If you're a sole trader, or thinking about starting up a business, new legislation should make it easier for you to incorporate the business as a limited company. For example, you'll be able to have just one director, just one document in the company constitution and you'll be able to have an AGM by correspondence. See this article.
At present, there are benefits to being a company director as distinct from a sole trader, when it comes to making pension provision. Here's a brief summary: -
Sole Traders
- Pension contributions limited to a fixed percentage of Net Relevant Earnings, dependant on age.
- Earnings cap of €115,000.
- No PRSI or USC relief.
- Earliest retirement age (except in ill-health) is 60.
Company Directors
- Companies can write off significant pension contributions against Corporation Tax, up to generous Maximum Funding limits.
- Funding not restricted by the earnings cap.
- Company contributions offer effective relief against tax, PRSI and the USC.
- Early retirement permitted from age 50, once director severs ties with company and disposes of shares.
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