TIPS FOR THOSE STARTING A BUSINESS
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.