WHOSE CASH IS IT ANYWAY?

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In recent weeks, we have talked quite a lot about the current funding options available for Irish Small and Medium Enterprises (SMEs). As SMEs continue to become a large part of the Irish economy during the recovery, their funding has been an important topic to cover as it is important to ensure the survival and stability of these companies. As previously discussed, the banks remain the largest source of funding to Irish SMEs.

 

Recently, Revenue have warned SMEs about the possibility of additional tax charges on loans which may have been sold to so-called ‘vulture funds’. These vulture funds have long been a hot topic of contention when it comes to SMEs. It was recently discovered that the acquisition of distressed loan books can trigger a demand for withholding tax on interest paid on individual loans, for which the borrower is liable. Under Irish law, companies must deduct 20% tax on interest payments.

 

The problem for SMEs here is that as the banks remain their largest source of funding, this tax does not apply and as such these companies may be unaware of their tax liability should this loan be sold to a purchaser outside of the banks. If your SME loan was sold on by the bank, then you as the borrower may potentially be at risk for owing additional tax and interest along with penalties owed for time passed without payment. This issue becomes a larger and more costly one when it is considered that the issue may not be known for a number of years until finances are more deeply looked into.

 

Tax partner at MG Partners, Aisling Donohue has said that this issue has arisen due to a “combination of bad tax laws and unfairly worded contracts” and that this could cause major issues for SMEs looking to sell their business. “An adviser doing diligence could flag this as an issue and say the SME was exposed to possible interest and penalties and this would mean the company was worth a lot less.” Donohue also stresses the importance of remembering that this applies to companies and not to individuals to avoid further concern.

 

If you are concerned about this and the funding status of your own SME, we would suggest contacting Revenue directly for clarification or alternatively to ask Revenue to create a provision for paying interest gross to a non-banking entity. If you have any further concerns regarding this or any other business or financial issue, please don’t hesitate to get in touch with us here at DCA Accountants.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

YOU TALKING TO SME?

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There is no disputing the fact that the past couple of weeks have been one of uncertainty for our little island as confusion and lack of clarity reigned supreme following the general election as we were without government until decisions could be reached. Whilst it may have seemed that the uncertainty would continue on, decisions were eventually made and our new government came into being. Despite these changes coming into place so recently, promises and plans are already being made and put into place for some major changes which might be of benefit to you and your business.

Recently it has been suggested that there will be a massive surge towards tackling the country’s ongoing mortgage crisis with measures aimed at assisting existing homeowners and, one would hope additional measures to assist prospective homeowners. These measures would be of great benefit to workers and business owners alike who may be struggling with savings or payments.

With Small and Medium Enterprises (SMEs) beginning to form somewhat of a backbone to Irish business, accounting for just over half of all Irish businesses, it is no surprise that it has recently been reported that a newfound focus on these small businesses is said to be close to the top of the agenda for the new government. A document which formed the basis of negotiations between the Independent Alliance and Fine Gael is said to outline the dire need to make progress on the issue of credit availability for Irish SMEs.

It is reported that the Independent Alliance in conjunction with Fine Gael have signalled the need to make available €1billion in additional finance to assist Irish SMEs in initial set-up and expansion issues. Lack of competition in the banking sector in Ireland has resulted in our SMEs paying more for credit than elsewhere in Europe. This, in conjunction with the discrepancies between what large companies pay for credit and that which is paid by SMEs in Ireland, makes it increasingly difficult to not only get a small business off the ground, but to keep it running. We have spoken at length in the past about the issues associated with SMEs attempting to borrow from traditional banking lenders and also new non-traditional lenders, so this new push could be a step in the right direction for the future of business in Ireland.

It is said that the new government’s focus to tackle this issue will be on developing new alternative funding sources which will be open to SMEs from peer-to-peer lending to investment opportunities in order to reach their financing goal of €1billion. The hope is that this will stimulate competition in this sector which will in turn lead to the wider availability of funding. The draft document outlining these proposals is due to be published later in the week and should also detail a commitment to increasing the earned income tax credit from €550 to €1650 for the self-employed by 2018, another step in the right direction for small business owners in Ireland.

As always, whether you are a small or large business owner, or just starting out on your own should you require any financial or business advice please do not hesitate to contact us here at DCA Accountants where we will be happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

SHOW SME THE MONEY!

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The question of financing can often be the difference between taking action on setting up your own business, and deciding not to go ahead with it. Certainly in recent years, financing has become somewhat of a fraught term with cash flow being a major issue and less options being made available to Small and Medium Enterprises (SMEs). Banks remain the top choice for these companies to gain finance as only a small minority seek alternative options for financing their business. It has been reported that even after finding themselves declined for finance from the banks, many SME owners still do not seek out alternative funding options. With the financial climate in Ireland beginning to take a slight turn for the better in recent months, perhaps now would be a good time to begin looking beyond the banks when you want to begin or grow your business and are in need of the financial backing or financial boost to do so.

 

The Strategic Banking Corporation of Ireland has recently urged SMEs to look towards alternative funding options to the banks, as this may allow them to access funding more suited to their individual needs. With the Irish economy now making a valiant attempt to recover, there are a number of new lenders emerging which offers a great deal more choice to SMEs which previously would have had very few options after being declined by the major bank lenders. Due to a newly competitive market, these lenders can often offer quite competitive rates and have the financial confidence to accept what major banks may see as being a risky investment. Another positive aspect of the arrival of these new lenders to the market is that many have the ability to deliver funds far faster than major lenders.

 

Many SMEs may suffer from seemingly weak financial reports when compared to larger companies, or be in the midst of a restructuring plan, which may result in them being declined by bank lenders. Perhaps these new more widely available lenders could now make all the difference for these companies which will now have more options to choose from.

 

Invoice financing is one such way for SMEs to avail of funding through companies such as Clancy Cashflow Solutions who welcome businesses which have been declined by larger lenders and allow borrowers to release funds tied up by their debtors in order to immediately make use of funds. Whilst some lenders create an impossible situation for borrowers wherein they may not have access to enough cash to make it until the payment of the loan, this financing option allows for swifter access to funds, sometimes even within 24 hours.

 

Invoice financing works by raising an invoice to your customer which is then forwarded to the funder who will allow for the almost immediate release of a portion of the requested funds to allow your business to stay running smoothly.

 

Should you have any financial queries or issues that you require advice on, please don’t hesitate to contact us at DCA Accountants, where we will be happy to help in any way.

 

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

THAT WHICH SHALL NOT BE NAMED – MORTGAGE RULES

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Over the past year, we have discussed mortgage issues at length with the various new changes to mortgage rules and the difficulties this has posed for both business and home buyers, in particular, for the first time buyer. It has become clear since the introduction of these new guidelines that the number of first time buyers was in decline. Recent reports however have shown that not only is this the case, but also the number of mortgages being approved has fallen in recent months.

 

Data from Banking and Payments Federation Ireland (BPFI) shows that from December to February, 1,951 mortgages were approved, which is a drop of 15.1% when compared with the same period in 2014-2015. First time buyers accounted for half of these approvals, whilst re-mortgages accounted for just over 13%. With the number of first time buyers apply for mortgages dropping by 27% in recent years, it is clear that the introduction of the new mortgage rules will continue to have a far reaching consequences on the property market.

 

Rachel Doyle of the Professional Insurance Broker’s Association (PIBA) lamented the situation and its long lasting effects recently, saying that

“The question now is, how much deeper is this crisis going to get before it turns around. If this situation becomes prolonged it will not only continue to prevent first-time buyers, primarily in their 20s and 30s and living in urban areas, particularly the greater Dublin area, from buying their first homes but it will impact the wider economy.”

 

Another change we are seeing is that the actual value of the mortgages approved was down by 5.8% from January to February, undoubtedly a result of new mortgage rules and the slight increase in spending over the Christmas period. The mortgages approved during this three month period are estimated to be worth around €374 million total, which remains in line with the 14% drop in value each year that we have seen in recent years.

 

We are all aware that there is to be a review of these mortgage rules to be published in November, and whilst prospective buyers will be hoping for some changes or leniency, recent comments suggest that this may not be the case. Chief economist Gabriel Fagan spoke at the recent presentation of the Central Bank’s quarterly accounts and stated that whilst a review will be published, it will certainly not result in the abolishment of these rules, and that there is the possibility that the rules may in fact be tightened.

 

Don’t say goodbye to that silver lining of home ownership just yet though as there is still a chance of change. Until that point, if you require any assistance or advice on your own financial matters, please don’t hesitate to contact us here at DCA Accountants.

“We shouldn’t think of a change taking place,” he said, adding that the rules may not be changed at all, or may in fact be tightened.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

HOME IS WHERE THE TAX RELIEF IS?

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Over the past couple of months, we have discussed tax and taxation issues at length. We have also talked about tax relief available and the many ways in which individuals may have overpaid tax and be due a rebate of some description. This week, we have decided to focus on one form of tax relief which is not as widely known about, and one which directly affects business owners and a great many Irish workers, namely the Trans-Border Workers Relief.

 

This is a form of tax relief available to an individual who is a resident of Ireland and commutes daily or weekly to work abroad and is as a result paying tax in that country on their employment income. This tax relief is an important one for those workers and business owners whose employment takes place entirely abroad, but their residence remains in Ireland. As a cross border worker, you are in the strange situation of having to pay income tax in the country of earning whilst your ultimate tax responsibility lies within your country of residence, therefore an annual self-assessment tax return must be completed each year regarding your world-wide income.

 

One thing to consider when working abroad is double taxation agreements. A double taxation agreement is in place between the UK and Ireland which means that you will be awarded credits for tax paid in the UK, if this applies to you we would recommend visiting the HM Revenue and Customs website for further information. Trans-border Workers Relief ensures that you do not pay additional income in Ireland, unless it is income earned from other Irish sources or you have chosen to be jointly assessed with your spouse.

 

As with all tax relief options, there are a few conditions you must meet in order to qualify.

 

  • Employment must take place in a country with which Ireland has a Double Taxation Agreement (detailed above)
  • You must be employed for a continuous period of at least 13 weeks of the tax year.
  • Your income from employment must be subject to tax in the country of employment and have been paid in full.
  • For each week worked abroad, you must be present in Ireland for one day.

 

If you feel that this may apply to you and require further information, it would be advisable to contact the Revenue directly in order to assess what the best course of action would be. Should you have any other concerns or issues you require financial advice on, please don’t hesitate to contact us here at DCA Accountants.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

RENTAL CHAOS

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With all the rises and falls in the cost of living, and in particular house prices in recent years, it is no surprise that attention consistently turns towards rental costs. Recently, it was announced that there would be an overhauling of the rules on renting in The Residential Tenancies Amendment Bill. These new measures are designed to give tenants as well as landlords a greater degree of security about their immediate futures. The rental sector has been an increasingly volatile and unstable one for a number of years and it is hoped that these measures will bring some stability.

 

Alan Kelly, Minister for the Environment, Community and Local Government announced a series of reforms to the private rental sector in Ireland this month. The main change here will be that the rent review period is to be increased from one to two years, this provides tenants with more security in terms of rent increases as rent cannot increase each year. As a result, anyone who has had their rent increased in 2015 will not have another rent review until 2017.

 

Minister Kelly was quoted on these changes as saying:

“Long-term renting will become an option for more and more people and the regulatory environment has to catch up with this. People in rented accommodation need greater security and these measures will provide that.”

 

As well as the change in the rental review period, landlords will be required to notify tenants if their rent is due for review, which Minister Kelly has said will again provide more security to the sector.

“Now that there will be a legal obligation on landlords to notify tenants as to how to dispute excessive rent increases, tenants will now be more empowered and landlords have a disincentive to aim for the highest rent possible – as they could face a dispute which will delay their rents.”

 

There have been reports of landlords increasing their rents in the months before these measures are brought into effect, reports which have been corroborated by studies which show the steepest rent increases since the financial downturn in the three months prior.

 

Another new rule announced as part of this bill is a deposit protection scheme wherein deposits are lodged with the Private Residential Tenancies Board as opposed to the landlord themselves. Landlords will also be required to provide greater evidence that their proposed increases are in line with local market rates. There will also be greater protection for the termination of tenancy with landlords being required to provide a statutory declaration if they intend to terminate a tenancy in order to allow a family member use the property.

 

Whilst these new measures have been met with some hesitation from landlords, there are also some measures announced which are designed to protect the landlords themselves. New procedures will see that rent arrears and terminations will be dealt with in the District Court as opposed to the costly proceeding in the Circuit Court. Finally, landlords who rent to those receiving rent allowance etc. will now be permitted to avail of 100% mortgage interest relief on their borrowings once they commit to accommodating tenants availing of relief for a minimum of three years.

 

If you are a tenant or landlord and are unsure of where you stand financially in the coming months, please don’t hesitate to contact us here at DCA Accountants where we will be delighted to assist you.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

REFINANCING – COVERING YOUR ASS..ETS

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After suffering through some harsh financial times in recent years, when we hear phrases such as cash flow boosting, restructuring and refinancing one of two feelings may occur to us. We either are stricken with more fear than that which occurs on Sunday evenings as we imagine all that we have built into our company walking out the door on us (“anything but the beanbags please, they are our only link to trendiness!), or the clouds part and we may think we hear the angelic chorus of our financial salvation.

 

The refinancing of assets sounds like a dangerous road to go down, and can inspire more than a bit of hesitancy when the idea is brought up, but restructuring and refinancing of your assets may be the one thing standing between your business and the ultimate success of overcoming financial obstacles. In recent years it has been found that this unlikely alternative can ultimately help businesses in financial difficulty, in particular SME’s to survive through tough times.

 

The refinancing of assets involves financing assets you already own in order to unlock some much needed cash flow over a period of time. The money borrowed in this way is secured against the value of the existing assets. The cash tied up in these assets is then released in order to allow these funds to be utilised in other ways. This may involve the restructuring of existing loans and the setting out of a new repayment schedule, perhaps extending the period of an existing loan. Refinancing can be an excellent way of unlocking cash from assets you already own such as company cars or general machinery and equipment.

 

Many SME owners may not be aware that this is a viable option for their business to boost cash flow and engage in new opportunities. Whilst refinancing at the present moment may be primarily geared towards the SME market, it isn’t just an option for SME’s. The refinancing of assets is also suitable for larger companies who already have strong assets, as this can generate some extra funds that may ease any financial pressure.

 

Of course, refinancing does come with its own set of risks and you must seriously consider your repayment options and capabilities before engaging in this activity to ensure that you do not set your business up for further complications down the line. Once you confirm your repayment abilities and set out a plan you are comfortable with, this can be an easy way of freeing up cash within your business at a time when it might be most needed, allowing you to invest further in important projects or perhaps even take on new and exciting opportunities.

 

If you are interested in refinancing some existing assets within your own company, or just curious as to how you would go about this give us a call here at DCA Accountants and we would be glad to talk you through your options.

DOES YOUR COMPUTER NEED A FLU JAB?

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Technology companies are fast becoming one of Ireland’s top business areas, with many worldwide tech companies choosing our little island on which to set up shop. It’s not surprising then that technology is everywhere, a huge part of our everyday lives from getting us to work to business meetings and finding that perfect recipe for dinner (not to mention firing up Netflix) when you get home. It is often not until we attempt an ‘unplugged’ day that we realise just how big a part it has to play. With that in mind, it would stand to reason that we should look after these new extensions of our business so that they don’t come down with “an awful dose” as the Irish Mammy would say, or become the target of an attack.

Recently Rob Sadowski, director of marketing at security company RSA has spoken out about the need for tech security in businesses, stating that it is now a major security challenge for companies having to detect and respond to technological threats. Many companies do not utilise the security systems at their disposal for their technology, with some not having any installed anti-virus software, or as Sadowski states “defences built for yesterday’s IT”. Many companies also fail to have the correct staff to deal with these threats. When we think about the information stored on these machines, it would be wise to ensure that our technology is as protected as possible.

In this technical age, our computers are always at risk of various threats, as evidenced by our overflowing SPAM and junk mail folders that seem never ending. If your company is one of the many that still has a primary focus on outdated IT security systems and antivirus software, Sadowski suggests moving into a mode of preparation. Ensuring that your data is as protected from any outside threat as possible will be far more beneficial to your company than running that daily antivirus software. One of the primary methods of achieving this is to ensure that your company has well-trained and knowledgeable IT specialists who can identify threats and possible attacks in order to limit issues.

A recent RSA survey found that less than 10% of companies felt that they could detect a threat quickly enough whilst 90% admitted to not having the facilities to investigate these threats before they became an issue. This survey also showed that it is not merely the bigger companies who find themselves targeted, but also smaller companies and companies storing various forms of data other than financial. It was also found that smaller companies can be attacked as a gateway to a larger partner.

This might all seem very ‘doom and gloom’, but with our technology advancing and becoming more of an integral part of everyday and business life, it is important to ensure that safeguards are in place.

If you have any queries or require our assistance in budgeting for your own IT security team, please don’t hesitate to contact us here at DCA Accountants where we will be happy to help.

TIGHTER SQUEEZE FOR DUBLIN BUSINESSES

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It’s no secret that the property market in Ireland has been rife with struggles in recent years, with the increased strictness and new mortgage rules putting roadblocks in the way of first and second time buyers. Now, with office space rental prices increasing whilst availability decreases it has become more difficult than ever to gain access to appropriate property in Dublin both for personal and business customers.

 

This issue is set to become a prevalent one for Dublin businesses as it has been suggested by the Society of Chartered Surveyors Ireland that rental rates for businesses in Dublin are to rise sharply by 12% in the coming year. To add fuel to the fire of a rocky year for leasing in Dublin, it has also been recently reported by estate agentSherry Fitzgerald that vacancy levels for office space in Dublin have hit an all-time low. It seems to be a Catch-22 situation ahead for new and upcoming businesses in Dublin as there will now be limited property available and a cost increase on existing property.

 

The SCSI’s group chair Brian Meldon has been quoted as saying the following regarding the lack of supply:

“While some respondents are anticipating an increase in supply in 2017, no new office space has been delivered to the Dublin market for the last five years and as a result demand continues to surpass supply.”

 

It has been suggested by economists that the influx and growth of the tech company sector in Ireland may have led to greater competition for office space, resulting in less availability and higher rates as competition increases.

 

It is not just office rental availability which has become an issue in recent years, as property website Daft.ie have this week published their report which showed that this month, tenants had only 3,600 properties to choose from in the entire country, a massive drop from the 5,200 seen at the same time last year, and a marked difference between the 16,000 available in 2010.

 

Undoubtedly, demand for office space across the country will continue its rise in 2016 as our economy continues down the road to recovery. Between office space and personal accommodation, we may see ourselves running head first into a rental crisis in the coming months and years. If you are curious about the rental prices and availability in your own area, we would advise having a read of the Daft report which includes many infographics to keep you informed.

 

As always, please don’t hesitate to get in touch with us here at DCA Accountants if there is any way we can be of assistance to you and your business in the midst of these crises.

THE RISE AND RISE OF THE POP-UP SHOP

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The term ‘pop-up’ until recent years would have been reserved primarily for children’s books. In more recent years this term has been expanded to include temporary shops springing up in major cities on a temporary or seasonal basis and generally specialising in one very specific item. In the years since the beginning of Ireland’s financial crisis, our shopping habits have naturally changed, from the original slump in shopping habits to our current push back towards consumerism. Pop-up shops were previously designated towards the more seasonal products (Christmas decorations, calendars etc.) In more recent years we have seen a trend towards these pop-up shops becoming more popular and being more widely utilised as a marketing tool, so what does this shift mean for other businesses?

 

The financial crisis naturally took a large toll on all businesses, in particular the retail sector with many shops in towns and cities being left largely vacant. With pop-up shops now beginning to utilise these vacant spaces it is hoped that stores will feel the benefit of increased footfall in their respective areas due to the increased interest in these temporary specialised stores. With these stores becoming increasingly popular, it is not just vacant stores which are being utilised, well known storefronts are being transformed into these temporary niche stores. Arnotts in particularly has become quite a haven for these pop-up shops, leaning primarily to the food sector with Magnum and trendy doughnut emporium Aungier Danger both choosing to set up shop temporary in their Henry Street storefront.

 

With the rise of this phenomenon, a new Irish company has recently been revealed which aims to specialise in pop-up shops. Popertee, the brainchild of Lucinda Kelly utilises the digital marketplace to connect businesses and marketing professionals with appropriate pop-up space. The intention is that this will function in much the same way as the highly popular travel accommodation search engine AirBnB. This could be a highly beneficial and extremely simple way to grow your business and gain new customers by making yourself and your business more visible and present in a new location for a limited time. Pop-up stores also allow a business owner to test the popularity of a product in the short term before making the long term commitment to a location. Lucinda Kelly has been quoted as saying that the model to be used is quite easy to use which will be good news for all busy business owners:

“The model is really simple. We are trying to make it a three-step-to-pop process where, on our website, you can view, consult with the owners and book your location straight away.”

 

This idea could change the face of retail as we know it as it will open up the idea of a pop-up store to many business which until this point may not have had this option available to them and may even bring businesses who function solely online back into the bricks and mortar business of face-to-face retail. Popertee currently has 50 locations signed up, and are on the hunt for more to add to their files

 

Here we see business and retail make a conscious effort to step into the new technological age, and whilst many business owners may not welcome this shift (or welcome our new robot overlords) this could be a step in the right direction for smaller stores and SMEs to get their name on a premises in a prime location for a short period of time. One thing is certain though, pop-up shops

 

If you require any assistance with your own business, be it advice or financial direction please don’t hesitate to contact us here at DCA Accountants where we will be happy to help.