TIPS FOR THOSE START­ING A BUSINESS

Bray People - - NEWS - with Der­mot Byrne

DO not set up a com­pany at the start. In­stead you should trade as a sole trader as it is sim­pler and au­dited ac­counts are not re­quired. If you pre­fer not to use your own name then get a reg­is­tered business name with a sim­ple ap­pli­ca­tion form.

If you make a loss in the first year of trad­ing as a sole trader then you can off­set the loss against your to­tal in­come of the same tax year and re­cover PAYE paid when in em­ploy­ment prior to switch­ing to self-em­ploy­ment.

Ini­tially try and trade from your res­i­dence in order to keep costs down. If you live in a town the neigh­bours will ob­ject if you set up a car scrap­page business at your house. How­ever, many types of business now are clean with very lit­tle ev­i­dence of trade ac­tiv­ity.

If one has to get a premises, then rent it on a short-term lease rather than tie up cap­i­tal in pur­chas­ing a premises that will not be wanted if the business does not suc­ceed. Hire part­time staff if pos­si­ble and con­tract out as much ac­tiv­ity as pos­si­ble. This saves em­ployer’s PRSI, hol­i­day pay, un­fair dis­missal rules and Em­ployer’s Li­a­bil­ity In­surance on wages.

Use sec­ond-hand plant and ve­hi­cles in the start-up un­less grant-aided, where new ex­pen­di­ture will be in­sisted on for grant aid.

You will need to de­cide whether to lease or buy items. While there is a need to com­pare the monthly re­pay­ments, it is wise to con­sider the leased plant re­mains the prop­erty of the lessor and can be re­pos­sessed eas­ier than plant bought on HP which is owned from the start by the cus­tomer.

Do not reg­is­ter for VAT ini­tially un­less you are buy­ing on HP Plant and Ve­hi­cles on which VAT can be re­cov­ered. Re­mem­ber that the VAT thresh­old for sale of goods is € 75,000 per an­num and for sup­ply of ser­vices it is € 37,500.

Get a clear pic­ture from your tax ad­vi­sor of the cor­rect VAT rates which are ap­pli­ca­ble for var­i­ous goods and ser­vices. Re­tail busi­nesses can have com­plex VAT rules with var­i­ous rates of VAT op­er­a­ble to sim­i­lar goods. If you get it wrong and it only comes to light af­ter two or three years then you may owe a crip­pling VAT debt to the Rev­enue.

Check out the Lo­cal En­ter­prise Board for any grants and as­sis­tance that may be avail­able.

If start­ing on a slightly larger scale, then try En­ter­prise Ire­land also as they of­fer gen­er­ous pre-trad­ing grants for fea­si­bil­ity, mar­ket test­ing etc.

Be pre­pared for a breakeven oper­a­tion in the first year and if you do bet­ter than that then count your­self lucky.

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