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,




DCA Accountants and Business Advisors


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,


DCA Accountants and Business Advisors



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,




DCA Accountants and Business Advisors


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,


DCA Accountants and Business Advisors





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


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.



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,


DCA Accountants and Business Advisors


Cashflow management is one of the biggest problems facing Irish businesses today. A company may well be able to monitor its profit and loss results on a month-to-month basis but regardless of profit forecasts, no business can expect to continue to trade if it is not in control of its cashflow.


To pinpoint the exact problem when it comes to cashflow is difficult – after all, no two companies are the same. However, at DCA Accountants and Business Advisors, we have seen a trend developing where credit control is one function in a lot of companies that falls down – the knock-on effect of course is that day-to-day cashflow management generally falls with it.


There are macro issues at play of course – a shortage of credit in the economy being the primary difficulty. People, it seems, are less willing to give out credit terms these days, the result being that credit is much tighter than before. Therefore, third party contractors are less willing to carry out a job in full before receiving payment. This situation damages the economy as a whole from the point of view there is less and less work being initiated. Without having the cash in place, it therefore becomes irrelevant whether or not a company has the ability to generate profits further down the line.


There are solutions, however, but it is imperative that directors, managers and business owners alike are aware of the discipline it takes to improve a cashflow situation.


The first step most companies must take is to try to work their credit terms more efficiently – this is what we call ‘The Matching Concept’. In other words, businesses need to match the level of credit that they obtain from their suppliers with the level of credit that they supply to their customers.


I would also strongly recommend that companies appoint a credit controller – someone who is responsible for and dedicated to managing the business’s debtor’s ledger book on a daily basis. By having this system in place, a company can have someone who can answer queries, can input daily updates to the debtor’s ledger, and can stay consistent when it comes to following up outstanding payments, which is very often left on the long finger by business owners themselves.


One of the core functions of the team at DCA Accountants and Business Advisors is to drive home the importance of cashflow management and the effects it can have on the future of our clients’ businesses. In most cases, we prepare cashflow projections for the month ahead and try to help our clients anticipate when and where they will have difficulties in this area. After all, if they are armed with the information, they have the ability to do something about it before it negatively impacts on their company.


We can also manage the debtor’s ledger on behalf of our clients. By appointing a dedicated member of our staff, our clients avoid the expense of having to employ a full-time credit controller, as well as knowing that their outstanding accounts are being followed up and managed on a daily basis, which allows them to concentrate on their core business and of course, to generate more sales.


Whatever your situation when it comes to cashflow management, it’s always wise to remember that if this most important aspect of your business is not managed correctly every day, you are, whether you realise it or not, putting your business in serious jeopardy.


Declan Dolan,


DCA Accountants and Business Advisors


How your company can handle debt effectively

Tighter controls from all financial institutions in Ireland are taking their toll on small businesses. From what we see at DCA Accountants and Business Advisors on a day-to-day basis dealing with our clients is that while it may seem that the banks are closed for business, they are simply much more stringent in their loaning policies. Some business owners, who may be running viable companies but at the same time cannot get credit, can often be left wondering what it is they’ve done wrong.


The answer is simple. While it is true that banks do have much tighter financial controls in place, many of them will still engage with businesses as long as the financial information being supplied to them is accurate and can be relied upon. Whilst it is true that credit is much more difficult to acquire and it can be tough to get, banks will listen and evaluate the financial information presented and then make a decision based on same. With the advent of the Credit appeal process there is then an opportunity for business person to get independent party to evaluate banks decision if not happy with it.


During the boom years, banks were literally giving money away and lending decisions to a large extent were perhaps based on the value of property a business person had rather than the fundamentals of the business itself.


Due to the availability of credit, some businesses allowed their credit control procedures and cash flow management to deteriorate and hence when the economy began to contract, businesses found it difficult to manage their cash flow due to both poor historical credit control policies and also banks tightening up on lending/overdraft facilities.


The credit contraction in Ireland over the last 3 years has lead to business owners realising the benefit of proper cash flow management and also strict credit control policies.  Also the availability of accurate up to date financial information is now paramount to businesses to allow them know in a timely manner how business is performing. Because of the availability of credit in boom, some of these practices were not adhered to /used.


Another consequence of credit contraction is that the banks staff have had to learn how to interpret financial information which is based on actual business performance rather than the value of a property.

There has been a steep learning curve for both business owners and bank staff with regard to how best to manage cash flow/debt in tight financial situations so that the client can operate their business and the bank can see that client has ability to pay loan by working with client rather than penalising client.


At DCA Accountants and Business Advisors all of our clients know that they need to be armed with the facts of their business when they enter into discussions about accessing credit or restructuring loans for their business from their lender. They know that they need proper profit and loss accounts, a list of signed-off sales orders for the next six months, and prudent/realistic  cash flow projections over that period. If that information is presented to a financial institution, more often than not, business owners will find their bank is willing to engage with them.


By working with clients and offering practical sound advice, we find that clients can perhaps have clarity with regard to how best to deal with bank/debt problem. In current climate it’s all about working together to achieve a solution that perhaps is not ideal for everyone but is realistic for all parties.


Top tips for dealing with bank debt:

  • Present timely and accurate information so you can have a frank and open discussion with your bank.
  • Be certain that what you are promising is reasonably achievable – don’t ever over-promise.
  • Keep the bank up-to-date on your company’s financial progress.
  • Keep in regular contact with your accountant and return his calls!
  • If you are doing your best and your business is fundamentally sound, you’ll find that your bank will work with you.


Eamonn Garvey,


DCA Accountants and Business Advisors



Right now many companies in Ireland could be classified as insolvent. As cashflows are disrupted by slow paying customers and as bad debts stack up, business owners who find their company in an insolvent position often wonder what the next steps are.


Firstly, don’t panic – after all, if you’re confident that your company can trade its way back into a profitable position (which it can in a lot of cases) then you’ll be fine. It’s in nobody’s interest for a company to fold just because there are cash flow issues, least of all the company’s creditors.


However, many business owners lose sleep when their company is in the red. The monthly wage bill and the day-to-day operating costs have to take priority to keep the company going but the real acid test of whether or not you can get back to a solvent position is by taking a close look at your balance sheet at the end of each year.


If your company’s performance is improving in terms of reducing the level of losses or if profitability is increasing on a gradual scale over a period of say three years, then you can continue trading and at that point, it will generally be agreed that the company and the company’s creditors are of the opinion that the company is returning to a solvent position.


Considering options

On the other hand, if there is really no way of knowing whether or not the company can get back in the black, the directors must consider a number of options. The first is whether or not to put the company into liquidation. It is the responsibility of the directors to be honest here and acknowledge the true financial position of the company. Delaying the liquidation process can have, after all, grave consequences – reckless trading being the most serious.


There are three types of liquidation. The first is a voluntary liquidation whereby the owners of the company are in a position to wind-up the company themselves. This can only arise in a situation where the company is solvent in the first place though. In other words, the directors should know that if they cash in their overall assets, the money they receive will be sufficient to cover any liabilities that exist within the company.


The second and most common type of liquidation is a creditor’s liquidation. This is where the directors realise that they are in an insolvent position. Under company legislation, they are obliged to hold a creditor’s liquidation if they are of the opinion that they will not be able to trade out of their troubles and return the company to a solvent position.


The third type of liquidation is a compulsory liquidation, where by a petition has been presented by a creditor to the courts under section 2.3.1 of the Companies Act 1963 to wind up a company and sell off its assets in order to receive outstanding payments in full.


How we can help

If you find your company is in financial trouble, the first thing your accountant or business advisors should do is take a look at the state of the company’s finances and restructure where appropriate and possible.  At DCA Accountants and Business Advisors, we often start with the company’s costs and see if there is any room for reducing outgoings. In many cases there will be. It is also important to ensure that the company in question is maximising the resources at its disposal.


Once the internal process is complete, creditors need to be informed of the situation – the company’s primary aim, which we always advocate at DCA Accountant and Business Advisors, should be to try to trade back into profitability. To do that takes time and creditors need to be made fully aware of the restructuring process and payment plans that have been put in place.


If there is really no other course of action left having explored all possible avenues to keep the company in business, liquidation may be the only option. If that’s the road that you have to go down, it is imperative to ensure that the entire process is carried out as efficiently – from a professional and financial point of view – as possible.


Declan Dolan,


DCA Accountants and Business Advisors


14/05/11 – PAYE/PRSI: P30 monthly return and payment for April 2011

14/05/11 – DWT: Return and payment of DWT for April 2011

14/05/11 – PSWT: F30 monthly return and payment for April 2011

14/05/11 – RCT: RCT30 monthly return and payment for April 2011

19/05/11 – VAT: VAT 3 return and payment for period March/April 2011
19/05/11 – VAT: 4 Monthly VAT 3 return and payment (if due) for period January/April 2011

1-21/05/11 – Corporation Tax: PT for APs ending between 1-30 June 2011
1-21/05/11 – Corporation Tax: Returns for APs ending between 1-31 August 2010
1-21/05/11 – Corporation Tax: Pay balance due on APs ending between 1-31 August 2010
1-31/05/11 – Corporation Tax: Returns of Third Party Information for APs ending between 1-31 August 2010


14/04/11 – PAYE/PRSI: P30 monthly return and payment for March 2011
14/04/11 – PAYE/PRSI: P30 quarterly return and payment for January/March 2011

14/04/11 – DWT: Return and payment of DWT for March 2011

14/04/11 – PSWT: F30 monthly return and payment for March 2011

14/04/11 – RCT: RCT30 monthly return and payment for March 2011

1-21/04/11 – Corporation Tax: PT for APs ending between 1-31 May 2011
1-21/04/11 – Corporation Tax: Returns for APs ending between 1-31 July 2010
1-21/04/11 – Corporation Tax: Pay balance due on APs ending between 1-31 July 2010
1-30/04/11 – Corporation Tax: Returns of Third Party Information for APs ending between 1-31 July 2010