How to minimize banking fees for your small business

When running a small business, profitability matters and every dollar counts. Statistics show that about 20% of small businesses fail in the first year and almost 70% fail in their 10th year. One of the most common reasons is the inability of the business to become profitable. Various factors affect the profitability of a business and one key aspect is the high banking transaction costs. Business accounts normally accrue higher fees than individual accounts. It’s important for businesses to keep their bank transaction costs minimum to see better chances of being profitable. Here are 5 important tips for small businesses to minimize banking fees.

1.    Understand the Banking Charges

It’s important to know how much you spend every month as banking charges. Charges almost apply for every transaction and the different facilities offered by the banks. Different banks have their own fees structure and it’s crucial that you pay attention to it. It’s best to open an account with the bank that offers the lowest account fee and transaction charges.

2.    Online banking

Every bank offers online banking facilities these days and it’s best to take full advantage of these facilities. Online banking helps to save time and have the banking details on your fingertips. Generally, banks tend to offer a package of additional services when you opt for online banking. It is advisable that you try to understand the charges, in case you opt for them, that come with it and a good understanding of the services offered.

3.    Reduce the number of transactions

Most banks charge their customers on a per-transaction basis. Therefore, fewer the transactions, lesser the banking charges you will pay. Plan ahead in the month on the number of withdrawals and deposits you intend to make and try to combine them into a single or few transactions to save on the banking charges.

4.    Alternative payment methods

If your business requires customers to make payments or deposit money into your account, to avoid transaction charges for every single transaction, you can move into the Direct Debit scheme. By opting for this, all your customers’ payments will be credited to your account on a single day (of your preference). In this case, you only need to pay one transaction fee to receive the entire amount. Similarly, when you have to make payments to your vendors, you can opt for the Direct Credit scheme in which you will get billed for your transactions on a particular date.

5.    Never use other bank ATMs

Always use the ATM of the bank in which you hold an account. Using your card on other bank ATMs will earn you charges for every single transaction. Remember to consider the number of ATMs in your locality and the accessibility factor when you open a bank account.

6.    Stay in Credit

End of the day, it’s important to make sure you maintain the minimum bank balance and stay in credit to avoid any charges. Having too many credit cards will be expensive and increases the usage fees. Be aware of the limits on your card and make sure you don’t exceed the limit.

 

How to claim for Tax Relief for your Start-up Company?

The start-up scene is growing rapidly in Ireland. Driven by business visionaries and bolstered by government associations like Enterprise Ireland and local start-up gatherings around the nation, the start-up network in Ireland is growing exponentially year on year. While new companies can have the skill, drive and the involvement in their specific region to amplify the eco-system, there is still one area where numerous entrepreneurs, new or old, can find quite overwhelming and that’s the convoluted universe of Irish tax returns.

This guide identifies a few territories you need to talk about with your tax specialist if you are a part of startup eco-system

 What are the reliefs for individuals looking to set up/ invest in a company

Following are the few points using which companies can set up their investment in other companies.

 SURE: If you have recently set up your very own business, you might be qualified for tax relief under the Startup Refunds for Entrepreneurs scheme. Under this scheme, entrepreneurs can make a claim for a refund against income tax they paid over the past six years.

Employment Investment Incentive: This plan provides tax relief, subject to specific conditions being met, to people for purchasing new standard share capital in another or existing business. A taxpayer who invests into an approved EII investment can reduce a substantial amount from their taxable income for the year in which the investment was made. The maximum investment allowed is €150,000 per year

The EII Scheme offers one of the few remaining income tax reliefs and is one of the few sources of total income tax relief (which includes, but not limited to, Pension funds, ARF distribution income, Rental income).

What are the Tax Reliefs for all businesses (including partnerships, sole traders, and limited Companies)

The following are tax reliefs offered to businesses of different types, including sole traders, partnerships and limited companies: 

Pre-trading expenditure:  Pre-trade expenses are the expenses you had incurred within seven years of you starting the trade or while you were trading. The calculation begins from the first day of tradingThese tax-deductible business expenditures include expenses, such as buying inventory, equipment, paying rent, getting insurance, marketing, and advertising.

Think about the activity of the business: Certain extra tax relief might be available relying upon the activities of the business – for instance, relief for expenditure on research and development. 

What is the tax relief for companies only?

Companies can also gain some relief from the tax. Following are a few methods through which companies can apply for tax relief:

 Company tax relief: Certain organizations don’t need to pay for corporation tax on their profits, subject to meeting certain conditions, for a timeframe subsequent to starting a business. Note that, the relief does not matter to specific trades, for example, those including the essential production of agricultural items, the preparing and promoting of agricultural products, export-related activities and so forth. Moreover, the relief won’t have any significant bearing where the trade was recently carried on by someone else in the State.

Costs of doing business: You can guarantee a tax relief against your business benefits for some operational expense that you cause entirely and solely for the motivations behind the trade. 

Research and development tax credit: As an impetus for organizations doing certain R&D exercises, a tax credit might be available. Audit your business activities with your tax specialist to check whether you meet all requirements for R&D tax credits.

Losses: Tax treatment of misfortunes is an important region, and tax specialist advice is suggested for this (and, to be sure, for all areas of expense). At last, the relief available for losses will rely upon whether the business is working as a sole broker/organization or through an organization.

Capital allowances: A capital allowance is an expense derivation for expenditure caused by capital hardware, for example, office furniture. It merits checking on your fixed-asset register to check whether you are asserting capital allowances on all passing assets.

IP: Tax relief is available for capital use acquired by organizations on an expansive scope of intangible assets, including trade names, brands, know-how, publishing titles, copyright and goodwill specifically derived from those intangibles.

To check whether you are eligible, speak to the advisors here. 

 

 

 

How Your Business Can Protect its Name, Brand and Ideas

Establishing a unique identity in this vast marketplace is not a cake walk. Businesses work very hard to create an identity that reflects the true essence of their core values,  products, and services. An identity that even the stakeholders can resonate with. However, there are few companies which accidentally or deliberately use another company’s trademark and brand, thus potentially creating confusion among consumers. This also affects their overall marketing visibility. Therefore, companies need to protect their brand image and business with due diligent monitoring and careful preparation.

Following are a few methods businesses can use to safeguard their name, brand image, and innovative ideas from being deliberately utilized by other parties.

Registration of company name: Make sure to register your company name first. Once a company is registered online or offline, the company holds the exclusive right to the corporate name along with the designation such as a Corporation or Corp., Incorporated or Inc., Limited or Ltd., Company or Co., among many others. The registration acts as a foundation stone in building a great brand value of the company.

Domain Name Registration: The second method is registering the domain name of the website. When you register a domain name, it puts your business name on the global forum, i.e., the world wide web. It is through this medium you can get wide and easy access to a global market. This will also make it easier and convenient for the consumers to find information about your business such as products and services, contact details, information on founders and lots more.

Copyright: Copyright is the process of granting the creator of an original work all the exclusive rights of its distribution and uses. This applies directly to the songs, poems, any form of content in writing and recorded format from internet to software, drawing, film, photography, music and much more.

Companies having copyrights over original works can profit from royalty payments using licensing agreements. All the copyrighted works are marked with the symbol “©”, the owner and the year in which it was created.

Trademarks: Trademarks are very crucial in protecting the brand identity of the company. It helps to differentiate the business in the marketplace. Registering a trademark helps businesses to protect business name, logo, and brand.

Patents: A patent is a form of “industrial property”. It can be licensed, assigned and transferred by the owner. The patent helps protect the ideas and creativity of business from plagiarism and copy. A patent is granted for a specific period of time and the holder reserves all the right to use, make, sell and license the innovation.

Design: All the new visual designs of a product, company logos are protected in order to save them from being copied by another individual, companies, etc. This will enable your company to get a distinctive competitive advantage over other competitors.

Protect trade secrets: Trade secrets are confidential information as they help companies to protect their secret business deals, agreements, information from being stolen by other interested parties. This also helps companies to gain economic advantage over others. They hold great commercial value, and which is why companies need to protect them very carefully.

Protection – Proactive Approach: As infringement, theft, plagiarism is very much common in today’s competitive corporate marketplace, companies need to take a proactive approach in protecting information, what truly belongs to them. With laws varying from place to place, companies need to be aware of the legislation that applies to the markets in which they function. This will help protect their product, brand value and gain rights over protected assets.

A company’s brand image, idea, value acts as a foundation stone for the company visibility in the global marketplace. This is something every company must do to protect proactively.

 

PAYE Modernisation – All your questions answered

Pay As You Earn (PAYE) modernisation is a new public consultation process initiative introduced by the Revenue to give the existing system a makeshift. The existing PAYE system is in place since 1960 and hasn’t been updated. The Revenue is working to modernise the PAYE system especially to overcome the problem of over and underpayment of taxes.

With PAYE modernisation, every employer must report their employees’ pay and deductions to the Revenue as and when they are paid. This helps the Revenue in deducting and paying the correct amount of Income Tax, Pay related Social Insurance, University Social Charges and Local Property Taxes.

How does the PAYE modernisation work?

At the end of every calendar month, the Revenue will issue a statement with the tax due for the period of time. The organization must positively return the statement to the Revenue by the 14th day after the month end after which payroll taxes have to be remitted by the 23rd day of the following month. If your company has employees paid both weekly and monthly, you must submit separate Payroll Submission Request (PSR)s to the Revenue.

Payroll submissions must be done by organizations before any taxable component cash payments are done to the employees. Employers must revise their internal processes and make sure the taxable expenses are calculated beforehand.

Can payroll corrections be made after submission?

Yes, payroll corrections can be made before or after the employee is paid. The organization has to make the payroll correction and send it to the Revenue which will replace the original submission.

When does the PAYE modernisation come into effect?

The new PAYE system is in effect from 1st of January, 2019.

What benefits does PAYE modernisation offer?

PAYE modernisation improves to streamline the business and reduces the burden of the employers to meet their PAYE reporting deadlines.

Should organizations complete the P35 after the year end? Should P60s be issued to employees?

No, the annual P35 is no longer required since the Revenue will be receiving the file submissions during each day period of time. This will also eliminate the need for P30s. However, organizations must remember that the P35 is still required for the year 2018 while it’s no longer required after that.

P60s need not be produced to employees after 2019, though it is still required for the year 2018 (similar to P35). The Revenue will issue a statement at the end of the year to all employees. All taxpayers will be able to view their certificate of earnings and deductions from the myAccount page on the Revenue portal.

How should Benefits and notional payments be reported?

If there are any Benefits-in-Kind (BIK) payments or notional payments, they must be reported to the Revenue on the day when it is paid or the earlier of the next payday or December 31 of the particular year. Company credit cards use is considered as notional payments. The benefit has to be provided by the organization on the date the card is used (and not when the bill is settled).

What are the penalty charges for non-PAYE modernisation compliance?

The Revenue implies a €4000 fixed penalty for every PAYE breach. There is also a fixed penalty of €3000 which will be imposed on the company secretary for every breach.

Have more questions regarding PAYE Modernisation? Speak to our experts today. Book your first no-obligation appointment here. 

How much should you pay to yourself as the business owner?

You wanted to start a business, and you’ve done it! Everything you do is working great, your product or services are selling fine and your customers start loving your product. But if you haven’t thought of giving yourself a pay check, think again. Most entrepreneurs tend to overlook paying their salaries. Here’s why you deserve a pay check –

  • You put in the hard work and it’s your valuable time that must be credited
  • Keeps you motivated and helps you perform better
  • Helps to manage your personal finances and expenses
  • Reduces the tax you pay on the total profit

How much should you pay yourself?

The first question that arises when talking of paying yourself a salary is “How much?” Getting paid is important and necessary for your personal well-being, but this should not slow the business growth. Paying too much will take a hit on the business while paying less might not seem the right thing. So it’s important to strike the right balance on how much you get paid as a business owner. And as always, treat your personal and business finances separately! Remember this general rule of thumb: You can take 20% of the profits as your salary and put back the remaining 80% as an investment in your business.

Take your pay according to your business type

Before drawing your pay, assess the nature of your business and see how much you are “eligible” to take as per Government norms. You can refer to the Government tax websites to get these details. This varies based on the market sector and the amount of profit your business is actually making. Do some research on how much other similar businesses will pay you, and understand if the pay is reasonable when compared to your employees and if it merits your work and efforts.

When can you take a paycheck?

If your business is on a low, taking a paycheck should be your last priority. Once the business stabilizes, it becomes easier to get paid. Here are a few questions you can try answering to see if you can take a paycheck or not –

  • Has my business starting generated a sustained revenue?
  • Am I on track with the projected revenue?
  • Are all my operational expenses covered, and is my business breaking even?

If you answered Yes to all these questions, you can take a paycheck as the business owner.

Ways to take a paycheck

The best practice is to take your pay from the business profits rather than the revenue. Also remember to factor in other expenses like payroll, taxes, overheads and so on. You can choose to take a paycheck either as a Salary or an Owner’s Draw. You can choose to earn at regular intervals based on a number of hours of work or a flat rate according to the nature of your business. On the other hand, you can take a salary from your company profits.

As a business owner, it’s important that you make a point to get yourself paid. It’s completely fair for all the work you do.

What other questions do you have regarding paying yourself as a small business owner? We’d love to provide you with custom advice unique to your business. Book your appointment with our Expert Now.

5 Things you need to start a company in Ireland

Have a business idea or an innovation? Thinking of bringing out the entrepreneur in you and starting a business to put the idea into action? Perhaps considering the support and the initiatives you get from the Irish Government and the start-up communities in the country, starting a new business in Ireland isn’t really a challenge. However, before you get a move on with the process, it’s important that you get the basics right. See if you can answer the following questions and if you can, you are good to start your business in Ireland.

Do you have it in you?

While starting a business can be tough, before stepping into it, take a reality check to see if you are ready for it. Initial stages of setting up a business aren’t going to be easy. You’d be forced to make a lot of sacrifices – both in your professional and personal life. You are the boss and the servant till you have a team working under you. Do you have the entrepreneurial skills in you to run a company?

If you require coaching, get in touch with your Local Enterprise Office (LEO). LEOs have defined courses and training programmes for start-up companies that give insights on how to take your business idea forward.

Does your business have the success factor?

First and foremost point to remember – don’t jump into your business idea without knowing whether it will succeed in the market or not. Your idea needn’t be something that will reinvent the wheel; it can be something that’s already been tried in the market and a successful one. You can try something specific (a niche or a category) in the existing business and master the art. Discuss your business idea with possibly other young start-up owners or people who you trust and believe can give you wise suggestions.

Most important, do some analysis on the revenue that your business will generate. How much you will be spending on building the actual product? Can you recover the cost involved along with profits? What will be your expenses in a month, the cash inflow vs. outflow and costs to run your business. A handy tool as this cash flow planner will help you manage your cashflows. If you can arrive at realistic numbers for these factors, you’ll have an answer to whether your business will be successful or not.

Do you have adequate funding?

Next important factor to consider is whether you have sufficient funds to start the business. Should you require assistance, State Grants should be the primary option for start-ups in Ireland. The Local Enterprise Office is the best place to reach out.

LEOs also offer financial support and advice to start your business! They will help you to understand the business opportunity and validate it against defined norms. Feasibility grant from the LEOs can earn you up to €15000 (which is 50% of the cost excluding VAT). The Innovation Voucher worth €5000 can be used with the 3rd level institution in Ireland to hire college students to build prototypes of your product. The Competitive Start Fund offers up to €50000 or a 10% equity stake in your business if your business idea can scale and attract heavy investment. This can be the perfect investment to get a prototype product or Minimum Viable Product out in the market to attract customers. Crowdfunding can also be an option to secure funding for your start-up.

How will you manage the accounts of the business?

Once you are clear of your source of funds and the business, the next immediate step is to open a bank account for your business. Never mix your business transactions with your personal accounts. This is a big mistake lot of start-up founders make in their initial stages. If accounting is something you cannot handle, get the best accountants in Ireland who will monitor your accounts, bills and invoices, and keep a watch on the cash flow. Make sure that your accountant understands your business well.

Networking – is it important?

Yes, as the founder of your business, it’s important that you become an active part of physical networking communities in your locality – be it coffee table meetup events, or major events related to your business. A Google local search will give you an idea of these events around your locality. You can also become a member of online communities on LinkedIn or Facebook or other similar chat forums. Having a discussion with successful entrepreneurs will nothing but give you loads of confidence for your business.

 

5 Most Commonly Overlooked Business Tax Deductions

Every year, business owners face their toughest and the most dreaded time – paying taxes. Though the business performs exceptionally well during the year, the amount payable as taxes is still a lump sum. But, there’s good news! There are lots of ways business owners can reduce the tax amount payable every year. One most popular and common method is tax deductions. Not many business owners are aware of this “nifty but priceless” method to lower their tax amount.

Here are the 5 most commonly overlooked business tax deductions by business owners. It’s highly advisable that you get in touch with your tax planning expert or look out for the best accountants in Ireland.

1.    Travel Expenses

Travelling is a part of the job for business owners. Do you use your car for business trips or your daily office commute? Expenses such as parking and toll charges, vehicle insurance fees, fuel, vehicle breakdown and repair charges, maintenance charges will be eligible for tax deductions. Additionally, if your travel involves a flight/train/bus journey, a hotel stay, all these expenses can be accounted for tax deductions.

2.    Accounting, Consultancy, Bank Expenses

Any fees that you pay related to your business such as amount paid to your accountant for preparing your tax returns, or business consultants are eligible for tax deductions. Even bank fees and finance payments such as credit card payments specific to your business will qualify for deductions. Interest charged on business loans can also be claimed as tax deductions. If you paid for the cost of education and/or training of your employees, the cost can be claimed as a deduction.

3.    Advertising Costs

Any business will require paid advertising efforts. For example, printing brochures and flyers, or online advertising as a part of your marketing campaigns. This is very crucial for the success of the business. These advertising costs can be tax deductible. It’s however recommended that you speak with your accountant to validate the expenses before paying your taxes.

4.    Personal and Home Office Expenses

As a business owner, you may be using a lot of your personal things for the business. For example, mobile phones, computers, stationery items, and more. You can add up these expenses and get them deducted when paying your taxes. Though not as significant as other costs, you can still save a few thousand dollars.

If you have a dedicated office premise, you can claim the rent paid, electricity and other associated costs as expenses. If you are using a room in your house as office space to conduct your business, you can claim the expenses under the Home Office deduction category.

5.    Medical and Insurance Expenses

Business owners have the liberty to deduct 100% of the medical expenses and insurance costs when paying their taxes (not the business tax, but personal tax). You can also claim the expenses of your spouses or your dependents.

As a business owner, you make money; and it’s important at the same time to pay your taxes. Your business might not be eligible for all the deductions listed, or there might be some restrictions.  Get in touch with the best accountants in Ireland and plan your taxes in advance.

 

What should all Irish Taxpayers know about PAYE and PAYE Modernisation?

On salary or wage or pension received by job doers, the Revenue levies income tax on behalf of the Irish Government. Instead of overburdening the taxpayers with a one-time payment of tax, Revenue allows them to pay tax as they earn.

PAYE stands for “Pay as You Earn”. Whenever the employers pay salary or pensions to employees or directors, they calculate and deduct income tax amount on employee’s income and pays to the Revenue. Wages includes sick pay, maternity or paternity pay and adoption pay. You pay tax over the whole year, each time you are paid, rather than paying tax in one lump sum.

Following taxes are deducted from the income of the employee –

  1. Income Tax
  2. Pay Related Social Insurance (PRSI)
  3. Universal Social Charge (USC)

PAYE pulls off the burden from employees’ shoulders, enabling them to evenly pay the tax amount on each payday in a tax year.

When should employers register for PAYE?

An employer must register for PAYE if he or she pays the employee more than –

  1. €8 per week (or €36 per month), if the employee is working full time,
  2. €2 per week (or €9 per month), if the employee is working part-time.

If an employer has recruited only one employee, who is domestic and is being paid less than €40 per week, then he doesn’t have to register himself for PAYE.

When is the concept of PAYE Modernisation?

Revenue is introducing PAYE modernisation from Jan 1, 2019, to ensure hassle-free communication with businesses and ensuring the deduction of correct PAYE amount.

Under the new system, companies will have to submit details related to the employees’ pay, tax, and other deductions, as well as details of joining and relieving to the Revenue. They have to provide the details on each payday, and the Revenue will ensure that the tax is correctly deducted at the right time for every employee.

The employer will provide the Revenue with payroll information for every employee he or she is paying, including –

  1. Directors
  2. Family Members
  3. New Employees
  4. Departing Employees
  5. PAYE Exclusion Order Employees

The employer also has to report PPSN of every employee. If the PPSN isn’t available, employee’s name, address, date of birth, and employer reference must be stated.

What are the amounts to be reported?

An employer has to report the following amounts about an employee –

  1. Gross Pay – All the income before any deductions are made,
  2. Pay for Income Tax – Gross Pay minus regular payments made by the employee into a pension fund (superannuation contributions)
  3. Pay for USC purpose – Gross Pay minus payments from Department of Employment Affairs and Social Protection
  4. Pay for Employee Pay Related Social Insurance (PRSI) purpose – Gross Pay plus notional pay plus Benefits in Kind (BIK) plus payments made to Approved Superannuation Schemes, Personal Retirement Saving Accounts (PRSA), Approved Revenue Funds (ARFs) and approved permanent health insurance schemes.
  5. Income tax Paid
  6. PRSI Class and Subclass
  7. Employee & Employer PRSI Paid
  8. USC Paid

PAYE modernisation will make the PAY reporting obligation simple and quick, besides improving the business processes also. What are your thoughts about PAYE modernisation? Let us know in the comment section below.

Are you ready for PAYE Modernisation? The new real-time reporting regime will be operational for all employee payments being made from 1st January 2019.

Book your free consultation here.