Step-by-Step Guide to Registering a Sole Proprietorship in Ireland

Ireland’s rise as an economic powerhouse can be attributed to the low corporate taxes, ease of starting a business, and pro-free trade governments. However, the contribution of sole proprietors in Ireland to the economy is less known. 

People starting a sole proprietorship in Ireland are one of the biggest beneficiaries of Ireland’s business-friendly policies, enabling them to start a business and run it without stringent regulations and interference from the bureaucracy.

Starting a sole proprietorship in Ireland is straightforward and can be completed online. Here’s all you need to know about opening a sole proprietorship in Ireland.

Self-employed employers are considered to be practicing sole proprietorships. They are also known as sole traders in Ireland.

All citizens of Ireland and the countries in the EEA (European Economic Area) can open a  sole proprietorship in Ireland.

Foreign nationals from countries outside the EEA and UK are not allowed to practice sole trade in Ireland. This is because their work visas do not allow them to be self-employed in the country. 

Employers can accrue several benefits by opening a sole proprietorship in Ireland. With pro-business policies such as low corporate taxes, simple processes to start businesses, and free trade, any business structure would find Ireland lucrative enough to start a business.

Here are the benefits specific to starting a sole proprietorship in Ireland:

Ease of starting a sole proprietorship

Starting a sole proprietorship in Ireland is simple. Employers can complete registration online. They only need a few documents that every citizen of Ireland will possess.

Additionally, Ireland’s population is highly educated and thus can guarantee the smooth functioning of the business. 

You could also hire freelancers from outside Ireland for pilot projects. Multiplier can help you manage and pay freelancers and generate invoices.

Cost-efficient

 Opening a sole proprietorship in Ireland is inexpensive. Unlike a Limited Liability Corporation (LLC), which shall cost the employer registration fees, startup capital, and the likes, a sole proprietorship only has registration costs ranging up to €40 depending on the means (online or manual) used to register.

Low closing costs

Sole traders in Ireland also benefit from the favorable laws on closing down their business without any liabilities and risks. They only need to report to their clients and suppliers that they are closing shop.  

Note: Sole traders in Ireland must store and retain financial records for six years from closure.

Tax allowances

Sole traders in Ireland can also benefit from income tax allowances similar to LLCs. 

In several cases, they can also claim exemptions from VAT for their goods and services.

Generally, sole proprietors can obtain tax relief by submitting proofs for expenses incurred through :

1. Rent
2. Wages
3. Accountancy fee
4. Interest for business loans
5. Vehicles and machinery used

Sole proprietors (sole traders) in Ireland require few documents to register their business.

1. Business Name (if required)
2. PPSN (Personal Public Services Number)
3. Business bank account

Registering a sole proprietorship in Ireland is uncomplicated. There are no additional criteria sole traders need to be aware of to open a sole proprietorship.

Have a business plan

Although not mandatory, having a written business plan ensures a documented business model in place. It also ensures that you have established your goals, customers, and competitive advantages. The business plan can also contain an established path toward converting a sole proprietorship into an LLC (Limited Liability Corporation).

Open a bank account 

Before beginning a sole proprietorship in Ireland, sole traders require a separate bank account to process business transactions.  

Acquire a PPSN

All Irish citizens acquire a Personal Public Service Number (PPSN) to access social security benefits, public services, and information in Ireland. 

Foreign citizens can acquire a PPSN in their local welfare office.

Register a name for the business

Sole proprietors in Ireland can pursue their business using their name or under a company name. 

If they choose to use the latter, sole traders must register their names with the Companies Registration Office. 

Sole traders must fill and submit the RBN1 form (Registration of Business name) to successfully register and pursue their sole proprietorship under a business name. Business owners can submit the form online through CORE on the Companies Registration Office website. The application costs €20.

Sole traders can also complete the registration manually by submitting their application at the Company Registration Office at Carlow. Officials take up to 5 business days to process the form. The application costs €40 when submitted manually.

Registration for tax

Sole proprietorship taxes in Ireland are governed and regulated by The Tax Consolidation Act.

Sole traders must also register their company for income tax with the Office of Revenue Commissioners in Ireland as they commence their business. They can complete registration through the Revenue Online System (ROS).

By registering on ROS, sole proprietors in Ireland can:

• File all taxes in a single window
• File returns and make payments for liabilities online
• Make claims on expenses, income tax, VAT

Sole proprietors can also complete registration manually using the TR1 Form and send it to the revenue office in their country for processing. On successful completion, the revenue office shall send a “Notice of registration” confirming their registration for income tax. Sole traders are subjected to an income tax of 55% on all the income they earn.

Registration for VAT

A sole trader must also register for Value Added Tax or VAT. VAT is added to the sale price of products and services and is generally passed onto the customer. The VAT Consolidation ACT 2010 governs the regulations around VAT in Ireland.

Most sole traders aren’t eligible for VAT until their annual turnover through:

• The sale of products is more than €75,000
• The sale of services is greater than €37,500

VAT rates are of various types in Ireland, such as – standard rates (23%), reduced rates ( 9% and 13.5%), and Zero-rated (0%).

Similar to income tax, VAT can also be registered through ROS. Sole traders can also register for VAT through the TR1 form. 

Registrants for VAT are often required to provide additional details before completing the registration, such as evidence of trading, lease agreements for premises, etc. As a result, the process can sometimes take longer than Income Tax registration.

Register for Employers PAYE

All sole proprietors in Ireland who employ workers must register as an employer and process payroll.  As an employer, sole traders are responsible for deducting the appropriate PAYE tax, USC, and PRSI from your employees’ wages. In addition, they have to maintain a record of these payments reported to Revenue on a real-time basis. 

Register for PRSI

Pay Related Social Insurance or PRSI is a contribution sole proprietors make towards social welfare. The revenue categorizes PRSI into various classes. Sole proprietors pay Class S PRSI.

Sole traders in Ireland generally pay 4% of their annual income as PRSI. However, for businesses with revenues below €5,000, social contributions can be exempted. However, employers can still pay €500 towards PRSI contributions as voluntary contributors.

PRSI entitles sole proprietors to social insurance payments.

Running a  sole proprietorship in Ireland has its merits, the most significant ones being the ease of starting and running one.  Although kickstarting your business can be smooth, managing affairs around payroll and compliance would be difficult.

Employers will need help paying their employees, managing freelancers, and generating invoices.

Using Multiplier’s SaaS-based employment solution, sole proprietors in Indonesia can pay employees and generate invoices without hiring an accountant or building an in-house HR team.

Speak to our experts.