Operating through a Limited Company

How do I form the Company? 
There are several ways in which a company can be formed. The most common routes are through a company registration agent or through an accountant or lawyer. You choose your own business name and specify the objects of the company. The company will then be created to your own requirements within about five to seven working days. The charge for our company start-up service includes all advice given as to the appointment of company officers and shareholders and completion of the initial registration form for VAT, PAYE/PRSI and Corporation Tax purposes.

What Documents will I receive? 
Certificate of Incorporation: The birth certificate of the company setting out where and when it was incorporated, and its registered number.

Memorandum and Articles of Association: The constitution of the company setting out the objects for which the company is formed and any restrictions on the conduct of its day to day business. 

What forms do I need to complete?

• Form B10 - Appointment of Director and Secretary.
• Form B2 - Notification of Registered Office.
• Form A1 - Issue of Shares.
• Form TR2 - Application for registration for Corporation Tax, VAT and PAYE/PRSI
• Form 12A - Application for a certificate of tax-free allowances

How do I open a bank account? 
It is recommended that the contractor open two bank accounts in the name of the company: -

• A current or cheque account for the day to day transactions of the company.
• A deposit or high interest account which will be used to save funds for payment of VAT and tax bills (effectively a tax reserve account).
  Generally speaking the best approach to opening a company bank account is to go along and see your own personal bank manager as he will be able to proceed quickly with the paperwork without the need to look for references, etc.
• Alternatively, if you are not on good terms with your own bank or have just arrived from overseas, OSK will be able to refer you to a "user friendly" bank manager who will be aware of the freelance contractor "one man" company.

What Expenses can I claim? 
As a freelance contractor your limited company is allowed to deduct from its income most expenses incurred in the conduct of its business or performance of its duties.

The question of what qualifies as a tax-deductible expense is generally straightforward. However there are some grey areas which often only become clearer when the Revenue Commissioners specifically decide that a particular expense is or is not a deductible expense.

Some categories of expense such as company cars or mobile phones are fully deductible but carry an associated benefit in kind tax charge on the contractor, while others such as accountant's fees can be deducted without question.

Often the particular circumstances of the contractor (e.g. residence, contract location, contract length, nature of work) can make it straightforward to determine how an individual will fare in his attempt to claim deductions.

Allowable Expenses

• Stationery and postage;
• Wages and salaries;
• Advertising;
• Legal and professional fees;
• Subsistence costs;
• Subscriptions to trade associations should also normally qualify;
• Business travel expenses - if you use your own car for business journeys then you may claim a mileage allowance. Business journeys will start from your normal 'place of business'. Your normal 'place of business' is defined as where you carry out substantially all of your duties. Therefore, even though your business may be registered at your home address you will not be able to claim for travelling between your home and the site at which you are working;
• Accountants fees;
• Subscriptions to trade-related journals and other sources of information;
• Telephone, light and heat - a proportion of your household expenses may be allowable if you use your home partly for business purposes. It is not necessary that your home should also be your base. If you carry out some of your work at home and you incur additional expenses (eg light, heat, telephone) as a consequence, then the additional expenses will be allowable.We will advise on the expenses that may be claimed if you use your home for, business purposes and on whether or not you should purchase assets, (e.g. company cars) in the company's name.
• Professional books and journals - We will advise on the capital allowances that are available on the company's assets and advise you of any additional reliefs for which you may be eligible.
• Permanent health insurance;
• Pension contributions;
• Training costs;
• Computer related costs;
• Interest and bank charges;
• Leasing costs (over the period of the lease);
• Repairs, renewals, etc.

How is the Company money distributed? 

By Remunerating Yourself 
The contractor should pay himself a regular salary at a rate normally agreed at our initial meeting. Any funds left in the company at the end of the financial year should be paid out by way of additional remuneration. 

By Paying Third Party Expenses 
Certain expenses can be met directly from the company's bank account (e.g. accountant's fees, pension contributions, training etc.). 

By Reimbursing Expenses to Yourself 
There will be a few expenses which, by necessity, must be paid directly by the contractor from his personal funds, but which relate to company expenditure. The contractor should regularly reimburse himself in respect of this expenditure (either monthly or quarterly) in the same manner in which he would claim expenses from an independent employer. An expenses reimbursement claim supported by receipts should be submitted to the company and a cheque written to the contractor for the total claim. 

By Paying Tax Liabilities 
The payroll taxes and VAT may both be paid to the Revenue by Direct Debit from the Company's bank account. At the start of the year we will work out the amounts that should be paid and we will fill in the direct debit forms on your behalf. Paying by direct debit means that the liabilities are always paid on-time and it reduces the paperwork as you only need to file one VAT and one PAYE return at the end of the year.