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.

THE HARD-KNOCK TAX LIFE OF THE SELF-EMPLOYED

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With the General Election edging ever closer, taxation has once again come up as quite a hot topic. Everything from the abolishment of the USC to increases in taxation have been discussed ad nauseum in recent weeks. However there is one important taxation issue that is often overlooked, despite being a reality for many workers in this country. The issue at hand here is the many ways in which self-employed individuals find themselves carrying an extra weight of taxation due to their employment status than their PAYE paying counterparts.

Figures from 2014 suggested that the percentage of the Irish workforce who are self-employed makes up nearly a quarter of the overall workforce at over 17%. Thus, the financial burden of harsher taxation here is one which affects a large percentage of our working population and is an issue which demands to be raised. So, if you or your loved one is currently self-employed, just how much of a tax disadvantage does your self-employed status put you at?

One way in which the self-employed are at a disadvantage is through the percentage of tax they must pay. All employees, whether self-employed or otherwise will pay the top tax rate of 52% on all income up to €100,000. However it is when income goes above this figure that self-employed individuals will have to pay an additional amount of USC, which is not applicable to other employees.

The PAYE tax credit is another nail in the coffin for the self-employed as those in the PAYE system gain a €1,650 tax credit each year which can have a lightening effect on your tax bill, this tax credit is not applicable to self-employed workers who will instead now earn a €550 credit on earned income from 2017.

Self-employed workers may also find themselves missing out in terms of paying PRSI. Self-employed individuals must pay PRSI at 4% on any earnings over €5000 whilst PAYE employees do not pay any PRSI if they earn less than €18,304 per year. This difference in PRSI thresholds means that the self-employed person will have paid a significant amount of tax before other employees need to consider it.

If you are self-employed and concerned about perhaps having overpaid tax, we would recommend getting in touch with Revenue for a re-evaluation of your payments from the past four years. If you find yourself in need of assistance with your own or your company’s finances, please don’t hesitate to contact us here at DCA Accountants where we will be happy to help.

TAX BACK: WHAT’S THE CRAIC?

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Claiming tax which you have overpaid is a common concern for most workers, yet it is one that is often overlooked. Each of us either know someone or is the person who is most likely to say “I think I have overpaid tax, I will definitely look into it” only to entirely forget and get on with daily life.

Although new tax reductions were introduced in the most recent budget, which may have had a slight effect on our wallets many workers are still feeling the tax pinch. To hopefully alleviate some of this stress, and replace some of the money into your own pocket where it belongs, we have collated some of the most common ways that you may have overpaid tax. Reports suggest that a great many people are unaware of having paid too much tax, and are failing to reclaim it. Many people are also unaware that you can claim for as far back as four years, so whilst you may be on track with tax payments now, it is possible that you can claim for previous years. I’m sure none of us would argue with having a few extra pennies in our wallets for the weekend.

Rental Tax Credit

This credit only applies to those who have been in rental accommodation on December 7th 2010, and is due to be phased out entirely. Before then however, you may be able to claim some tax back for your rental status.

Health Insurance

Those who have private health insurance, you may be entitled to claim some tax back. This will be dependent on the cost of your policy.

Marriage Tax

The common joke about tying the knot for the tax breaks is still doing the rounds, and is based somewhat in truth. If you have been married in the past four years and not notified Revenue, you may have overpaid tax and be eligible for a rebate. This is typically based on what you both earn and your income bands, and your joint assessment situation. Isn’t that what true love is?

DIRT

Whilst first time buying has become a minefield in recent years, the one small saving grace is the ability to claim back DIRT on savings for your deposit. Definitely something for first time buyers to bear in mind during the stresses of purchasing.

Travel Costs

Travelling to and from work every day can be a significant drain on your finances when paying full price for public transport. Employees can purchase a TaxSaver commuter ticket through their employers which allow tax free commuter tickets as part of a salary package.

Home Carer Tax Credit

Many people who have taken time out to care for children or elderly relatives are unaware that a tax credit can be awarded to the working spouse to ease financial worries. In Budget 2016, it was also announced that the cut off rate for the earnings of the non-working spouse would be raised from €5,080 to €7,200, meaning that this can apply to many more people than previously. The credit itself has also been increased this year from €810 to €1,000.

USC

Despite a reduction of the USC in the most recent budget, the USC remains a tax which is an irritation for many workers. There are a couple of ways in which you may have been overpaying this tax and be due a rebate, the most obvious one being in relation to medical cards. If you have a full medical card, you should notify Revenue of your change of circumstances as you may have overpaid USC. Also, if your income fell below the threshold at any point, Revenue should be notified.

Expenses

Many workers remain unaware that they may be entitled to claim tax back on a number of expenses aside from their travel costs. These costs can range from uniforms to tools for trades such as engineers and electricians. For teachers, an annual allowance of €518 is allotted for expenses incurred in terms of teaching supplies, and this applies to many other professions. It is advisable to check the Revenue website to see if you may be entitled to claim back on some of your own working expenses.

These are just a few ways that you may have inadvertently overpaid taxes, and may be able to claim a refund. We would recommend investigating your tax payments in full for the previous four years in order to ascertain if you are due a refund. Should you require any assistance with your own or your businesses finances please don’t hesitate to contact us here at DCA Accountants.

CREDIT RISK MANAGEMENT/INSURANCE

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Credit Risk immediately sounds like a term which should strike fear into business owners everywhere. Nobody wants to hear the word risk when associated with your business, but it needn’t be that way and today we are going to speak to you about managing your credit risk.

 

Credit risk can be simply defined as the potential that a borrower may fail to meet financial obligations on previously agreed terms. The main goal of the Credit risk management systems we will be speaking about today is too secure overall credit risk parameters and ensure that neither borrower nor lender suffer as a result of these risks. Managing your Credit Risk can have great benefits for your business including increasing cash flow, increasing credibility, better business development, and more secure trading options to name but a few. Having this backing may also give you peace of mind in terms of the security and longevity of your company.

 

Following the financial crisis, borrowing and lending became a financial minefield, and whilst things have since eased up and more options have recently become available for both parties, the need to be vigilant remains. 25% of all bankruptcies are caused by unpaid invoices, so you may be currently taking more risks than you were aware of. The risks associated with borrowing and lending have not eased as much as one might expect in recent years, and both parties must be aware of the dangers associated.

 

Some Credit Risk Management companies offer to advise and protect clients in order to allow safe trading, effectively insuring a company’s finances ahead of trading. The first step in Credit Risk Management is to gain a full and comprehensive picture of the company’s finances and position as well as having a solid idea of the company’s ability to lend to customers. Having this comprehensive picture then allows the creation of an appropriate action plan for managing your credit risk, having a simple plan in place will then pave the way for more sophisticated credit management solutions in your company’s future.

 

Credit insurance is one fairly simple way to manage your credit risk which may assist your company in growing profitably. Cash flow is the most important and also the most vulnerable aspect of business and credit insurance could give your company peace of mind against any bad debts. Credit insurance insures your company against the potential of your customer’s failing to pay their debts within your agreed parameters. This in turn ensures that your company finances and risk scores do not suffer when it comes to your own future borrowing. Non-payments are one of the top ways in which your business can be weakened, and Credit Insurance can be the ideal way to navigate this issue. In this way, you are assured that your company will reach its anticipated targets even if there have been some defaults.

 

If you find yourself in need of advice, support, or guidance in how to go about credit risk management in your business please don’t hesitate to contact us here at DCA Accountants where we are always happy to help.

DEPOSIT RATES: HOW LOW CAN THEY GO?

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In recent months, it has been reported that Irish retail rates have slumped whilst the ECB has kept its refinancing rate at 0.05% since 2014. It has been suggested that the stasis of interest rates may not prevent deposit rates from continuing to slide. Recently, Irish deposit rates have taken a steeper turn than those in Mainland Europe.

The Central Bank’s figures show that Irish savers earned an average rate of 1.83% on deposits since September 2014, this rate then dropped steeply again to 0.98% by November 2015. Despite the ECB remaining steady in its rates, the only distinguishable trend for Irish rates seems to be a downwards trend, with retail deposit rates already steadily inching towards zero.

The ECB was the first major bank to edge towards zero in 2014, and many have since followed suit. This has not been a trend that has been specific to retail rates however, as we have also seen a steep decline in corporate rates, with recent reports suggesting that some banks are now offering negative interest rates to their corporate customers.

What are negative interest rates, and what can they mean for you? In this scenario the bank does not pay a return to keep its money for you, but instead charges you as the client for doing so. As a result, you will then be effectively paying the bank in order to keep your money there. This can have both positive and negative consequences.

Danish banks were the first to implement this idea of negative interest rates, and are now passing this option on to customers. This is a fairly new but commonplace practise in many Euro Zone banking systems with Sweden also recently adopting the practice. Chief economist for Denmark with lender Handelsbanken, Jes Asmussen has been quoted as saying:
“I don’t think we’ve seen the last of this trend. When I trained as an economist, negative rates weren’t in the textbooks, but that’s the world we live in now.”

Certainly, many Euro Zone banks are now offering their customers negative rates, it remains to be seen however if Ireland will follow suit in this practise, but plummeting rates would indicate a strong possibility.

MORTGAGE WOES KEEP BUYERS ON THEIR TOES.

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Mortgage rules have been a point of contention in Ireland for some time now and whether house prices fall or rise, it has become increasingly difficult for those hoping to gain footing on the first step of the housing ladder. Last year, mortgage rules were changed to mean that only 3.5% of income can be borrows, and there must be a 10% deposit on all mortgages up to €220,000, and a further 20% on any cost above this figure.

 

At the time of this change it was suggested that these rules would be in place for a period of a year and then re-examined. As they were put in place in February last year, all eyes will be on these rules to see if there is any change which might allow for easier purchasing. DNG have suggested that they would like to see the borrowing limit raised to 4% and the 10% deposit rule extended to €300,000 as they have seen over the past year that many people are becoming trapped by these rules and are unable to buy due to higher house prices and stricter rules.

 

It has been reported this week that we may see an even bigger shake up in the mortgage industry. An Australian lender, Pepper is reportedly set to offer new incredibly competitive mortgage rates which will target first-time buyers in particular. This arrival of a new lender is expected to push current Irish lenders into offering new lower rates in order to respond to competition and demand.

 

Already since the announcement we have seen Bank of Ireland offer a new bonus. This bonus would see them add 10% to first time buyers onto their existing deposit savings. Additionally, Bank of Ireland were already offering 2% back of every new mortgage.

 

Pepper is said to be set to offer rates as low as 3.55% for both first time buyers and those looking to switch lenders. Pepper Ireland boss Paul Doddrell has suggested that Pepper will also be first in line with offers for those who have found themselves refused by other banks, including those who are self-employed. It is suggested that Pepper will also be able to lend to those who found themselves in arrears during the financial crisis, but have now found their way back to meeting payments.

 

Whilst these new offers may not be a complete end to Irish mortgage woes as these offers will only be available through brokers, the suggestion of another adjustment of the overly tight mortgage rules will be a welcome one for many first time buyers and prospective first time buyers. It is hoped that we will see a general reduction in rates, with the onset of further competition in the Irish mortgage market. If you require assistance with your own or your company’s finances whilst hoping to gain a mortgage, please don’t hesitate to contact us here at DCA accountantswhere we are always happy to help.

GOODBYE VISITING RELATIONS, HELLO INDUSTRIAL RELATIONS

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As we have now hopefully all shaken off the last of the holiday tiredness and the children are all back to school it is now officially time to get back to work and build on the successes of 2015. While we don’t condone this type of behaviour, none of us can be held responsible for what happens to the last couple of biscuit and chocolate boxes laying around all of our offices and homes this month. Whilst our diets may take a hit, our ability to inform and assist will not so we are back this week with information on a new Bill which has been introduced.

 

The Industrial Relations (Amendment) Act 2015 was signed into effect in July of 2015 and actively commenced in August 2015. The amendment of this Act will have several consequences on industrial relations, all of which it is important to be aware of in order for your business to be properly equipped to deal with the main changes in this Act. Here we have collated some of the main changes which can be expected and which might have an effect on your business. Two of the most obvious changes here will be to non-unionised companies.

 

Registration of Employment Agreements (REA’s).

This Act reintroduces a structure for the above which allows the Labour Court to review and introduce new rates of pay. This may affect your own business as changes to the current minimum wage of €9.15 can be expected.

 

Trade Disputes.

It is thought that this Act will result in a great deal more trade disputes being referred to the Labour Court which may result in employment terms being laid out by a third party. Prior to this Act, the Labour Court was unable to conduct investigations unless there is a larger number of employees involved in the dispute. There have however been assurances that the Act will not result in Collective Bargaining issues.

 

There may also be additional changes to issues such as sick pay, pensions, holiday pay etc. which will of course all be dependent on each specific company. We would advise that all business owners read over this new amendment and its coming recommendations in full in order to be best informed.

 

Full details of the changes and recommendations will be published in the coming weeks but until then it is always wise to have information on any of these changes so that your business can be better prepared for any issues which might arise. Should your company already recognise a union, there are unlikely to be many additional issues arising from this amendment.

 

Should you have any concerns or queries, as always please don’t hesitate to contact us here at DCA Accountants.