or desire that you currently have.

Once you have decided to proceed and incorporate your own private limited company, we will require for you to complete an online form to outline your chosen business name, your directorship breakdown and also the shareholding details.

There is a fee of €229 + VAT to incorporate a private limited company plus a separate €20 (non-vatable) fee for your B1 submission.

When?

Despite the current 10-12-week turnaround time that is associated with a complete company incorporation including VAT registration, depending on your requirements, you could have the certificate of incorporation for your very own private limited company within 5 working days.

The biggest piece of advice I will outline is to get in touch to discuss your plans, there may be a different way to achieve what you are trying to achieve with less admin and more rewards for you. Like anything in accounting, not one size fits all.

You can get in touch to discuss the benefits of switching to a PLC in more detail by emailing me directly sean@iconaccounting.ie.