How much does it cost to set up a company?
This is really subjective and depends on how quickly you want things to happen (it costs money to skip the queue) and to what standard.
For instance, doing it yourself is likely to be sloppy and inaccurate, but cost-effective (at least regarding money, it would probably take a first-timer quite a long time to complete all the necessary tasks.
Here is a rundown on the costs that are usually incurred when opening a “limited by shares” company.
1) Filing incorporation forms/preparation of legal documents
A business can be set up as a company or as a partnership or a proprietary business. This involves some form of regulatory paperwork. In the Republic of Ireland for instance the Companies Act 2014 describes the documents and forms which must be submitted. These are then deposited with CRO (Companies Registration Office)
When submitting these documents, you will usually need to have chosen the official company name, the directors on the management board, a company secretary, their addresses, proof of residence, and also the articles of association. Getting an expert to do this process for you is highly recommended.
Costs: You will be paying for professional assistance (an accountant, a solicitor, and sometimes a notary) plus the registrations fees.
2) Tax registrations
Soon after incorporating your business, you will need to file for various taxes, usually:
- VAT (value-added tax) – tax you charge to the end-user along the value-chain
- Corporation Tax – taxes you pay on company profits
- Employer taxes – taxes you pay for employing staff
- Employee taxes – taxes you pass on to the government on behalf of staff
Registering for these taxes can cost money in some countries, but most countries do not charge to register for these taxes. It will cost money to find a professional to help you register for these taxes though (and to let you know when you need to register for them)!
Sometimes, you will also need to find out if there are any other taxes which you will need to register for, pending on the type of business you are offering. For instance, if you sell goods to another EU country, you may cross that country’s VAT threshold and, to continue trading there, you may need to register for VAT in that specific country.
3) Engaging an accountant or a lawyer
While most of the above items are a one-time activity, you will have some monthly or quarterly compliances too. It is a company director’s responsibility to ensure that their company remains compliant with local tax laws, but usually you will be gently reminded if you are not compliant. It is only in cases of constant negligence where penalties are issued.
Not only that, but once you have registered your company and various taxes, you still need to keep on top of the weekly/monthly/bi-monthly/quarterly/annual reporting deadlines. You are able to complete these yourselves without the help of an accountant for micro-companies, but if your business is doing well, it will cost less in the long run to get professional help.
A good accountant or solicitor will know how to make your business tax-efficient, and will keep on top of your important reporting and filing dates so that you don’t need to worry about them.
Products related to this post:
Income Tax Registration (Revenue Commissioners Ireland)€100.00 – €200.00
Union VAT OSS Registration (in Ireland)€150.00
Union VAT MOSS Registration (in Ireland)€150.00
STARTER PACK: Irish Tax Registrations (for new companies)€450.00 – €1,050.00