Sole Trader vs Limited Company in Ireland; Everything You Need to Know

What are the differences between a Sole Trader and a Limited Company? One of the most common queries every business starter asks before launching their new company on Ireland soil. Which business type I should choose? Are there any tax benefits for a limited company compared to a sole trader? what are the risks involved in both company types? etc. The list goes on.

This article will walk you through the significant differences between being a Sole Trader or starting a Limited Company in Ireland so that you can choose the most suited business category for your dream venture.

What are the differences between a Sole Trader and a Limited Company?

  • There is nothing wrong in starting your business as a Sole Trader and then changing the same into a Limited Company
  • Sole traders are personally liable for the debts of the sole trading business. Their personal assets such as their house, other properties, car, etc. can be used to pay their creditors. On the other hand, Limited Companies are completely separate legal entities and the creditors can only claim against the company’s assets, not on personal properties
  • Setting up a Limited Company in Ireland is more expensive and a little bit more time-consuming compared to a sole trader
  • Starting your business as a limited company will give you more security for your personal assets
  • Starting your business as a limited company compared to a sole trader will give you the cushion of multiple tax incentives
  • There are pre-defined limitations set by the authorities on how much you can mature as a sole trader, whereas the limited company is wide open for development and exposure
  • A sole trading business is easy to shut down whereas a limited company has a little more formalities compared to a sole trader
  • A sole trader has only fewer legal filings compared to a Limited Company in Ireland
  • You don’t have to prepare financial statements if you are running your business under the sole trader category but for a limited company, you have to maintain a proper book of records
  • If you are a sole trader, your business financial details won’t be visible to the public but a limited company financial statements are open to the public as per the law
  • Irrespective of the business category, you have to register your business name with the Companies Registration Office before starting your business
  • Even though you are a sole trader, you still have to prepare a tax return every year
  • If you are running your business in Ireland as a sole trader, then your earnings deducted from your expenses will be taxed as your income which can mean a tax rate of up to 55%
  • If you are moving forward as a limited company in Ireland, then your profits will be taxed at a rate of 12.5% as a Corporation Tax

If you still have any queries or clarifications, please contact our experienced TASC accountants in Dublin 15. We can help you with your business registrations, queries from government bodies and other subsidiaries, and also with the main filing obligations. We will also assist you in preparing your year-end accounts, filing your tax returns on time, setting up payroll, adding and deleting new employees, etc.

So, the NEXT step is business registration, right? Even though it is possible to proceed with the business name registration process by yourself, still it is better to seek the help of one of the experienced company formation experts in Ireland.

READ THIS ARTICLE: Business Name Registration in Ireland: All Possible Scenarios


Call us at (087) 225 7706, 01 441 6919, or email us at for any assistance.