Hello,
I am planning to set up a company with 2 others. It was initially very clear to us that the way to go would be setting up a private limited company with the 3 of us being directors with equal share distribution. This is our first time getting involved in something other than PAYE work and having done our research ( CRO, Revenue, other resources on line, seeking advice from company formation agencies, etc.), we seem to have come up with more questions than answers at this stage! I will try to outline our situation and our questions as clearly as possibly below. I apologise in advance for the long post.
Background about the company we intend to set up:
· Company business: the development of a retail franchise business in Ireland and the UK ( this is already established for a number of years and growing quite rapidly in Spain and Portugal. We would be agents for Ireland & UK.) We would be:
o advertising and promoting the franchise company with a view to find prospective franchisees
o supporting these businesses on the ground on their day-to-day running
· Products and invoicing structure: The products will be imported from Italy & Portugal. Import/shipping and invoicing to future Irish & UK franchisees will be done directly by the franchise owner company ( based in Portugal), not by us.
· How would we make money?: Our company's income would be in the form of a fee from the franchise owner company ( we would get a set fee for every franchise shop that we open here + a percentage fee for on-going orders from the shops) .
· Our initial investment: apart from our time, something in the order of €2,000 - €3,000 each for advertising here and in the UK, set up and administration etc.
· Location: we intend to set up the company in Ireland. We will not require offices.
· Our current, individual situation: The two others are employed full time ( one in Ireland, one in Spain) I am currently unemployed - not getting benefits/ allowances, but signing for credited contributions.
· Company size: we do not intend to make any hires in the foreseeable future.
Our questions
Based on the above:
· Is the structure of a Ltd company with 3 directors with equal share holding the most appropriate for us?
· Because I am currently unemployed, I will be doing most of the initial research and related tasks- we have drafted an agreement between us that reflects this and how each of us will be remunerated based on the amount of activity carried out etc. We don’t envisage that we will be bringing in any money for at least 4-6 months. Are there other considerations that we should be thinking of at this stage? Tax implications for them or effect on my signing on for credits?
· I have contacted the Local Enterprise Office for advice and have an appointment in 3 weeks’ time. Are there additional start-up supports that would suit our type of business? We do not require investment or a loan. There seem to be a lot of organisations out there ( I have also seen the posts here from May on the subject of somebody trying to put together a list with all of this information and links) However, when you look into the detail, it is hard to figure out where to go to – we are not a HPSU, we are not creating a new or innovative product or service, we will not be exporting or hiring staff…
-If we go down the Ltd company route: with regards to the authorised share capital ( as required when incorporating a ltd. company), I see that this is an arbitrary figure and that, in order to avoid having to increase it at a later stage, the recommendation seems to be to set it up as high as €1,000,000. I am finding it difficult to grasp the implications of this ( have asked a couple of company formation agencies that you find on-line, with a view to engage them in setting this up, but replies are a bit slow and unclear). Is €1,000,000 the norm? Is this basically a formality at the point of incorporation?
Any help would be greatly appreciated
I am planning to set up a company with 2 others. It was initially very clear to us that the way to go would be setting up a private limited company with the 3 of us being directors with equal share distribution. This is our first time getting involved in something other than PAYE work and having done our research ( CRO, Revenue, other resources on line, seeking advice from company formation agencies, etc.), we seem to have come up with more questions than answers at this stage! I will try to outline our situation and our questions as clearly as possibly below. I apologise in advance for the long post.
Background about the company we intend to set up:
· Company business: the development of a retail franchise business in Ireland and the UK ( this is already established for a number of years and growing quite rapidly in Spain and Portugal. We would be agents for Ireland & UK.) We would be:
o advertising and promoting the franchise company with a view to find prospective franchisees
o supporting these businesses on the ground on their day-to-day running
· Products and invoicing structure: The products will be imported from Italy & Portugal. Import/shipping and invoicing to future Irish & UK franchisees will be done directly by the franchise owner company ( based in Portugal), not by us.
· How would we make money?: Our company's income would be in the form of a fee from the franchise owner company ( we would get a set fee for every franchise shop that we open here + a percentage fee for on-going orders from the shops) .
· Our initial investment: apart from our time, something in the order of €2,000 - €3,000 each for advertising here and in the UK, set up and administration etc.
· Location: we intend to set up the company in Ireland. We will not require offices.
· Our current, individual situation: The two others are employed full time ( one in Ireland, one in Spain) I am currently unemployed - not getting benefits/ allowances, but signing for credited contributions.
· Company size: we do not intend to make any hires in the foreseeable future.
Our questions
Based on the above:
· Is the structure of a Ltd company with 3 directors with equal share holding the most appropriate for us?
· Because I am currently unemployed, I will be doing most of the initial research and related tasks- we have drafted an agreement between us that reflects this and how each of us will be remunerated based on the amount of activity carried out etc. We don’t envisage that we will be bringing in any money for at least 4-6 months. Are there other considerations that we should be thinking of at this stage? Tax implications for them or effect on my signing on for credits?
· I have contacted the Local Enterprise Office for advice and have an appointment in 3 weeks’ time. Are there additional start-up supports that would suit our type of business? We do not require investment or a loan. There seem to be a lot of organisations out there ( I have also seen the posts here from May on the subject of somebody trying to put together a list with all of this information and links) However, when you look into the detail, it is hard to figure out where to go to – we are not a HPSU, we are not creating a new or innovative product or service, we will not be exporting or hiring staff…
-If we go down the Ltd company route: with regards to the authorised share capital ( as required when incorporating a ltd. company), I see that this is an arbitrary figure and that, in order to avoid having to increase it at a later stage, the recommendation seems to be to set it up as high as €1,000,000. I am finding it difficult to grasp the implications of this ( have asked a couple of company formation agencies that you find on-line, with a view to engage them in setting this up, but replies are a bit slow and unclear). Is €1,000,000 the norm? Is this basically a formality at the point of incorporation?
Any help would be greatly appreciated