What are the Advantages and Disadvantages of Operating as a Sole Trader in Ireland?

Is it okay to remain as a sole trader?

One of the most common questions we hear all the time.

Every business type in Ireland has its own benefits. It’s entirely your decision to select a business type that you suits your business. A sole trader is a businessman or a businesswoman who doesn’t have any partners in their business and all the business decisions are made by themselves. If your net income is above €5,000 then you must register yourself as a self-employed person with Revenue in order to set up your business as a sole trader in Ireland.

You are entitled to pay your Income Tax, Pay Related Social Insurance (PRSI), Universal Social Charge (USC) on your net business profits, Pay As You Earn (PAYE), employer PRSI, Value Added Tax (VAT), and Relevant Contracts Tax (RCT). Being a sole trader in Ireland, you have to make sure that, you must submit your Form 11 and any salaries that you pay to your staff must be paid through the PAYE system only.

But in order to decide, whether you operate your business as either a sole trader, a partnership or as a company, it is always advisable to consult an experienced and one of the best accountant in Ireland so that an infant business person can get to know the in depth rules and regulations associated with it.

So, for your self-knowledge here are the most important advantages and disadvantages of operating a business as a sole trader in Ireland.

Advantages of operating as a sole trader in Ireland

  • Being a sole trader, there will be less administrative activities such as employee management, salary distribution, compliance handling etc
  • If you act as a sole trader, then you don’t have to file accounts with the Companies Registration Office (CRO)
  • If you are operating your business as a sole trader, then the monetary benefits from your business will be flowing into your hands directly
  • Your business maintenance cost will be comparatively lower when you are operating as a sole trader in Ireland
  • For business/trade categories such as contractors, freelancers, or other self-employed professionals, being a sole trader offers a flexibility in their process and in what they do
  • Being a sole-trader, you don’t have to pay more taxes on your own income with respect to certain conditions
  • If you are doing business alone, then you don’t have to run a payroll for yourself.
  • Even if you suffer a financial loss in any given year, if you have other sources of income, then you can withstand your business and move forward

Disadvantages of operating as a sole trader in Ireland

  • If your business is highly successful and you are able to earn more than enough money from your business, being a sole trader the surplus income is all subject to income tax, which can be as high as 55% including the PRSI and USC. But if you run as a company, then you can fix a certain amount as a salary for yourself and the rest amount can be left in the company account itself. In that case, you only have to pay a 12.5% as tax cut
  • You won’t have the safeguard of limited liability which you would benefit from in operating your business through a company
  • Being a sole trader, it will be more difficult to raise finance to fund trade expansion in the future
  • Certain tax reliefs such as EIIS, SCI or SURE will not apply to a sole trader but to a limited company
  • Being a sole trader, you won’t have a corporate or shareholding structure which will make you challenging to find investors other than your business circle
  • As a sole trader, for pension planning, your scope is very limited

Want to become a sole trader in Ireland?

Contact the most trusted accountants in Dublin now. Contact our best chartered accountants in Dublin and become a sole trader in Ireland. With our 15+ years of experience, we will help you to effectively and efficiently manage your sole trading business for a productive future.



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