Should I be a sole trader or a limited company?

So, you’ve made the decision to set up a business. How will it be structured?

If you are starting up a business in Ireland, the first decision you will make is how the business will be structured and, more often than not, the choice will be between operating as a sole trader (or in a partnership), or registering as a limited company.

Business types

As a sole trader, you will be legally inseparable from the business that you run. As such, you will have unlimited liability for any debts the business incurs. Simply put, this means that you may be held personally liable for the company’s debts. This is in contrast to being a director or shareholder of a limited company, whereby you have limited liability. This means you are only liable for the amount you paid for shares.

However, setting up as a sole trader is particularly easy, in that there are no charges from the Companies Registration Office (CRO). Also, it is simple and cheap to wind the business down. A sole trader does not need to register as an employer (provided it is only you who works for the firm). Also, you don’t need to file returns to the CRO.

There is more bureaucratic red tape to cut through when setting up a limited company. However, there are plenty of benefits. Limited companies find it easier than sole traders to get access to credit from banks and other lenders, and directors can avail of generous pension tax breaks, as well as a corporation tax rate, which is lower than the personal taxes that sole traders are charged.

Limited company: pros and cons

Pros:

Limited liability. This means that the liability of shareholders is restricted to the amount paid for shares. Shareholders will not be held personally liable for company debts.
A limited company is a separate legal entity from directors and shareholders.
Generous tax breaks for directors on pensions.
Limited companies are looked upon more favourably when it comes to accessing bank credit.
The company is taxed at corporation tax rate.
In the event of director’s death, shares can be passed on or sold, so the business does not have to cease.

Cons:

Bureaucracy and compliance rules are stricter than they are for sole traders or partnerships.
Directors are employees so must register and file P30s and P35s at an extra cost.
It costs more to open and run a business.
It is expensive to wind up the business.
The public can see filings, such as summary accounts, for a small fee.
Limited liability does not apply to health and safety issues.
Registration of a business name does not protect against others operating under the same name.
For protection, you must register for a trademark.

Sole trader/partnership: pros and cons

Pros:

It is very cost-efficient and easy to set up and run this type of business.
There is only a small cost to wind up the business.
The sole trader or partnership does not have to register accounts with the CRO.
A sole trader does not need to register as an employer.
Public does not get to access accounts.

Cons:

There is no limit on personal liability for the debts of the business.
Profit is taxed at individual rates, instead of corporation tax rate.
Limited scope to avail of pension tax breaks.
Individual contractors may not be able to work with sole trader/partnership, as they are restricted to working with limited companies.
Not as likely to access credit from banks and creditors as limited companies.
Business ceases with the death of the owner.

Choosing a business structure

This all depends on how you see your business developing, who will be involved, and who your clients will be. The choice is not as straightforward as it may seem. And remember, just because you think it might be better to operate as a sole trader does not necessarily mean you are setting your sights too low.

For example, if you are planning on setting up as a micro-business in your home with few if any creditors and you’re unlikely to incur many third-party costs, you might be better off setting up as a sole trader as the cost of setting up as a limited company may not be worth it.

However, if you are looking for extra capital to give your business the shot in the arm it needs to get to the next level, or it is likely you will need to borrow significantly to get your business up and to run, you should be seriously considering setting up as a limited company.

The choice is yours, but be sure you consider all the relevant factors before taking the plunge. Remember that you can set up as a sole trader and change to a limited company at a later date. See the CRO company registration section to help you decide, and be sure to consult with a tax adviser.

Don’t forget about tax

You’ll need to register your business for tax. There are different forms to fill out depending on the structure of your business, however, the Revenue Online Service caters for every business’s need. For more information, see the Revenue Commissioner’s article on registering for tax and the ThinkBusiness.i.e., Guide to Businesses’ Tax Obligations.

4 Action Points

Investigate the differences between operating as a sole trader and as a limited company. This distinction will be crucial to the success of your business.

Make a decision on how you will structure your business, based on legal preferences, cash flow, and the type of business you are looking to run. Once you make up your mind, you’re ready to get started.

Register for tax. This is a crucial part of setting up your business.

If in doubt, check out the CRO and Revenue websites for more details. Everything you need is there.

This post was originally published here - https://www.thinkbusiness.ie/articles/structuring-your-new-business/ on

How to open a franchise in Ireland

Coming up with an original idea isn’t the only way to become a business owner. Franchising can be a cost-effective way to start a business.

Franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own business under the brand of the franchisor while following a proven business model. Some well-established franchises in Ireland include McDonald’s, SuperMac’s, Fastway Couriers and The Zipyard, a firm specialising in clothing alterations.

There are plenty of advantages of becoming a franchisee:

You don’t need to come up with a new concept or idea. Someone has already got the business off the ground and it is making money.
Larger franchise companies will often have well-established ad campaigns in place, as well as an excellent reputation.
Good franchisors will offer extensive training programmes across all functions of activity.
All franchisors will provide current operational guidelines in the form of a manual to serve as a reference for franchisees.
Some franchisors will help you to secure funding for your investment. This may also take the form of bulk sales discounts from suppliers with whom they already have a relationship.
Customers realise that franchises offer excellent value for money and consistent service quality.
Consistent support is provided by franchisors, and they may help you to find and fit out premises.
You collect all income from your outlet, paying the franchisor through franchise fees or a markup on sales.

To be considered as a franchise opportunity, a business will need to be profitable. The franchisor will need to generate enough profit to cater for both you and themselves.

Franchising disadvantages

Your franchise will never be truly independent. Restrictions include the products or services that can be offered, pricing and geographical location.
You must pay fees on an ongoing basis.
You must balance the restrictions of running a franchise with your management demands.
Any reputational damage suffered by a different franchisee may affect your business.
The term of the franchise is usually limited, over which you may not have any control.

Franchising in Ireland

The franchising sector in Ireland is significant, with over 300 active franchise systems boasting an annual turnover in the billions of euro, and employing approximately 40,000 staff. For more details on franchising in Ireland, see the Irish Franchise Association’s website.

As a franchisee, you finance your own outlet. You meet the costs of your own franchise and collect income, while the franchisor receives either franchise fees or a mark-up on products sold by you. Costs vary depending on the sector and how profitable the business is, but research has shown that initial franchise fees in Ireland start from approximately €20,000.

Costs of a franchise

The cost of securing a franchise will depend on a number of factors, including:

How established the franchise is. For example, a McDonald’s franchise will cost more than a new franchise.
The size of the territory. How large is the geographical area for which you’re buying the rights?
The type of franchise. Retail or service franchises, for example, will be expensive.
Do you need equipment? Some franchises require the purchase of expensive equipment while that’s not necessary with others.
How many units you will be buying.
What the franchisor is giving you in return. The more you get, the more you’ll have to pay.

3 Action Points

Is a franchise right for you? Investigate the costs and responsibilities. Perhaps the sector in which you’re interested is too crowded for a new business, but a franchising opportunity is available.

Assess the advantages and disadvantages of running a franchise. Whether or not it is something that will appeal to you is purely down to your own circumstances, needs and preferences.

Confirm the cost of the franchise in which you’re interested. Some franchises are more costly than others. Know what you’re getting yourself into, and ensure you have enough funding to get your franchise up and running.

This post was originally published here - https://www.thinkbusiness.ie/articles/how-to-open-a-franchise-in-ireland/ on

Make your commute work for your business

Here are seven ways to make your commute work for your business.

Write a to do list

A long commute in the morning can be tiring – a morale-sapping grind for business owners. However, with the right attitude, it is possible to turn that train or bus journey into an opportunity for productivity. Get organised first thing in the morning, and prioritise the things you need to get done that day. By the time you reach the office, you’ll already be ready to start your first task.

Check your emails

A lot of time can be wasted at the outset of a business day going through your inbox, clearing out the emails you’ve received since the day before. Do this on your mobile on your way to work and save yourself time later. You’ll also get a head start on any urgent correspondence.

Make calls

If you’ve got calls to make and it’s not too early in the morning, there’s no reason you can’t start during the commute. Take the opportunity to check in with your team, follow up with clients and chase new prospects.

Consider your goals

Separate from the day’s to-do list, take some time in the morning to consider your broader goals for your business and yourself. Are things moving in the right direction, could you be doing something differently? The morning is a very good time to consider these questions before you get too busy.

Read

Whether it’s something light to empty your mind before getting stuck into the work day or an article specific to your industry, the commute is an excellent chance to catch up on your reading list.

Learn a new language

Whether it’s to foster better a foreign business relationship or just for personal reasons, learning a language is an excellent way to be productive on the way to work. Moreover, learning a language has never been easier thanks to apps like Duolingo.

Exercise

If you live close enough to your business, why not leave the car at home and either cycle, run or walk? Getting the blood pumping in the morning is likely to make you more productive throughout the day, and will save you time in the evening if that’s when you usually squeeze in your exercise.

Paying wages to employees – a guide

If you employ people you need to pay them properly. Here’s how to avoid disputes and penalties under the Payment of Wages Act 1991.

You need to know:

How to pay salaries
What type of payslips you need to issue
What taxes you should deduct
What payment processes you need to have in place
How to avoid disputes

Paying wages

Employees must be paid by one or a number of methods set out in the Act. The main methods are:

Cheque
Cash
Electronic transfer
Money order

You should always be aware of the national minimum wage. This applies to all employees, except close relatives and apprentices. You can check minimum wage entitlements online.

Payslips

All employees are entitled to payslips showing the gross amount of wages payable, and the nature and amount of any deductions, including all taxes and voluntary contributions, for example health insurance contributions. Just because you make an electronic payment doesn’t mean you are exempt from providing a payslip.

You should ensure that reasonable steps are taken to keep the pay statement confidential. If the payment is made by credit transfer, the statement should be given to the employee as soon as possible afterwards.

Deductions

As an employer, you are responsible for deducting the right amount of income tax, PRSI, PAYE and universal social charge (USC) from wages and submitting these to the Revenue. You must also pay Employer’s PRSI contributions. Detailed information on the taxes you need to deduct from your employees’ wages and how to do it is available on the Revenue website.

Deductions must be required or authorised by law, for example, PRSI or PAYE deductions, be under a valid oral or written term of the contract, or have the employee’s prior written consent.

A deduction from wages will be lawful if:

The employee commits an act such as breaking equipment, or is suspended without pay
The employer provides goods or services to the employee which is necessary for employment.

If the wages paid on any occasion are less than the total due (after legal deductions) or no wages are paid, then the amount will be treated as a deduction made by the employer and, consequently, this will be subject to the rules for a valid deduction.
More information about employees’ rights with regard to pay is available on this online resource.

Payroll systems

It makes sense to invest in a payroll system to help you pay your employees. It will generate payslips and also keep track of all the payments and deductions you make.

There are plenty of payroll systems on the market designed for start-ups and small businesses, some of which offer free trials for an initial period

Avoid disputes

If you regularly pay your employees late or fail to pay them at all, they can enforce their legal right to be paid under the terms of their employment letter. If late payment of wages is persistent, employees can take up a trade dispute case with the Rights Commissioner.

Employees are entitled to take up a case with the Rights Commissioner within six months of a complaint being made, and up to a year in exceptional circumstances.

Find out more about the Rights Commissioner online.

And finally

Understand your obligations for employee payment. Ensure you don’t regularly pay your employees late, or not at all.

Check if you are compliant. Are you conforming with the law?

Review existing structures. You can save yourself time and effort by investing in a new payroll system, for example.

This post was originally published here - https://www.thinkbusiness.ie/articles/minimum-wage-in-ireland/ on

The one minute interview – Mark Fielding, ISME

‘The cost of doing business in Ireland needs to change.’

What are the main issues facing small businesses in Ireland?

The number one issue would be economic uncertainty as a result of the (domestic) political situation, but also the global situation, for example, Brexit, and all that goes with it.

Number two would be that the cost of doing business in Ireland is increasing even though our ‘inflation’ is at minus point one. Right across the board we’re seeing increases in prices which are nowhere near actual inflation/deflation.

Number three is not being paid on time. We have prompt payments legislation in Ireland which is a joke. Businesses in Ireland are supposed to be paid in 30 days but large firms can contract out chasing invoices, which means that smaller businesses are on the back foot, dealing with 60, 90, 120-day waits and sometimes longer. This has an adverse effect on their relationship with their customers and with their creditors, and it’s also having a negative impact on their relationship with their bank.

The fourth one would be access to finance. SMEs need good finance at good rates. We’re still paying way over the odds when we compare ourselves with our comparators across Europe. Our interest rates are way too high, and it’s affecting our competitiveness.

The fifth thing would probably be red tape.

Mark Fielding is one of Ireland’s leading authorities on the SME sector. He has worked in Europe in a broad range of sectors from Biotech to property and has been involved in the start of more than 300 companies. He was also a senior partner in an accounting and management consulting firm specialising in SMEs. He is currently the CEO of ISME, the Irish Small and Medium Enterprises Association, Ireland’s only representative organisation for SMEs that is independent. It currently has over 10,200 members.

You can find out more about ISME at http://isme.ie/.

This post was originally published here - https://www.thinkbusiness.ie/articles/mark-fielding-isme/ on

A brilliant business plan template

If you are starting, running or growing a business, you need a great business plan. If you are applying for a business loan you will also need a plan. Download now and build your dream.

Your completed business plan should include your business name, logo and other relevant details.

Remember, your plan is the foundation on which your business rests. It is vital when you try to attract funding, grants or even equity investment, but should also guide how you run your business day-to-day.

If you need help with your plan, read the ThinkBusiness.ie business plan guide for additional information.

The template covers all the main areas of a business plan. These are:

Executive summary: This is a brief summary of your overall business proposition, covering all the main elements of your plan.
Company description: This gives details of shareholders, advisers, your business’s legal status, your products or services, the long-term aim of the business and your goals.
Market analysis: Covers PESTLE and SWOT analyses.
Marketing and sales: Identifies customer trends and opportunities, a marketing and sales strategy, pricing and customer service.
Key people: This covers key employees and an organisation chart, if applicable.
R&D and business assets: This section covers R&D and assets in detail.
Financial forecasting: This covers financial information e.g. loans, guarantees. Assumptions and funding requirements are also included.
Appendices.

This post was originally published here - https://www.thinkbusiness.ie/articles/business-plan-template/ on

The Personal Touch: Why Direct Mail Marketing Still Rules in the Digital Age

When everyone has access to their email in the palm of their hand at all times, does sending out physical marketing materials in the form of brochures, letters, postcards and catalogs matter anymore? It tends to come as a surprise to many that direct mail, as this marketing approach is known, continues to thrive.

While many marketing gurus have predicted the fading away of direct mail, these materials bring clear advantages to the marketing efforts of businesses both large and small, ones that are simply not possible with email. One of the most noticeable benefits is that unlike email that often ends up in spam folders or that simply gets lost among hundreds of other marketing email, brochures and catalogs usually do make their way into the hands of most recipients, and they are not easy to get rid of. Marketing materials, once they arrive in a recipient’s home or office, float around for days, which means that unlike email, they stay active for an impressive length of time.

Direct mail can be effective in many other ways, as well.

To begin, people aren’t tired of direct mail at this point

Years ago, when people received bunches of direct mail, it was dismissed as junk. Today, with most companies having switched to email and other forms of digital marketing, most consumers and b2b customers have a problem with it.

It’s important for marketers to take note of the change. Most people don’t even look at the marketing emails that they get. On the other hand, studies by the US postal service show that three out of four consumers will look at physical mail at least once when they receive it whether the open the envelope or not. Many direct mail marketers in printing envelopes with the most important part of their message on the outside to make sure that they do get their message across.

Direct mail gets the undivided attention of consumers

When people look at their email, they usually have many other things going on — other tabs, Twitter and Facebook notifications, and so on, all on the same screen. With email, then, it can be hard to get a consumer’s undivided attention. It’s different with physical mail — presented on a medium that is clearly distinct from the electronic screens that display distractions, it tends to hold consumers attention better. To any marketer attempting to convert someone through the force of their persuasiveness or through the personal touch, it’s likely to go through much better with physical materials.

Email comes with a limited bag of tricks

If you want to show your email recipients the results of a study, letters of appreciation by happy customers and so on, it can be difficult to do with anything other than attachments or links; unfortunately, these methods tend to make people suspicious. With direct mail, on the other hand, you can attach anything you want. Studies show that the fatter a packet, the more trustworthy it is seen to be.

There’s far more versatility with direct mail

With email, no matter how much effort you put into its design, all you get to attract the recipient was at first is a few words on the subject line. Not so with direct mail. From envelope color and shape to the blurb that you put on the envelope and the freebies that you get to stuff inside, there are so many choices they can help you stand out. You can even go with expensive scents and the use of high-quality paper. Direct mail is simply easier for dramatic effect.

Direct mail does get results

According to research by the Direct Marketing Association, email tends to do with a response rate of barely 0.1%; in other words, for every 1,000 emails sent out, only one actually elicits some form of response. Direct mail on the other hand, gets a 3.4% response rate. It is 34 times as effective. It is clearly the superior medium.

The post The Personal Touch: Why Direct Mail Marketing Still Rules in the Digital Age appeared first on Small Business Can.

Climate launchpad, secret seeds and the road to Amsterdam

Climate launchpad

I got the invitation to attend the Climate Launchpad bootcamp just as a work contract was finishing, the timing was perfect. I had toyed with the idea of working for myself for some time and this bootcamp and coaching seemed like something that would help me on my way. The bootcamp and mentoring sessions over 2 months leading up to the National Finals at the Climate Gathering were tough and interesting and really helped me formulate my concept.

National finals in Dublin

The eight businesses involved were so different but with a common goal in finding a climate friendly business solution that allows them to make a living. We were put through our paces weekly and presented at the National Finals on June 22nd. The eight presentations were very unique to each other and had come a long way from the initial bootcamp.

This was my pitch:

Climate Launchpad International finals in Amsterdam

I was really delighted to be selected in the top three and go forward to represent Ireland in the finals in Amsterdam. However this is where things got real, 28 countries, 84 contestants and all competing for 10 places on an accelerator programme and the top three will get cash prizes. The number of contestants is daunting but the variation in ideas is fascinating, with a common theme and ideal surrounding climate each team has developed very different concepts. I am a mix of nerves and excitement bringing Secret Seeds to the finals in Amsterdam.

Secret seeds

Secret Seeds are heart shaped seedbombs that are full of wildflower seeds. While they look small their impact is large. By using Secret Seeds instead of buying flowers you promote growing your own, you provide food for bees (who are vital for our own survival) and by choosing to buy Secret Seeds instead of cut flowers you reduce the transport emissions, virtual water and even human rights conditions associated with flower farms which are based in the developing world.

Change the world one seed at a time

I am looking forward to meeting the other contestants, hearing their pitch but I am more excited about presenting my business to the judges and showing them that Secret Seeds can change the world one seed at a time.

The post Climate launchpad, secret seeds and the road to Amsterdam appeared first on Small Business Can.

This post was originally published here - http://www.smallbusinesscan.com/secret-seeds-road-amsterdam/ on

Balmoral Show 2015

The Balmoral show is in full swing. Here are the highlights for day 1. Sunshine. 20,000 visitors, Andy Mill, Ulster Bank, food, lots of animals and lots of farmers.

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Protect Your Data: Could it Be Your Most Valuable Asset?

In 2015 Uber, the world’s largest taxi company owns no vehicles, Facebook the world’s most popular media owner creates no content, Alibaba the most valuable retailer has no inventory and Airbnb the world’s largest accommodation provider owns no real estate. This statement made me think about these companies and what, in the absence of tangible assets could their most valuable asset be? It’s simple; it’s in the millions of data records which each of these companies holds.

Reports of data breaches are all too common these days hitting some of the biggest names in business such as Sony, Target and Home Depot. Whilst the big brand names occupy the media headlines, business owners should no longer be complacent towards the value of the data within their business. It is no longer a case of if but when a business will suffer a security breach. It’s time for every business to start treating data as an asset. To today’s cyber criminal, data is the new cash!

Cyber Criminal Activity

Findings from the 2014 Gemalto Breach Level Index found that over 1 billion records were successfully intercepted by cyber criminals earning 2014 its name as the “Year of the Hack”. In comparison to 2013, this represented a 78% increase in the number of breach incidents. That equals 2.8 million records stolen every single day!!
As large corporate companies sit up and take note of the increasing threat, cyber criminals are recognising that small to medium sized enterprises are easier targets where online security tends to be weaker due to a lack of trained resource and robust security policies.

Recently Bitglass undertook an experiment geared towards understanding what happens to sensitive data once it has been stolen. In the experiment, a fake list of 1500 employees which included social security numbers, credit card numbers, addresses and phone numbers travelled the globe, landing in five different continents and 22 countries within two weeks.

The experiment offers insight into how stolen records from data breaches are shared, bought and then sold on the black market. The falsified data was placed on Dropbox as well as on seven Dark Web sites believed to be frequented by cyber criminals.

The result of the experiment found that within 12 days the data was:

Accessed from five continents – North America, Asia, Europe, Africa and South America
Accessed from 22 countries – United States, Brazil, Belgium, Nigeria, Hong Kong, Spain, Germany, the United Kingdom, France, Sweden, Finland, the Maldives,
New Zealand, Canada, Norway, the Russian Federation, the Netherlands, the Czech Republic, Denmark, Italy, Turkey
Accessed most often from Nigeria, Russia and Brazil
Viewed 1,081 times, with 47 unique downloads.

Treat every record within your business as if it has commercial value. It may look like a list of names and addresses but the underground hacker markets are thriving with counterfeit documents to further enable cyber criminals to then utilise the compromised data to commit online fraud and identity theft.

Protect Your Data

Simple Steps to Protect Your Data:

Manage email security and validate potential threats.
Enforce strict password policies and ensure that passwords change on a regular basis.
Manage privileged user accounts.
People can often be the weakest link. Invest in your people and train your employees.
Ensure that your software is up to date and that security patches are set up to automatically update.
Implement a robust records management policy and only store data for as long as it is required.

The post Protect Your Data: Could it Be Your Most Valuable Asset? appeared first on Small Business Can.

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