- Limited Liability:
- As a Sole Trader you are your business. You are personally liable for the debts of your business.
- This means that should your business fail your personal assets such as your home and your car can be used to pay off your potential creditors.
- By setting up a Limited Company you are limiting your liability, essentially creating a safety barrier between you and your business.
- Your business will become a separate legal entity, and potential creditors can only get access to the assets of the company, not your personal assets.
- The Corporation Tax that a Limited Company pays in Ireland is only 12.5%.
- Sole Traders pay Income Tax at either 20% or 40%, add to that PRSI and USC (taxes by another name), and the actual marginal rate of tax can be as high as 52%!
- Yes you can actually end up handing over more than 50% of your hard-earned profits to the taxman!
- Paying Yourself:
- The ultimate aim of any business owner should be to extract an income from their business so that they can enjoy the fruits of their labour.
- In very simple terms it is much easier to do this in a tax efficient manner (meaning you get more money in your pocket), when you operate your business as a Limited Company rather than as a Sole Trader.
These are the 3 primary reasons to incorporate your business, though there are many others to consider.
Should you wish to discuss further please feel free to contact me by emailing firstname.lastname@example.org