Ireland Fact-File Part 1:
Business Formation for Individuals

1.8 Ireland Family Business Ownership

Types of ownership structure for individuals in business

It is possible to employ one's spouse within a small business, or for them to work for you in a self-employed capacity, or to be a partner in a partnership, or a director of a limited company. The advisability of each course of action will depend (obviously) on the corporate form being employed by the small business and the trade or profession being undertaken by it; professional advice is recommended in this regard. However, some of the advantages of employing one's spouse (if they pay tax at a lower rate, for example) in other countries will likely not apply in Ireland, due to the fact that the Irish system permits joint assessment of married couples for income tax purposes, permitting the allowances and credits of spouses to be allocated in a customised way.

All things being equal, and provided that your spouse actually does undertake a portion of the work required within the business, the partnership route may be the way to go, with joint assessment for tax, in order to reduce the administrative burden which inevitably comes with employing people (PAYE, PRSI, etc, although the situation with regard to PRSI and employing family members is complex for unincorporated businesses, as often contributions are required, but very little social welfare coverage results).

There are, of course, other options for the individual establishing a business in Ireland, and the involvement via investment of a third party or body (venture capitalist, lender, or government) is entirely possible.

In terms of state involvement in a business start-up, County and City Enterprise Boards (CEBs) may offer support via a Redeemable Preference Share Scheme, whereby the CEB holds preference shares (which receive priority with regard to the payment of dividends, and a fixed dividend payment, but which are redeemable at a later date, and allow the Board no voting rights) in the small business, providing capital support for companies seeking to attract equity investment for the first time.

In terms of private investment, if a ‘business angel' (or wealthy private individual) can be persuaded that the business is a viable and attractive investment proposition, they may provide a fair chunk (or all) of the capital required to establish the business, usually in return for ownership equity, or convertible debt (a type of bond which can later be converted to shares). Your ‘angel' may also be able to provide a degree of expertise and support, which could be invaluable to a relatively inexperienced individual.