1. Be organised, be ready and don’t be late

Under self-assessment there is a common date for the payment of tax and filing of tax returns – the 31^st of October each year. With all the demands of starting a new business, this date can often sneak up on you. It is absolutely vital that you are ready for this date each year and have everything you need optimally organised to make the process as easy, quick and pain-free as possible. You can file your return in advance of this date once you are ready. Do not leave it until the last minute to file your return. Not only are there fees for missing the deadline, if you rush there is more chance that you make a mistake or leave something out, which can also result in a financial penalty or even a potential tax audit.

2. The Start Your Own Business Relief

There are a number of tax reliefs, deductions and exemptions in place that contribute towards the creation of jobs. The start your own business relief provides tax relief for someone who has been unemployed for at least 12 months before starting a qualifying business, and provides an exemption from income tax up to a maximum of €40,000 per annum for a period of two years.

3. Keep receipts and records of all your relevant expenses

Once an expense is directly related to the running of your business, you can make a claim for it in your sole trader tax return. However, you must be able to prove that you have made the expense by keeping all relevant receipts and a record of them, for six years. “Allowable expenses” for the day-to-day running of your business include items such as: the purchase of goods for resale, rent, rates, repairs, lighting, heating, the running costs of vehicles or machinery used in the business, accountancy fees, interest paid on any monies borrowed to finance your business, lease payments on vehicles or machinery used in the business, equipment, motoring expenses and commuting expenses. Things like mobile phones and cars can be a tricky area as many sole traders use them for their own personal use as well. Only the usage that is directly related to the running of the business can be claimed.

4. Don’t overlook your pre-trading expenses

Because you’ve only recently launched your business, you may be eligible to claim a tax deduction for some qualifying pre-trading expenses in respect of the business in the three years before the commencement. For tax purposes, these expenses are treated as if they had been incurred at the time that the trade started. These may include business-related costs like: leasing costs, legal fees, the cost of preparing business plans and feasibility studies, accountancy fees, advertising costs and rent paid for the premises from which your business operates.

5. Broaden your understanding of allowances

While the reliefs available to you when doing your income tax return are enough to keep you busy, there are other assets for which you may be entitled to claim a tax deduction for. If you look hard enough, they can make a big difference when getting your new business off the ground. Things that can easily be overlooked include things like intellectual properties your company may have acquired such as trade names, brands, know-how copyright and even good will, assets the cost of which qualify for tax relief; research and development costs; and even tax treatment on any losses you incur.

About the Author

Selfemployed.ie have over 25 years experience helping people through their self-assessment and income tax returns. So, if you are self-employed, involved in a start-up, working on a contract basis, or earning any other second income and need any help with any aspect of filing your income tax return, you can get professional, experienced income tax service starting from just €150 (+VAT). Get in touch with the experts today to get started.

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Benefits of good cash flow management

The overall aim of highlighting the issues mentioned above is to firstly make you more aware of your cash position which will ultimately help you to improve it.

The ability to monitor your cash flow situation is hugely important when it comes to trying to get your business to thrive under pressure.

By simply being able to follow good cash flow procedures your business will reap the rewards almost instantly when it comes to building and growing your company.

Pay your debts

Having a good cash flow situation will make the payment of debts easier. The ability to pay your bills on time and avoid due deadline dates will create better relationships with your suppliers.

Top Tip: Having a good track record paying your bills will create greater understanding if the situation ever arises where you cannot pay a bill on time or are seeking out financial help.

Being able to pay your bills on time means there will be no impact on your credit rating. Having a good credit rating is very important especially if you are looking for financing later on in life.

Less Stress

When you are constantly under financial difficulty a lot of stress can come with the territory. It can impact your life greatly. Getting into a good financial position is important for not only your business but your own life as well.

Top Tip: When you are running a business wages become a huge part of your expenses. Having a positive cash flow takes away a huge amount of stress when it comes to paying employees and lets you focus on growth and expansion.

Expansion

A good cash flow position brings with it a lot of benefits. Having a proven track record with money and being able to manage your finances has a lot of perks to it. Better interest rates being just one example.

Once a business has established a good cash flow history and has a cash flow that is positive, it is then best placed to look at expansion plans for the business. Potential lenders will expect past, present and future cash flow projections to assure them that the business is on a solid footing.

At this point it’s worth pointing out that an accounting software package will be of enormous benefit. Used properly it will do all your heavy lifting and help you tick all the boxes on the cash flow checklist below.

Thank you for taking the time to read our three-part series on cash flow. It’s such an important subject and we hope that we have made it clear that cash flow is one aspect of your business that you need to be on top off.

Cash flow checklist

• Forecast: Have you planned for your future incomings and outgoings? Identify large and recurring outgoings.

• Invoice immediately: How long does it take after you make a sale to invoice?
• Details: Is your invoice addressed to the right person and are your correct bank details included?
• Payment terms: Is your payment term correct for your current cash position?

• Follow up: Have you followed up promptly seeking payment once the payment term has elapsed?
• Deposit: Is the order from a customer large? Do you need to spend a lot to complete it? Consider requesting a deposit.

• Credit limit: Do you have a customer that pays late regularly? Consider a credit limit to protect your cash position.

• Your bills: Are you waiting until the payment term is up before you pay? This is a free period of credit for you.

• Details: Are all the necessary details on your invoices.

• Taxes: Remember the second bank account to hold the monies you must pay the taxman.

The post Cash flow the lifeblood of Small Businesses – Part 3 appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

This is the second in our series of blogs on Cash Flow – by Michael O’Brien of Big Red Cloud.

Leading on from Part one where you should have a clear understanding of the importance of cash flow, now we go to the next step and look at cash flow measurement. What we can measure, we can fix!

Cash flow measurement

Having the ability and know how to foresee your cash flow situation over the course of the coming months is something you should try and master. The better prepared you are, the less issues you will come across along the way.

Get the basics right:

Cash flow is receipts coming into the business less cash paid out of the business.

What does this means?

When one figure is taken from the other your business is either left in a positive or a negative cash flow situation.

Positive cash flow

Your business has been able to monitor and manage its cash flow correctly and there is enough money coming into the business to cover any outgoings.

Negative cash flow

Urgent action is needed to resolve the current cash flow situation as the business does not have enough money to cover the money that is leaving the business to pay for wages, purchases and expenses.

Cash flow forecasting

One point that cannot but be over emphasised enough is cash flow forecasting for your business. It is a very important analysis when planning ahead for the future of your business.

Top Tip: Forecasting will not only give you the foresight to manage your business accounts but more importantly your payments, so you can always keep on top of your cash flow.

Forecasting can be vital for the future of your business. If it is carried out correctly it can put you and your business in a good position. Nasty surprises will become a thing of the past with accurate data now building the foundations of your business.

An accounting software solution is something you should consider for your business especially to facilitate proper, accurate and timely forecasting.

Managing & improving your cash flow

Provided below are a number of key practice recommendations that you should take note of when you are moving forward with your business. This should result, firstly in a solid foundation for your business and secondly a stable, positive cash flow position.

1. Plan

The first key to good cash flow management is to simply be aware of the pitfalls ahead over the coming months with regards to payments. Mapping out when you see the need for large chunks of cash and being ready for those instances is half the battle.

Obviously you cannot prepare for every such instance but having as much of the future mapped out in front of you as possible will help prepare for unforeseen cash flow challenges.

Planning is a fundamental business skill, no matter what the subject.

Top Tip: Taxes can often be neglected when taking the above issues into consideration. It’s not just the employees who need to be paid but also the tax man. Don’t forget!

2. Invoicing

The quicker you invoice your customers the quicker you can get paid for the sales you make. If it takes you 2 days to invoice your customer’s details then this means that is going to be at least 3 days before you receive any payments.

Top Tip: A sale isn’t a sale until it has been invoiced.

Having all the necessary information such as PO numbers is another important point to quicken up the process. Anything that can help you speed up the payment process should be looked into and carried out.

3. Identify Major Outgoings

One key to carrying out forecasting is to be able to identify the largest payments being made by the business. By identifying these payments your business should now look at these figures and see how they could be reduced through cut backs or even bulk buying.

4. Credit Control

One of the most important points especially when it comes to cash flow management has to be credit control. Only giving credit to customers who can actually pay their bills on time is a huge step towards getting payments in on time. Credit limits have to be put on customers who have a negative payment history with the company.

Top Tip: Companies should outline their credit policies to customers to make sure everyone is on the same page.

Receiving cash up front will allow you to pay necessary suppliers to set the project underway.

Finally always chase up on invoices. Regular reminders will go a long way in getting your payments in on time.

5. Payment Terms

Monitoring your payment terms and updating them when required is a good routine to get into as a business. Shortening payment periods in times of need and expanding on payment periods when everything is under check offers the customer a bit of leeway.

When it is your turn to make a payment it is better to wait until the bill is actually due rather than making a payment beforehand. Focusing on your cash flow situation is a lot more important than paying your own bills beforehand.

6. Tax Collecting

A point that can easily go unnoticed by a business is money relating to taxes such as VAT. Tax is money collected on behalf of the government that the business is obliged to collect and pay.

Top Tip: A good idea would be to open a second bank account that deals specifically with tax.

It will make it a lot easier for your business to see what cash is actually yours or the governments giving you a far greater idea of your overall financial situation. Penalties and interest charges should be avoided at all costs and this is one useful way of combating this issue.

7. Payroll

Wages are always one of the biggest expenditures within a business. Therefore it is very important to get this part of the business all above board.

Top Tip: Investing in a simple payroll system will save you a lot of time in the long run.

8. Relationship with your bank

Building up a solid trusting relationship between you and your bank manager could be very beneficial in the long run for your business.

Getting help with loan repayments, overdrafts or a short team moratorium on existing loan repayments (if it is particularly a bad time for you) are just some of the benefits a bank manager could provide.

Top Tip: Keeping your bank up to date with your overall position and future prospects is a great way of building a trusted relationship with your bank manager.

We look forward to seeing you in for Cash Flow Part 3, our final post in the cash flow series where we will look at three additional benefits of good cash flow management. Also, we’ll share with you a really handy cash flow checklist that you can use in your business.

This article was written by Michael O’Brien – Marketing Manager Big Red Cloud – www.Bigredcloud.com

You can register for a 30 day trial of Big Red Cloud Here

The post Cash Flow – The Lifeblood of Small Businesses Part 2 appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

The importance of cash flow is misunderstood by many business owners and managers with the result that many a profitable business actually goes out of business.

It’s a hard concept to grasp: if I run a profitable business, how on earth could I go out of business. Read our three part series on cash flow and you’ll get a full understanding of cash flow and realise how profit is no guarantee of survival. It’s no coincidence that they say “revenue is vanity, profit is sanity, but cash is king”.

Let’s kick off: What is cash flow?

Cash flow is the most important thing that you must look after as a business owner. It is the measure of money flowing in to your business from sales and out of your business due to wages, purchases and expenses.

You can either have a positive or negative cash flow. A positive cash flow means you have enough money coming in to cover any outgoing costs whilst a negative cash flow means that the money that is coming into the business doesn’t cover the outgoings.

Cash flow can easily be mistaken for profit. It is very easy for a business to actually make a profit but when the final years figures come in, the company may still have a negative cash flow.

The reasoning for this is quite straight forward. Cash flow focuses on your business receiving the revenue that is actually owed to you.

It is fantastic if you are making sales, but at some point in time, you must receive the money you are owed from customers or clients.

Example: A retail store that buys stock with cash

Debit and credit cards have become such a popular method of payment over the last few years. However what can be often forgotten in the grand scheme of things is the fact that this form of payment may take a couple of days to process.

During this waiting period stock needs to be purchased and wages and overheads may need to be paid.

The store’s sales might be good but if there is a delay in receiving the actual money into the business, they won’t have the cash in hand to buy stock or meet their other day-to-day expenses. Remember, cash is king.

Top Tip: Always be aware of the fact that your cash flow and profit are separate entities. Be aware of your cash flow situation even if your company is profitable.

How does cash flow affect you?

A negative cash flow can have an impact on the outlook of your business both in the short and long term periods.

1. Payment of employees

As mentioned above the lack of cash in your business can create many issues, most noteworthy, the payment of wages. Not having cash available to pay wages can create huge issues that need to be addressed to get your business back on track.

Sadly, some businesses will exist on a hand-to-mouth existence and this is stressful for everyone concerned. Good staff will be hard to retain and staff morale will take a hammering with a resulting decrease in customer care and service.

2. Cash flow not profit is key

When you are running a business cash flow should be at the forefront of your mind. Profit is great in the eyes of a business but at the end of the day, profit is not cash and as we said already, cash is king.

Any decisions made regarding your business finances should take your cash flow situation and cash flow forecast into account, whether positive or negative.

3. Customers’ needs

A lack of cash can create a lot of issues for your business especially when it comes to your suppliers. At the end of the day if you cannot pay your suppliers you cannot function as a business without their produce or services.

A situation such as this with your suppliers can only further compound issues for your business such as a restriction on the products on offer to the customer. This could cause major dissatisfaction amongst your customer base. Your sales will then suffer, causing a compounded cash flow headache down the road as less money is coming into the business.

Top Tip: Better business planning should accommodate time for an accounting software solution. It will save you time, make your life easier and most importantly, provide accurate cash flow projections at the click of a button.

Check back from Part 2 in our cash flow series as we cover cash flow measurement which, if done correctly, will give you the ability to properly forecast how your business is going to perform and what the cash flow situation will be like. With that information you can then plan for cash flow shortages and be best prepared to overcome any challenges.

This article was written by Michael O’Brien – Marketing Manager Big Red Cloud – www.Bigredcloud.com

You can register for a 30 day trial of Big Red Cloud Here

The post Cash Flow – the Lifeblood of Small Businesses appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

According to a 2012 National Federation of Independent Business (NFIB) study 79% of small business owners used credit cards to start or grow their business. That says a lot about the significance of using credit cards to capitalize a small business.

According to another study conducted by Keybridge Research, the use of business credit cards to start or grow a small business has tremendous positive effects on the business and the economy as a whole. The study found that the expansion of credit card lending between 2003 and 2008 contributed to the creation of 1.6 million jobs and for every $1,000 of business credit card use, a $5,500 increase in revenue was experienced by the small business.

The bottom line is that about 4 out of 5 small business owners will be using credit cards.

Founders of Google, Larry Page and Sergey Brin, did it in the early days. Most other successful business owners have done it as well. It’s like anything else in that, you can use credit cards the right way or the wrong way. So plan this like you do your business.

I like what T. Boone Pickens says about planning. He said:

“A plan without action isn’t a plan. It’s a speech.”

2. Microloans.

Microloans are small loans typically issued to borrowers who are low income earners or have less than perfect credit and do not qualify for traditional bank financing.

According to the Microfinance Information Exchange, MicroBanking Bulletin Issue #19, nearly 74 million entrepreneurs across the world have microloans that are equal to a combined total of $38 billion U.S. dollars (as of 2009). Statistics vary but most microlenders report that between 95 – 99% of their loans are repaid. Kiva.org has over a 99% repayment rate this month alone.

Repayment rates suggest that small businesses have experienced a significant level of success as a result of obtaining microloans. Furthermore, according to a recent survey conducted by Accion U.S. Network, 42% of survey respondents said their business income increased (between 2010 & 2011) as a result of a microloan.

3. Personal Savings.

This is the #1 small business financing option for most people who find that they don’t qualify for credit cards, microloans, or any other type of “traditional bank financing.”

This is a great way to get started. If you don’t quality for things like business credit cards or traditional bank financing, then you may want to take the appropriate steps to correct any credit issues that may be part of the problem. We would all like to have more financing options in the future as we grow our businesses. If you’re like millions of other business owners with less-than-perfect credit, then do something about it.

Resources like Creditera are invaluable as it is currently the only credit monitoring platform that allows business owners to monitor both business and personal credit in one place.

4. The 3 F’s: Family, Friends and Fools.

This is a great example of how the small business financing options are different for everyone. For some people, that list of possible investors from their friends and family is a long one. For others it’s, well, a short list shall we say.

Often times it is difficult to obtain financing from family and friends because they may not fully understand the business or believe it will succeed. You will really need to do what it takes to convince them the business will be lucrative and successful to get them to invest.

Entrepreneurs are famous for over-selling their cool ideas to their Uncle Louie and then seeing things not work out. If you do accept an investment from a friend or family member, then I suggest using something like ZimpleMoney. Whatever you do, be sure to treat your friends and family no different than you would a savvy angel investor. They deserve updates, communication and to be one of the first phone calls when there is a problem.

You should treat them as the partner you allowed them to become when you accepted their check. As for the fools – I’ll leave that one alone.

5. Retirement Accounts.

This small business financing option is highly popular for entrepreneurs who want to purchase a franchise. In order to use your retirement account to fund your business, you would use the Rollover for Business Startup (ROBS) Strategy.

This strategy is slightly complicated so you’ll want to consult with an expert such as Benetrends or Tenet Financial Group. It consists of forming a C Corporation and rolling your current retirement plan over to the new corporation’s retirement plan. It’s a relatively complex strategy. So don’t try it on your own and do your due-diligence. The term ROBS actually comes from the IRS ROBS compliance project.

ROBs strategies are common but are right up there as the most risky ways to finance a business along with Home Equity Lines of Credit and using personal savings. Again, in the event that your business fails, you likely lose your nest egg or whatever portion of it you “rolled over.”

I probably side with my friend Joel Libava, The Franchise King, on this when I say that I don’t think of franchisees as “full-fledged,” 100% entrepreneurs. I also cannot negate what my other good friend, Rieva Lesonsky, says when she argues, very respectfully, that franchisees take a lot of risk in buying a franchise. Especially a less established franchise.

When franchisees “roll over” their nest egg and start a franchise they totally get my respect and they clearly are taking a risk. I guess for me, I can’t get past the part about following directions and needing to get permission from the franchisor for many business decisions that an entrepreneur would not only make, but would make quickly, and he/she would laugh at the thought of needing someone’s permission.

The post 5 Small Business Financing Options for Startup Entrepreneurs appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

When pitching investors you have a captive audience. But they won’t stay captive for long unless you can hook them. And to-date I’ve seen two things that keep investors’ early attention on you versus their Blackberrys:

An entertaining story on the problem you’re solving.
An entertaining story on the founders and how the company came together.

Both of these points are about putting some context and relevancy on the upcoming pitch and discussion. If you make the problem feel real and explain it in an entertaining way it’s going to resonate much more strongly with investors. The same holds true with the history of the company. They want to hear about each founder’s strengths, background and how you were drawn together to create this new business. That has to be done in a relaxed, entertaining way.

2. Change the pace throughout.

Whether a presentation is 5 minutes or 50 minutes (or anywhere in between), you need to change the pace throughout. Speed up when telling high level stories, which also allows you to go through more rapid slide changes to keep people’s attention. Slow down when you’re getting into the meat & potatoes, so people can digest the details. When I first started pitching I know that I did so with a very monotone pace. Everything was well timed, but there wasn’t enough variation.

3. Sexy slides work.

I know you’re not selling vaporware or snake oil, so I have no problem promoting slick presentations. You’re not trying to pull the wool over people’s eyes with “style over substance” but you need to make things look good. I’ve seen too many presentations where the slides were simply painful to look at; and you can watch people in the room tuning out almost instantly. No matter what you’re pitching – from cool consumer apps to ultra-complex B2B technology – find a way to make your slides sing.

4. Don’t over emphasize the product.

Unless your product is dead simple, you won’t be able to go through all of its great features and benefits in a short investor presentation. Don’t even try. You want to highlight the key elements of the product, but ultimately investors are buying into the team (i.e. the founders), the passion, and the belief that you can execute on what you claim you can execute on. They love to see barriers to entry, intellectual property, etc. but they don’t want to become experts in your product after one pitch.

5. End Strong.

Most presentations leave the detailed financials to the end. Of course, investors want to know about your financial situation and projections, but ending just on that is pretty dry. Plus, they’ll be assuming that most of your projections are wrong anyway, especially if you’re at a very early stage. So find a way to end as strong as you can. In the last pitch I did, I listed out 4 key points I wanted the investors to remember. It was my, “If you leave here remembering only a couple things…here’s what you need to know…”

And recently, I got some interesting advice, which was to make sure the audience is drawn back to you at the end of the presentation and not focusing on the slides. You want them looking at you, making eye contact, and really getting a feel for your confidence and passion. I was told that the last slide should be as minimalistic as possible; even down to just showing your company’s logo. No matter what you do, end strong by highlighting the few critical things you want investors walking away with in their heads.

The post 5 Quick Tips on Pitching To Investors appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.

Demonstrate what’s special about your company and how you’ll keep that strong position. Is your offering fresh and different with a unique solution for the customer? Are your costs structurally lower or your service super fast because you invented incredible algorithms? Show that you have something different from the pack, and that is what your target market wants.

Some businesses grow and thrive with execution being their main differentiator: think high-volume selling or complex logistics businesses. If execution is your pitch for why you’re different, be sure your track record backs that up.

2. We are the right team for this endeavor.

For early stage companies, the team is the most important aspect an investor considers, as your market and product may not exist yet. What unique combination of skills and experience makes your leaders the potential winners? As you scale your business, your execution will demonstrate why you’re right for the job.

3. Our business model will make money.

Money — profits and cash flow — are ultimately what create value. On your way to profitability, your company may become strategically valuable, and might be acquired early or IPO when public investors believe you will become profitable soon. You have to show how your business model — the costs to acquire and serve customers — will be profitable. Understand the margin structure of comparable companies, and show how you will track versus their paths.

Later-stage companies and investors focus on the financials. Public investors might screen almost exclusively on your financials, looking for expanding margins and profit growth. For younger companies, your target model and cash needed to break even are foremost concerns.

4. Market size.

Investors want to know that your company has plenty of room to grow. “You can’t make a big company in a small market,” was one of my first VC lessons. For the nascent markets startups try to create, there is no current market size, so focus on the total addressable market. TAM measures the potential annual revenue for your industry — it is NOT an estimate of your company’s potential.

Markets can be sized “bottoms up” or “tops down.” Try both methods to check if your assumptions are reasonable. Typically, tops down-sizing crudely estimates a market by analogy or relative sizing, e.g., “Product X is a management solution for customers using technology Y. Technology Y is a $1 billion annual market, and an add-on management solution deserves 20 percent of the core target spend, so the TAM for Product X is $200 million.”

Here’s how Scale Venture Partners created a bottom’s up TAM to assess our investment in online marketing company Omniture: We counted websites by traffic volume, assigned an annual revenue potential to each size category and added it all up to over $1 billion a year of annual addressable spend. This work was done when Omniture had only a few hundred customers, not the many thousands of potential clients we counted in our TAM.

As a long-time venture investor, and previously the head of investor relations for two public companies, these four factors are the pillars of successful pitches — and investment decisions. Clearly communicate your company’s market, strategy, model and people, and you’ll be speaking your investors’ language.

The post 4 Things Investors Need to Know About Your Startup appeared first on Starting a Business in Ireland | Help for Ireland's Entrepreneurs | Start Up Your Own Business.