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Business Start Up Basics


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Points to Consider When Starting Your Business

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Business Start Up Basics

  1. 1. Business Start-up Delaney Corporate FinanceCorporate Finance & Business Support Services
  2. 2. Who am I? Chartered Accountant Advise companies on finance and strategy Provide management support I’m a start-up! DELANEY CORPORATE FINANCE 2
  3. 3. What business structure ?Company Separate legal entity Minimum requirements:  1 shareholder; 2 directors; 1 secretary (can be a director)  Limited liability, though in practice Personal Guarantees are often requested  Directors have duties and responsibilities and failure to meet these has legal consequences (e.g. Negligent or fraudulent trading)  Pay particular attention to directors loans  Small companies no longer need an audit  Must file an annual return, hold AGM etc  For further info see Companies Registration Office ( DELANEY CORPORATE FINANCE 3
  4. 4. What business structure ?Partnership Not a separate legal entity and governed by some pretty antiquated law (1890 & 1907) No particular minimum requirements If no partnership agreement courts refer to Partnership Law Limited (unusual) and unlimited partnerships  At least 1 partner must be unlimited DELANEY CORPORATE FINANCE 4
  5. 5. What business structure ?Sole trader Just you If not trading in your own name, must register a business name ( Not a separate legal entity so you’re liable for debts DELANEY CORPORATE FINANCE 5
  6. 6. What business structure ?Agreements If in business with someone else have a partnership or shareholders agreement:  Sets out how the business will be run  Information flow and meetings  Roles, responsibilities, rewards  Raising finance  Exits and new entrants  Dispute resolution Do it now when everyone is still friends. DELANEY CORPORATE FINANCE 6
  7. 7. What business structure ?Taxation Company: Company is taxed and you are taxed if you take a salary or a dividend i.e. potential double taxation. There are benefits however:  Certain specific reliefs (BES etc)  Wealth accumulation and inheritance Sole trader: Taxed on all income even if not drawn Partnership: Taxed on share of income even if not drawn DELANEY CORPORATE FINANCE 7
  8. 8. Funding Own equity Social Welfare (Enterprise allowances) 3 F’s Grants (many providers) Competitions Outside equity (PE and VCs) Taxed based (BES, Seed Capital) Banks/Credit Union ???????? DELANEY CORPORATE FINANCE 8
  9. 9. FundingWhat you need: Robust proposition Proven market and product/service offering Ability to deliver (set your milestones and deliver) Business Plan DELANEY CORPORATE FINANCE 9
  10. 10. What do the Banks want? Security Security Security Security Security Interest cover and repayment cover DELANEY CORPORATE FINANCE 10
  11. 11. Keeping the Bank happy Regular updates Robust and transparent financial information Milestones being achieved Good news stories not just financial Their money back! DELANEY CORPORATE FINANCE 11
  12. 12. Taxation Registering for tax  Form TR1 or TR2 (corp) Income tax/Corporation tax PAYE – if you have employees (incl. yourself, if a company) RCT – certain activities – largely construction related DELANEY CORPORATE FINANCE 12
  13. 13. Taxation cont VAT  Income greater than €37,500/€75,000  Cash receipts v accruals basis  Various rates: 21%; 13.5%; 9.5%; Zero; Exempt (NB zero v exempt)  Beware own usage  A costly tax to get wrong as transaction based  Get advice upfront DELANEY CORPORATE FINANCE 13
  14. 14. When to pay tax ROS (Revenue Online Services) is useful VAT: 2 monthy returns and payments + 1 annual return PAYE/PRSI: Monthly RCT: Monthly Income Tax: preliminary and final in October Corporation tax*:  Preliminary: 1 month prior to company’s year end  Balance: 9 months subsequent to year-end*small companies i.e. Profit<€200k DELANEY CORPORATE FINANCE 14
  15. 15. When to pay taxStart up reliefs Corporation tax *– no preliminary tax in year 1 Income tax – Year 1: profits to 31 December Year 2: First 12 months profits Year 3: Profits for accounting year ending in Year 3 If year 3 treatment results in excess tax paid over what would have been paid on a actual basis, one can claim excess relief.Losses Can be carried forward or offset against other income (with restrictions)Redundancy You can reclaim PAYE paid*small companies i.e. Profit<€200k DELANEY CORPORATE FINANCE 15
  16. 16. Taxation information Sources of information:  (in particular (IT48, VAT Guide)  Professional service firms websites (accountants/lawyers)  Your local friendly accountant DELANEY CORPORATE FINANCE 16
  17. 17. Record keeping DIY or Accountant? Computerised:  Traditional: Sage, TAS, Quickbooks, Big Red Book  Cloud based: Sage One, Xero, Kashbook Manual  Ledgers  SpreadsheetsKeep it simple but organised – see examples in IT 48 DELANEY CORPORATE FINANCE 17
  18. 18. Your Business Plan Use it Don’t lose it Not just for outside parties Track performance against milestones – not just financial => stay on track Good motivator either as clap on the back or a kick Will evolve and change – financials and marketing DELANEY CORPORATE FINANCE 18
  19. 19. Marketing Have a plan Know what your selling Don’t be shy: Tell everyone you’re in business Lots of free advertising opportunities:  Social media: Facebook; Linkedin; Twitter  Press: Local area profiles; trade magazines  Competitions and awards (e.g. Chamber awards; trade awards) Website (consider Google places, adwords, QR codes) DELANEY CORPORATE FINANCE 19
  20. 20. Other nuggets Never a bad time to go into business. Its up to you and your frame of mind Funding isn’t everything. There are ways Be prepared for a bit of an emotional roller coaster Don’t be afraid to ask for help – network Skill up DELANEY CORPORATE FINANCE 20
  21. 21. My experience ? Great No one else to blame or take credit New business can come from surprising sources and not always from where you expect it Give yourself time but hit those milestones! Plenty of people willing to help DELANEY CORPORATE FINANCE 21
  22. 22. ContactGeorge DelaneyDelaney Corporate FinanceThe Rising Tide Centre35 South StNew Ross087 DELANEY CORPORATE FINANCE 22