Ireland Fact-File Part 1:
Business Formation for Individuals

1.1 Ireland Individual Business Structures

Forms of company or business structures used by individuals in business

Individuals establishing a business in Ireland can operate as sole traders, partnerships or limited companies.

A sole trader can trade under their own name (or a business name – if you choose this option, it must be registered with the Registrar of Business Names, at the Companies Registration Office).

Liability is unlimited for sole traders, and they are not able to take advantage of the 12.5% corporation tax rate, facing instead the 20% or 40% personal income tax rates. Additionally, some of the tax benefits available in Ireland are only provided to corporate forms with ‘legal personality', such as limited companies. However, the formal requirements are few, meaning that establishing as a sole trader is relatively quick and easy.

Partnerships (where two or more people go into business together, on an equal footing) stand somewhere between sole traders and limited liability companies in the majority of ways.

Like sole traders, partnerships do not have limited liability (and in fact, one partner can end up being pursued for the debts of another), and do not have a legal ‘personality' in their own right.

With regard to limited liability companies, as the name suggests, the liability of the business owner is limited (to business assets), and it is possible to take advantage of various tax incentives, and of the 12.5% corporate income tax rate. However, the initial and ongoing procedures relating to limited companies are somewhat more arduous than for the other corporate forms.

The terms 'Freelance', 'sole-trader' and 'self-employed'

The terms freelance, sole-trader and self-employed are all used interchangeably in Ireland; there is no definite distinction in status or treatment between them, and there are no country-specific terms employed.