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What is an SME and how do I get started?
OCTOBER 28 2021
The term SME is frequently used in business, often without people knowing what it means, or what the definitions of an SME are.

In this useful guide, you’ll find out everything you need to know about SMEs, how to set one up and useful links to find out more specific information.

Meaning of SME:

The acronym SME stands for ‘Small to Medium Enterprises’. If your business has 249 or fewer employees, it is generally defined as an SME. Within that, ‘small’ and ‘medium’ are defined more accurately:

Small Enterprise

A small enterprise can have no more than 50 employees, or no more than a €10 million turnover or balance sheet figure.

Medium Enterprise

A medium enterprise is one with a headcount of between 50 and 250 with a turnover of less than €50 million (only 1% of SMEs are medium).

The SME Sector:

The majority of SMEs are referred to as ‘micro’ in size. That means they have a headcount of fewer than 10 people and the annual turnover is no more than €2 million.

According to the most recent figures from the Central Statistics Office (CSO), there are 248,344 SMEs active in Ireland, employing around 968,881 people, so they are very much the engine of the economy, both in terms of employment and outputs.

How to start an SME:

If you are thinking of setting up an SME, it’s good to know what supports are out there and what procedures you need to follow.

Local Enterprise Offices provide supports to local businesses that are starting up or in development. Their role is to stimulate economic activity at local level and to promote microenterprises (10 or fewer employees). You can find information about their training programmes and start your own business courses as well as mentoring and financial supports on

Enterprise Ireland: New Frontiers:

New Frontiers is a development programme for potential entrepreneurs, funded and coordinated by Enterprise Ireland, which is delivered locally by Institutes of Technology.

Back to Work Enterprise Allowance:

If you are unemployed you may be eligible for the Back to Work Enterprise Allowance (BTWEA) or the Short-Term Enterprise Allowance (STEA). If you are starting a business, you also may get extra supports under these schemes, such as grants for training, market research and business plans, as well as access to loans to buy equipment. These helpful initiatives are there to be availed of, so make sure you find out what you are entitled to.

Types of businesses you can set up:

Sole trader

It is relatively simple to set up as a sole trader but if your business fails, your personal assets could be used to pay your creditors. Your main legal obligation is that you must register as a self-employed person with Revenue (see ‘Tax and PRSI’ below). If you wish to use a business name you must register your business name with the Companies Registration Office (CRO).


This is where 2 or more people agree to run a business in partnership with each other. The partnership agreement should be drawn up by a solicitor. The partners are jointly responsible for running the business and if it fails all partners are jointly responsible for the debt.

Setting up a Limited company

If you set up your business as a limited company, the business is a separate legal entity. If the company gets into debt, the creditors generally only have a claim on the assets of the company. The company must be registered with the Companies Registration Office (CRO) and the company reports and accounts must be returned to the CRO each year.

SME Finance:

Microfinance Ireland provides loans to small businesses with no more than 10 employees, including sole traders and start-ups. The loans of between €2,000 and €25,000 are for commercially viable proposals. You can find out how to apply on

JobsPlus is an employer incentive which encourages and rewards employers who employ job seekers on the Live Register. JobsPlus has replaced the Revenue Job Assist and Employer Job (PRSI) Exemption Schemes.

Under ,the Trading Online Voucher Scheme, vouchers of up to €2,500 may be available to businesses who demonstrate that they have a credible plan for trading online. Further details are available from your Local Enterprise Office.

Tax and PRSI:

Extensive information on tax is available in the Citizen’s Information bureau’s document on tax for self-employed people and from the Revenue.


If you are starting up a business and decide to recruit staff, you must register for PAYE and PRSI with Revenue. A good guide for information on employing the Citizen’s Advice bureau’s document Employers' obligations in Ireland

Further information:

The Irish SME Association has a website that is full of important and very helpful information about setting up and running an SME