BE COMPLIANT

Most people will have seen advertisements indicating the end of the tax year, which is coming up next week. However, for new limited companies – those in their first or second year of operation – the tax deadline depends on the accounting period that began when the company was set up or incorporated. The adverts that you see now are for self-assessment tax returns, which is very different to a company’s corporation tax liability.

 

The first and most important step when preparing your tax returns is knowing the difference between the two. Having a good accountant will help but being able to differentiate between when your company’s corporation tax liability is due and the self-assessment deadline is key.

 

After a 12 month trading period a company must file a corporation tax return and comply with the preliminary corporation tax deadlines, meaning that returns must be filed and paid somewhat in advance. The requirements for companies in their second year or more of operation are clearly outlined by Revenue, who use a formula based on previous tax returns by company to calculate how much should be paid over three instalments.  The first instalment is due 31 days before the end of the accounting period; the second instalment is due within six months after the end of the accounting period; while the third instalment (i.e. the balance of the full liability) must be paid within one month after the company’s corporation tax assessment is returned. For the first instalment, companies must return 18% of the full liability, while 72% is due before the deadline for the second instalment.

 

For start-ups in their first year, the burden is not so great. The rules by Revenue state that any company has the option of paying 90% of the final liability up front or 100% of the previous year’s liability, which, for new companies, is obviously zero given that they have not been trading before. We always encourage companies to avail of that option when it comes to filing preliminary tax returns as it protects cash flow, which is at the cornerstone of a start-up’s success or failure.

 

The consequences for missing deadlines can be severe. Not only will a company be subject to penalties and interest of up to 20%, but they are also putting themselves in the firing line of Revenue and potentially classed as high risk in the future. What this means, of course, is that the likelihood of being selected for audit by the Revenue Commissioners increases dramatically.

 

At DCA Accountants and Business Advisors, we help companies avoid any unwanted spotlight when it comes to their tax liability. From the moment we meet a potential client, whether they are a sole trader or limited company, we identify all tax deadlines relevant to them. Every company is unique of course and so we alert our clients at least 90 days in advance of upcoming deadlines. We also encourage companies to help us to complete their annual accounts as soon as possible – after all, the more time we have the more likely it is that we can find ways of reducing the overall liability of a business.

 

Keeping a watch on deadlines and ensuring your company is compliant can be a tricky and confusing business, especially when a company is in its early years and not familiar with the system and rules. However, the dangers of non-compliance and putting your company on the radar of Revenue are great, which is why professional assistance should always be sought.

 

Declan Dolan,

 

Partner,

 

DCA Accountants and Business Advisors.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

TAXING TIME FOR EVERYONE

Most people think that self-assessment tax returns only apply to the business community. It’s an easy assumption to make given the advertising campaign that goes into reminding business owners of the October 31st deadline. But all workers, and even pensioners, must submit a return to Revenue every year.

 

In a lot of cases, the accounts department of the company you work for will take care of it for you – hence the high level of inertia and disinterest that most people show when it comes to their tax bill at this time of year. But by perking up a bit and taking control of the situation, you could save yourself a lot of cash in the year ahead.

 

When employees receive their tax credits from the revenue each year – or officially, the ‘Notice of determination of tax credits and standard rate cut-off point’ – they can calculate their tax liability for the coming 12 months. If you know what to look for here, you can start making plans to save money immediately.

 

Firstly, make a list of everything that you pay for over the year. Items like bin charges, water charges (if they apply in your area), medical bills, college or school bills, and anything else that puts money in state coffers directly from your pocket should be itemised. Once you’re satisfied that you’ve covered everything – don’t forget to include your rent or mortgage payments – you can start working out what the Government owes you!

 

If you want to file your own tax return you can do so in one of two ways. You can register with the Revenue Commissioners and use the ROS Direct Debit system or you can submit forms which can be picked up from your local tax office or printed from www.revenue.ie. The self-employed will need Form 11, as will company directors, while PAYE workers and pensioners should use Form 12. If you’re in business, a registered company should complete Form CT1 and for partnerships, Form 1 should be filled out.

 

Once you’ve calculated your overall tax liability you can post payment to the Collector General’s office or you can go there yourself and pay in person. They have offices in Apollo House on Tara Street in Dublin and Francis Street in Limerick.

 

Sometimes, especially when it comes to tax returns, a little professional advice can go a long way. At DCA Accountants and Business Advisors, our team have dealt with members of the public on many occasions to handle tax returns. Depending on an individual’s situation, the types of rebates differ. For example, a single parent will be entitled to a higher tax credit than a two-parent family receives. By having an introductory and largely informal chat with our clients, we can generally find credits that people didn’t know they were entitled too or simply didn’t know existed. What’s more, our consultation is free. From there, we can file the paperwork for you and make sure that you receive everything that you’re entitled to – not just this year but for the previous four years.

 

Whatever way you decide to go, it’s crucial that you are up to speed on your tax liability, how to file it and how to claim any overpayment – it’s your money, after all.

 

 

Eamonn Garvey,

Partner,

DCA Accountants & Business Advisors.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

CAN YOU CLAIM?

Right now, people up and down the country are preparing to submit their tax returns for 2011. It can be a time of great stress and worry for those who do not have their paperwork in order but, even for highly organised people, there is a chance that money is being thrown away.

 

Few people are aware of the full set of tax reliefs available to them and, therefore, returns are filed in excess of what actually should be paid. The good news, however, is that it’s not too late to reclaim what’s still rightly yours from the taxman.

 

The first thing anyone preparing a tax return needs to do is to look at reliefs available to them. If you are paying rates towards the collection of household rubbish, for example, you’re entitled to a credit for your bin tax on your overall taxable income. Another credit may be available when there is a dependent family member or relative at home – claims can be made against the care of that relative too, based on the amount paid throughout the course of the year for their care. It must be documented, of course. Also, if you are a one-parent family, you will qualify for double the tax credit of the average person, which amounts to roughly €7,000 against total annual income. Rental income or expenditure, depending on whether you’re the landlord or the tenant, is also subject to relief.

 

The trouble that most people have is that, while they may be aware that they are entitled to reliefs, they simply don’t bother to claim them if they are already struggling with the paperwork requirements that go with filing a return. What’s more, it seems that a lot of individuals believe that, after filing a return to beat the October 31 deadline, they lose the right to make a claim. That is not the case. Claims can made retrospectively for up to four years, meaning that depending on your case, you could be entitled to a rebate covering that period from the Revenue Commissioners.

 

But how do you go about claiming? There are software packages out there but I would caution against using a programme that simply regurgitates what you feed it. The best thing to do is talk to a qualified tax advisor. At DCA Accountants and Business Advisors, our team are well versed and experienced in all tax reliefs available and depending on your personal circumstances, which ones apply to you. In many cases, having discussed a personal situation with a client, we often stumble upon avenues where they can lower their overall tax liability by claiming reliefs – many of which they were not aware of before.

 

Our consultation service is free of charge so all you have to lose by not talking to us is really what was rightfully yours all along.

 

Declan Dolan,

 

Partner,

 

DCA Accountants and Business Advisors.

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

THE GOLDEN RULES OF BOOKKEEPING

Second to managing customer accounts and attracting new sales, bookkeeping is one of the most important functions in any business. If you’re diligent and have proper processes in place, you’ll have access to timely information that shows the true performance of your company. If you’re ambivalent in any way, though, your business could wind up in very serious trouble without you even knowing it.

 

A lot of companies, particularly small businesses that are just getting off the ground, tend to focus on getting as many sales as possible– it’s a natural way to start. After all, without customers a company might as well not exist at all. However, if source documentation when filing accounts for the company is not easily available, all of the effort put in on the sales side may prove worthless if the bookkeeping processes are not up to scratch.

 

When keeping accounts, the first rule is that it’s all about routine. If a company does not have a full-time accountant or financial controller then it is almost always up to the owner-manager himself or herself to look after one of the most important functions of the company. In some cases the responsibility will fall on a member of the owner’s family. Nevertheless, it is vital that the person in charge knows the financial state of his or her business at all times. Having a complete understanding of what is required to maintain proper accounts on a weekly or monthly basis will add an appreciation to the role of whoever it is assigned to and will also place a greater level of importance on it in the overall running of the business.

 

At DCA Accountants and Business Advisors, we take our clients through the key steps in bookkeeping from the outset. We explain in simple, jargon-free terms everything that they have to do to keep their accounts and books in order – by following the simple rules of consistency, completeness and communication, you’ll find that any information you need at any stage regarding your accounts will be readily at hand.

 

However, we’re also very aware that accounts management and daily bookkeeping are not necessarily a skill set that everyone has, which is why our clients find our bookkeeping service so valuable to their businesses. We can take care of all invoicing as well as PAYE payments and/or VAT returns. If there are pieces of information missing such as credit notes or invoices, our experienced bookkeeping department will follow up with the company’s clients to ensure everything is in order and that the information is accurate.

 

The key point, however, is that proper bookkeeping procedures are essential when running any business. Get it right and you’ll see very quickly just how much of an asset it can be to your business; get it wrong and the future of the business could be very bleak indeed.

 

Eamonn Garvey,

 

Partner,

 

DCA Accountants & Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie

PLANTING THE SEED

Two weeks ago, I looked at the Business Expansion Scheme (BES) as part of DCA Accountants and Business Advisors’ investment advice series. An extension to the BES is, of course, the Seed Capital Scheme, which is another tax refund for new enterprises.

 

The Seed Capital Scheme is very similar to the BES but what makes it potentially more attractive is that it provides for a refund of tax on an investment already made by an individual. That investment can be offset against the previous six years of PAYE income that an individual has earned and there’s a real opportunity to obtain a sizeable tax rebate up to €100,000.

 

The scheme is particularly attractive for anyone who has been on a good salary for a number of years. If someone has been made redundant recently, for example, he or she can use their redundancy payment to set up a new business that may qualify for the scheme under Revenue rules. If money is invested in the business it can be offset against the previous six years of income to trigger a tax rebate, meaning the cost of investing in the business is drastically reduced.

 

There are restrictions on the type of businesses that are eligible for investment, however. For starters, an individual who invests must enter into a full-time employment contract for at least one year, either as a director or as an employee. The second condition is that there are limits on the type of company that can qualify – the main categories for qualification include companies in the manufacturing industry or internationally traded services, while those involved in commercial research or development activities are also likely to meet the necessary criteria. The common theme, as you’ll have noticed though, is that innovation is required to qualify.

 

Companies seeking approval for the scheme should apply in the first instance to their County Enterprise Board for initial approval – by doing so, a company can fast-track its application to the Revenue for approval of seed capital relief. Your application will then be dealt with by the Revenue Commissioners’ branch in Dublin Castle.

 

The process itself may seem long and arduous but it’s worth it – right now the success rate for applications is particularly high given that the Government are doing all they can to incentivise people to invest in projects that are likely to create employment here. If the business plan is fundamentally sound and approval has been granted by a county enterprise board, the chances of success increase significantly.

 

At DCA Accountants and Business Advisors, we can help with applications for County enterprise board grants and also qualification under the Seed Capital relief scheme and assess whether or not a plan is likely to be approved at all levels. Once we have reviewed a business plan, we can point out areas where improvements need to be made therefore maximising the chances of success.

 

When we look at a business plan and application for any kind of investment, we can generally conclude very quickly if it will be successful in the approval process – our background when dealing with these matters is quite extensive and a number of our clients have secured investment through schemes like this after consulting our advisors. Like those that make the final decisions on applications, we closely scrutinise a business plan against the key criteria of the grant or investment scheme that a company is applying for and see how it measures up. If it does, then we can help with the necessary paperwork; however, if tweaks or adjustments need to be made in any area, we can point them out to give you and your business the best possible opportunity to qualify.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie

TAX DEADLINE LOOMS LARGE

This is the time of year that owner managers dread most. With the tax return deadline looming, most SME business owners are keen to make sure that their house is in order and that their files are up to date ahead of the cut-off point.

 

But it doesn’t have to be a time viewed with trepidation – when a company or sole trader sets up in business, they should have first appointed an accountant who would have indicated very specifically the records that need to be maintained, both for statutory compliance and from a personal perspective so that they know exactly what is going on in the business at any given time.

 

If you’re not sure what records you should be keeping, it’s a good idea start with a full list of sales and purchase invoices for the trading period – this list should also include any credit notes (including discounts and/or returns to and from customers and suppliers) that were received in the same period. All invoices must be in the trading name of the company or sole trader as registered with the Revenue Commissioners

 

Details of all lodgements to the company’s bank account for the trading period as well as customer receipts, details of bank loans and refunds must be filed and to hand. The company must also keep a record of all business bank statements for the period outlined including all credit card statements. Also, a record of all payments to suppliers including payments to trade suppliers, payments on loans, insurance, pensions and life assurance should be kept. If an audit takes place, the Revenue Commissioners will also ask for details of any loans or hire purchase agreements that the company has entered into – copies of the agreements should be readily available for review. Also, copies of all debtor and creditor statements showing balances due and owing from both customers and suppliers should be accessible. All of this information should be contained on your accounting software but it is also necessary to have hard copy records to vouch for all entries.

 

Companies should aim to submit a copy of their records to their accountant as early as possible after year end. Doing this will allow the accountant to provide you with timely information in respect of the company’s trading performance for a certain period; crucially, it can also act as an alert for any potential issues that need to be addressed as a matter of urgency.

 

It may sound complicated but in fact, the earlier you engage with your accountant, the easier it will be. At DCA, we are particularly proactive in that we will be in contact with our clients from the off, ensuring that they fully understand the records that have to be maintained. We also provide assistance to them through our bookkeeping service to ensure that monthly records such as VAT and PAYE returns are up to date.

 

If you are thinking of changing accountant for any reason, then talk to us. In such circumstances, we would initially carry out a complete review of the books and highlight any issues and implement recommendations on your say so. We’re here to help you run your business more efficiently by providing you with the timely information that you require.

 

Eamonn Garvey,

 

Partner,

 

DCA Accountants and Business Advisors

BUSINESS EXPANSION SCHEME – DO YOU QUALIFY?

In the first of a series of investment focused pieces, Declan Dolan takes a closer look at the Business Expansion Scheme.

 

Wary investors are treating today’s market with extreme caution and who can blame them? After all, the turbulence of the last three years hasn’t exactly inspired confidence – even those at the higher end of the risk profile are scaling back after, in many cases, suffering huge losses in their portfolios.

 

However, there are still opportunities out there for those with the means and the will to invest. The Business Expansion Scheme (BES), for example, is one. Set up as an incentive for individuals to invest in a new enterprise or business idea, the BES allows investors to offset their investment amount against their existing PAYE or other taxable income for the year.

 

As a tax relief mechanism, it is quite an attractive scheme from two perspectives. Firstly, if an investor puts in €10,000 into a BES, for example, he/she is entitled to offset that amount in full against his/her total income. Secondly, 41% of that investment can be reclaimed through a PAYE tax refund meaning the cost of the initial investment is reduced by 41% as long as there are sufficient earnings in the high income tax bracket to absorb the full amount.

 

For companies too, the benefits are numerous, not least the marketing opportunities that come with being accepted for the scheme. Once a business idea or innovation has been rubber-stamped by the Revenue Commissioners, the business will immediately start attracting the attention of outside investors. However, it’s not the case that every company will secure investment – but if the idea is strong enough, is innovative, brings forward a product or service that does not currently exist and, perhaps most importantly, is exportable, then the chances of investment increase significantly.

 

In general terms, the BES offers benefits to both the company and private investor but more needs to be done by tax advisors and by government to make people more aware of the opportunities that exist within it. Since it was launched in its current format in 2007, very little has been done to promote the scheme, and so, in my opinion, while I believe it is an excellent vehicle for all concerned, it really hasn’t worked in terms of the reach it should have achieved.

 

One instance of where it has worked was when a client of DCA Accountants and Business Advisors came up with an idea of producing an infra red, energy efficient product for rooms in homes without radiators. We felt at the time that the product could qualify for BES relief, which we applied for successfully – we subsequently obtained a €20,000 tax rebate for the client. Up until that point he wasn’t aware of such reliefs, which highlights the point that not enough professional advisors are making their clients aware of all of the options available to them.

 

On the face of it, the BES seems very appealing but don’t be fooled – it is extremely difficult to obtain and not every project will qualify. While the Revenue Commissioners are certainly widening the net in terms of the types of projects that can apply, the process can be a slow and frustrating one. But we can help. With our extensive experience in applying for the scheme, our experts can tell pretty quickly whether or not a project will qualify. We’ll also look at each application on a case-by case basis without charge so there’s really nothing to lose. However, if your project is innovative enough, there is certainly everything to gain.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie

WE’RE HERE TO HELP YOU SET UP YOUR BUSINESS

Following on from my last blog on how to set up your business, this week’s focus is on the determining factors that can help you decide whether the sole trader or limited company option is best for you.

 

When deciding which best suits your needs, the most important thing to take into account is your forecasted profits and how much your turnover is likely to be year-on-year.

 

A lot of people, when setting up a business, get hung up on details like having the appropriate measures in place when it comes to registering with the CRO and how they have to go about registering for various tax heads that relate to the sector that they will be entering. While it’s a prudent practice, it’s not nearly as daunting as some think.

 

Setting up as a sole trader is relatively painless and the process is much quicker than the limited company route. The same applies to a partnership if there are two or more people involved in getting the company off the ground. In both instances, the criteria and characteristics are very similar and the paperwork requirements are minimal.

 

Before you decide on setting up as a sole trader or partnership, ask yourself if you are likely to earn over €36,000 in your first year. If you feel you’ll be taking home in and around that figure, you’ll pay tax of 20% on the first €36,000 and 48% tax on anything above that.

 

However, if you believe, having carried out some research into your market and calculated projected sales figures, that it’s likely that you’ll earn much more than that, then a limited company is the route you should take.

 

To set up as a limited company, however, a company needs to be formed and it has to be registered for taxes. However, the real differentiator between the two is projected profits. If, for example, a single person goes into business and their profit forecast is in the region of €100,000, then we would advise them to set up a company. There is, however, more paperwork involved and annual accounts and bridged accounts must be filed with the companies office.

 

How can DCA Accountants and Business Advisors help?

 

First of all, having discussed your business with you, we’ll decide on the appropriate structure. Once all the paperwork has been handled, our advisors ensure that you are fully aware of the checks and records that must be kept throughout the year.

 

In a lot of cases, a new company wants to concentrate on getting their business up and running so, at DCA, we can manage all of your records throughout the year ahead of filing annual accounts on your behalf, regardless of the structure that is most suitable to you.

 

In the case of a limited company and on top of the necessary paperwork, the team here can register your business for VAT, PAYE and all other necessary tax heads. We can also assist in securing finance for your business whether that is an overdraft or term loan to get you started.

 

Once your company is up and running, our dedicated bookkeeping department can help you issue timely sales invoices and even follow up with your clients to ensure that payments are being made and processed on time.

 

When you are setting up a business, it can be very easy to lose sight of your core objective, especially in the beginning when there seems to be so much red tape to get through. We’re here to help you and your company get off to the best start possible, and with our expert team behind you, you can concentrate on why you set up the business in the first place.

 

Eamonn Garvey,

 

Partner,

 

DCA Accountants and Business Advisors

HOW TO PAY YOURSELF TAX EFFICIENTLY

Even when a business is operating profitably, paying yourself a good salary isn’t quite as straightforward as you think. Owner-managers of small businesses are subject to several obligations that they need to be aware of before they begin paying themselves, along with the same taxes as any ordinary employee. Business owners can, however, control and manage their tax liabilities while still complying with all the Revenue’s guidelines: the key is careful advance planning, organisation and engaging with the revenue authorities when you need to.

 

Things to consider

 

Before taking any money from a business, the most obvious and important factor to consider is the company cash flow. A business owner has to be careful about what he’s looking to pay himself if, in turn, it jeopardises the cash flow resources of the business and its ability to pay other key overheads. For example, if he pays himself such an amount that it jeopardises the wages of the other staff or if the cash flow resources are affected to such a point that the company is not in a position to pay the VAT or PAYE/PRSI bill, then the problems begin.

Business owners also have to factor in their personal tax liability. He or she may only have a single person’s tax credits available meaning that, for every euro taken above the standard tax threshold, the business will pay substantially on top of the net amount the business owner is paying  him or herself. Despite what some commentators may make out, there’s no special exemption from tax for business owners – they’re exposed to the standard tax rates also, starting with the PAYE rate, PRSI rate and now the Universal Social Charge (USC) rate, which has a particularly damaging effect on the tax situation of business owners earning over €100,000. It’s very probable that, for someone of that income, their average tax rate could rise to over 50%.

 

Reducing exposure

 

Of course, every business wants to limit their exposure and liability – the key is to be organised so that you can take advantage of generous reliefs. One that a limited company can look at is mileage and subsistence. Rather than just hanging on to petrol receipts, the director or owner of the company can complete a revenue-approved spreadsheet that, we feel, gives generous allowances in terms of travel he has incurred on behalf of the company. This is only applicable, though, if the director owns their own vehicle and it’s not owned by the company. Often, directors make the mistake of thinking it’s an advantage to let the company own the motor vehicle. At DCA, we would, in most cases, advise against that because the employer is leaving himself exposed to be taxed on a benefit-in-kind whereby be he will be exposed to an additional PAYE/PRSI charge on it.

 

Another idea is to employ a spouse that may not be working to avail of tax credits. This is perfectly legitimate as long as that person is actually carrying out work for the company. It could be an administrative role or helping with the paperwork at weekends. And of course, the business owner could have children off for the summer who may be able to help out, for which they could also avail of their tax credits.

 

Another option is pension planning, where by the business owner can look at the generous reliefs available for company directors, in particular if they look towards setting up a company executive pension scheme. This type of pension has more generous tax breaks than ordinary PRSA/personal pension scheme and is worth investigating.

 

The compliance issue

 

Of course, availing of these reliefs calls for organisation and planning. Certain businesses, particularly sole traders, tend to leave their tax returns until the final month before the submission deadline. Our view is that these businesses should look towards getting their tax computations and income tax returns completed as early as possible once the tax year is over. That gives them time to anticipate what lies ahead, both in terms of their ability to pay and also any tax planning measures that they might still be able to put in place to reduce their liability.

 

Being organised will stand to the company when the thorny issue of compliance comes up. The most important thing is to file VAT returns and P30 returns on time. That minimises exposure to interest or penalties for filing late returns. Far too many businesses end up exposed to unnecessary costs of that nature.

 

Working for you

 

At DCA, we come across many cases where we find that client cash flows are in such a situation that they’re not able to pay all their taxes at once. In this instance, we write to the Revenue and look towards an instalment plan. For any clients that are suffering tax problems, we have a very strong relationship with the Revenue and can negotiate on a client’s behalf to help that client trade out of his taxation difficulties at that moment in time.

 

More than that, though, we like to think of ourselves as a one-stop shop for these smaller businesses. We have a bookkeeping bureau, whereby we look after the PAYE, VAT, and month-to-month tax requirements of the business, and would act as their tax agent when it comes to dealing with the Revenue. We follow up with a client to make sure he sends in books or records promptly so that we can file returns on a timely basis – in general, we aim to have everything completed five months ahead of the deadline to give the client peace of mind to save towards the liability, or to look at measures that reduce the liability, rather than coming to a client two weeks before the deadline. From experience, we know that planning ahead leads to major savings and far less business stress in the medium to long term.

 

Declan Dolan,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie

SETTING UP A BUSINESS – YOUR OPTIONS

SOLE TRADER/PARTNERSHIP

 

Setting up as a sole trader is the easiest way of establishing a business. However, sole traders can only be registered to individuals; if you find yourself in a situation where you are registering a business with another individual or indeed, more than one other person, the business can be registered as a partnership.

 

In order to set up a sole trader or a partnership, a TR1 Tax Registration form must be filled out and sent to the Revenue Commissioners. On this form, businesses can register for income tax, register as an employer, and also register for VAT and RCT (Relevant Contracts Tax), which mainly relates to businesses in the construction industry. Registration takes roughly four weeks but Revenue may request further information if the business is registering for VAT. In some cases, Revenue may ask for a copy of a lease of premises if the business is renting, for example.

 

The deadline for submission of tax returns for sole traders and partnerships is October 31st each year so if you register your business in 2011, your submission of income tax return is due on or by October 31st 2012.

 

In some instances sole traders or partnerships can register a business name so that they can trade under that name – for example, Mary Smith T/A Dublin Photographers. To register a business name, a form must be sent to the CRO (Companies Registration Office) or alternatively, it can be filled out and sent online at www.cro.ie.

 

Once you have registered with the CRO, the next step is to open a bank account for your company. This is a relatively straightforward process and is similar to setting up a personal account in that the bank will require photo id (a driving license or passport) and proof of address (a utility bill dated within three months). If the business is trading under a registered business name, the bank will require copy of the business name registration as supplied by the CRO.

 

For sole traders and partnerships it is vital that proper and up-to-date accounts and records are maintained from the day you start your business – if the books aren’t in order from the beginning, it tends to be much more difficult to prepare annual accounts, which could possibly lead to higher fees come tax return time.

 

For new businesses, it is always a good idea to meet with your chosen accountant and have them explain the records that need to be kept on a daily basis. If after the accounting process has been explain to you and you still don’t understand it, chances are your accountant isn’t explaining it properly, which could land you in serious trouble with Revenue when it comes time to file your accounts.

LIMITED COMPANY

 

A minimum of two people are required to set up a limited company, which, like a sole trader or partnership, can be registered through the CRO.

 

It is important to remember that once the limited company is established, it becomes a separate legal entity and that members’ liability is limited to the amount of share capital each has subscribed to. In all cases, members become directors of the company so it is crucial that everyone involved is aware of their legal duties, responsibilities, and obligations as a company director.

 

To register a limited company for VAT and PAYE and other taxes, a TR2 Tax Registration form must be forwarded to the Revenue Commissioners. This can only be done after the company has been set up through the CRO. Once you have received your company number, registration for all tax heads can take up to four to six weeks.

 

Setting up a bank account for a limited company is slightly different than if you were applying as a sole trader or partnership. As well as proof of identification and address from two directors, the bank will require your certificate of incorporation and certified copies of both your memorandum and articles of association.

 

For a limited company, financial statements and a corporation tax return must be prepared each year. Financial statements have to be in format as prescribed by the various companies’ acts and filed with the CRO, normally within nine months of the accounts year end.

 

How can DCA Accountants and Business Advisors help?

 

In most cases, anyone setting up a business will need to be advised of their options. Our experts will take you through every aspect of setting up the business you have in mind and recommend the specific structure that suits your requirements.

 

We can also submit and follow up with all documentation required for the Revenue Commissioners and the CRO, as well as assisting with opening bank accounts, and ensuring that all other issues are addressed, such as ensuring your business has appropriate insurance so you can start trading.

 

Once the company is up and running, DCA can provide a full bookkeeping service to ensure that your monthly VAT and PAYE returns are forwarded to Revenue on a timely basis, which will help you to avoid interest payments and penalties.

 

Above all else, however, our expert full service accounting package for SMEs ensures that you, the business owner, can concentrate on getting your business off the ground safe in the knowledge that your accounting records are compliant and maintained properly.

 

 

Eamonn Garvey,

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie