Thinking of starting a business in Ireland? You’re not alone. Every year thousands of people take the leap into self-employment, contracting, or setting up a company.
But before you begin trading, the first big decision is choosing the right business structure. Whether you become a sole trader, independent contractor, or form a limited company, each option comes with different legal, tax, and administrative responsibilities.
Here’s a simple, clear breakdown to help you understand your options and make the best choice for your business.
1. Becoming a Sole Trader
A sole trader is the simplest way to start a business in Ireland.
Best For:
- Freelancers
- Small, service-based businesses
- Early-stage entrepreneurs
- Anyone starting with low risk and low overheads
What You Need to Know:
- Register with Revenue as self-employed (Form TR1).
- You can begin trading almost immediately.
- Legally, there is no distinction between you and your business.
- You are personally responsible for all debts and obligations.
- You pay tax under the self-assessment system at 20% or 40%, plus PRSI and USC.
Pros:
- Simple, low-cost setup
- Minimal paperwork
- Full control over decisions
Cons:
- No limited liability protection
- Harder to scale
- May be less tax-efficient at higher income levels
2. Working as an Independent Contractor
A contractor is technically self-employed, but the structure is commonly used in specialised or short-term project roles, especially in tech, construction, engineering, and professional services.
Best For:
- IT and tech contractors
- Consultants
- Project-based roles
- Skilled trades
What You Need to Know:
- You can operate as a sole trader or via a limited company.
- Many clients prefer contractors to operate as a limited company for compliance reasons.
- You handle your own invoicing, tax, and insurance.
- You are not entitled to employee benefits (sick pay, holidays, etc.) from clients.
Pros:
- Higher earning potential
- Flexible work arrangements
- Ability to offset business expenses
Cons:
- No employment rights
- Irregular income
- Must manage all taxes and compliance
3. Setting Up a Limited Company (LTD)
A limited company is a separate legal entity, meaning the business stands on its own.
Best For:
- Growing businesses
- Contractors wanting more structure
- High-earning professionals
- Anyone seeking limited liability
- Businesses wanting to hire staff
What You Need to Know:
- Register with the Companies Registration Office (CRO).
- Must file annual returns, company accounts, and comply with company law.
- More paperwork, but more protection.
- Directors have legal duties.
- Corporation Tax is 12.5% on trading profits.
Pros:
- Limited liability protection
- Often more tax-efficient at higher income levels
- More credibility with clients and suppliers
- Easier to raise finance or take on investors
Cons:
- Higher setup and ongoing admin
- CRO deadlines and compliance
- Need proper bookkeeping and payroll systems
How to Choose the Right Structure
Here’s a quick guide:
| If you… | Best option |
|---|---|
| Want the simplest, cheapest setup | Sole Trader |
| Earn under €40–50k and low risk | Sole Trader |
| Are a contractor in tech/construction/consulting | Limited Company |
| Plan to hire employees | Limited Company |
| Need liability protection | Limited Company |
| Expect to grow quickly | Limited Company |
| Want minimal admin | Sole Trader |
If you’re unsure, start with careful planning, or speak to a professional who can guide you based on your sector and goals.
What You’ll Need to Get Started
No matter which structure you choose, you’ll need to:
- Register with Revenue (sole traders) or CRO (limited company)
- Set up a separate business bank account
- Keep accurate books and records
- Track VAT obligations
- Register for taxes (PAYE, VAT, Corporation Tax, RCT if relevant)
- Put correct payroll processes in place if hiring
Starting correctly saves you money, stress, and compliance issues down the line.
Need Help Starting Your Business?
Whether you’re considering sole trader, contracting, or setting up a limited company, we can help you start strong and stay compliant.
Book a Free Consultation
Or contact us at info@outsourced.ie
