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Roberts Nathan News

  Business Advice

The Process To Think Through When Selling Your Business

The Process Of Selling Your Business

Selling a business is time consuming, emotive and can be costly if not executed correctly.   As we emerge from the rollercoaster of lockdowns over the last eighteen months, our economy is starting to roar back into life, and as a result, there is an increased interest in SME's across all sectors from both trade and private equity buyers. This, coupled with the availability of both debt and equity funding, makes it an opportune time to consider an exit strategy.  In this article, we explore a range of considerations when selling a business.

Preparation

Preparation is key to achieving the best value. The preparatory phase is when you should engage with your adviser and thoroughly review the business and its value drivers. Ask, 'why would someone want to buy my business" and then focus on this.   Prospective purchasers will demand transparency, so dealing with potential red flags and 'deal breakers' in advance of the buyer due diligence process will help protect value.   Telling your businesses story is essential and understanding how to present its financial information, both historical and forecast, is a crucial element of the process. What is the succession plan? With many owner-managed businesses, the owner is the business. A potential buyer will attribute little value to a company where its driving force (the owner) will be exiting or retiring in a short period after the sale.   Early tax planning protects value. The shareholders should consider the tax implications in advance of the process as time is of the essence where restructuring is required to effect a tax plan. Early key questions to be answered;
  • Is there an opportunity for family members (children and siblings) to be involved in utilising tax reliefs such as business asset relief for capital acquisitions tax purposes? 
  • Is there an option to claim retirement relief or entrepreneur relief for capital gains tax purposes?
  • Is there an option to review the group structure as a holding company can be beneficial when selling all or part of a business?
Perhaps the desired solution is a hybrid approach, providing a portion of the business to the next generation while selling a portion externally to generate some funds personally.  It is crucial to consider the tax considerations above with the overall commercial plan. 

Identify Prospective Purchasers 

Understanding and researching the potential buyers for your business is an essential part of the process.  Every business owner can name several potential buyers, be that a management team or a key competitor.  However, other potential buyers may not appear on a list, may have different strategic reasons for buying and may pay a premium for the business, i.e. new market entrant, acquiring IP, or gaining access to resources (e.g. people).   Keeping the process confidential during these early stages is vital as it may 'spook' potential customers or suppliers or unsettle critical employees. Having an adviser on board will help maintain confidentiality.  

Negotiating The Deal 

Once potential purchasers are identified, they may enter a period of limited due diligence.  Much valuable insight can be gained during this period for the vendor, regarding how the due diligence has conducted the type of queries and questions raised. Having this insight early on will help in the price negotiation phase.    It's not advised to name your price, solicit offers for potential acquirers setting strict deadlines for offers. The seller must maintain control of the process at this stage.  A second round of offers may be required until a preferred bidder is selected, after which they may enter a period of exclusivity to carry out a more detailed assessment of the company.    This selection criteria should not be based on price alone, and factors such as, ability to execute the deal and sources of funding should also be considered.     

Closing The Deal  

Negotiating the transaction documents is the final part of the process and also very important for both buyer and seller protection.   Considerations will need to be given to the deal structure.  Will part of the consideration be based on an 'earn out' from future profits?  Will the owner-manager be required to remain with the business for a period post-sale to help with the handover of relationships and integration?  The sale process is a time consuming and very involved process for the business owner, and often management teams are distracted by the process taking their' eye off the ball' to the detriment of the business.      Getting your advisers involved early in the process will help avoid many of the common pitfalls and ultimately protect the value that in many cases has been built up in the business over many decades.  At Roberts Nathan, we have worked on many buy-side, sell-side and management buy-outs in the recent past, and we have a wealth of experience advising owner-managers through the transaction process.  Please get in touch with us if you would like to understand more, my details are in the link below: 
https://www.robertsnathan.com/member/derek-dervan/
September 9, 2021
  Taxation

Business Succession Planning

Business Succession Planning As many Irish businesses reopen following the lifting of Covid restrictions, the discussion around the succession of the business may be back on the table for many business owners and their families. Obviously tax plays a major role in these discussions and we have touched on some of the key areas of tax to consider in this regard below.  However, a commercial decision also needs to be made around what the future plans for family members are and their desire to be involved in the business. Not all situations result in the next generation being actively involved in the business and sometimes an external sale may be considered as a more appropriate solution for everyone involved.    We will look at business sales to external purchasers in a later article but for now we will focus on the situation where a business will be passed onto the next generation.  The first thing which needs to be considered when passing over a business is the market value that would be attributed to the business or the shares in the company running the business if it has been incorporated. This value will then be used for capital gains tax, capital acquisition tax and stamp duty considerations as outlined below.  Capital Gains Tax Capital gains tax is deemed to arise at market value to the vendor when passing on assets but retirement relief may be available to mitigate the liability in many instances. The thresholds for retirement relief change from the age of 66 therefore, owners are generally encouraged to consider their plans in advance of reaching this milestone. However, the threshold for passing on business assets or shares to your children after 66 is €3m so can still be useful for businesses not valued above this level. In advance of reaching 66 there is no upper cap on value hence for larger businesses the age of 66 is an important timeline in relation to planning.  Should the conditions of retirement relief not be met, entrepreneur relief may still be available to limit the capital gains tax to 10% on the first €1m of consideration.  Capital Acquisitions Tax A child has a tax free lifetime gift limit from their parents of €335,000 currently. However, for many children involved in a business, a relief may be available which reduces the value being received to 10% of the market value. This is referred to as business asset relief and has a number of conditions around ownership and involvement in the business to qualify. Given this reduction and the current lifetime gift limit, this could result in a business valued as high as €3.35m being passed onto a qualifying child free from capital acquisitions tax. For the successor of the business another major advantage of the relief is that they will have a base cost for a future sale of the market value transferred before any relief is applied. This can help significantly reduce their capital gains tax charge on a future sale. 

Interaction of CGT and CAT

There is a requirement in both retirement relief and business asset relief for the assets to be held by the successor for 6 years, otherwise these reliefs may be subject to a clawback. It is also important to note that where both CGT and CAT apply on a transfer, a tax credit may be available for the CGT suffered against the CAT due. This is referred to as same event credit and is only available where the assets are held for two years by the successor from the date of gift.   Stamp Duty A recipient of a gift may suffer stamp duty at market value of the assets. Stamp duty on business assets is generally applied at 7.5% whereas shares in a trading company would be subject to stamp duty at 1%.  Conclusion Where there is a plan to allow a new generation take over a business it is important to consider the tax implications in advance. Retirement relief and business asset relief may result in value passing without a significant tax leakage.  Now may be an opportune time to consider such a transfer. Many businesses which have had limited trade in the past 18 months may have a lower market valuation and it is always a fear that there may be changes to capital taxes in future budgets as the government try to ensure a strong exchequer take given the cost of covid reliefs.  In Roberts Nathan we have experienced teams in both tax advisory and corporate finance advisory to help you with such business decisions. Please use the link to contact Brendan Murphy for any questions on any part of the above:
https://www.robertsnathan.com/member/brendan-murphy/
August 19, 2021
  Taxation

Returning or Relocating to Ireland (Tax Implications)

With the Covid pandemic hopefully nearing an end, we have seen an increased interest in expats looking to return home to Ireland. Perhaps it is the long absence from being home during the last 18 months or the new flexibility around home working for many industries which has led to this. If you are someone returning or relocating to Ireland from abroad, it is important to look at the rules regarding your residency position from a tax perspective and also your employer should consider any employment tax considerations.  We have outlined an overview of the key considerations for anybody in this position below.  Residency and Domicile There are two basic tests of residence in Ireland: 1)The current year test: If you are present in Ireland for 183 days in a calendar year, you will be regarded as Irish tax resident for the year. 2)The two-year test: If you are present in Ireland for 280 days taking the current and preceding calendar years together, you will be regarded as a tax resident in that year. However, if you are present in Ireland for 30 days or less in the second of these years, you will not be regarded as a tax resident in Ireland for that particular tax year, even if you breach the 280 days over both years.  Based on different tax rules in different jurisdictions, individuals arriving in Ireland during the year may be regarded under domestic law as resident in two jurisdictions. If this is the case, the Double Tax Agreement provides a tie breaker test to determine where the individual is regarded as resident. One of the key features of the tie breaker test is where the individual intends to settle and where their permanent home is located. If you are resident in Ireland for 3 consecutive tax years, you will be considered an ordinarily tax resident on the 4th year. Domicile is a concept of general law. A person can only have one domicile at any particular time but cannot be without a domicile. Everyone is born with a domicile of origin, normally the domicile of their father. In most scenarios this does not change but you may have acquired a domicile of choice or domicile of dependence in some situations. Your domicile can have an impact on how you are taxed and is important to examine in detail when moving between countries.  Tax Consequences As mentioned, domicile can have an effect on the tax treatment of resident individuals. An individual who is Irish tax resident and Irish domiciled will be subject to tax on their worldwide income, however, if an individual is Irish tax resident and non-Irish domiciled, they will only be subject to tax on Irish source income and foreign income to the extent it is remitted to Ireland. This can allow individuals to plan around what income they may wish to remit to Ireland.  Employment Income  If an individual relocates to Ireland and is in receipt of employment income, there may be some reliefs available. 
  • Split Year
There is a possibility that split year relief may apply in the year of arrival if certain conditions are met. Split year relief applies where an individual who was not resident in Ireland in the preceding year, arrives with the intention and in such circumstances that he or she will be resident for the following year. The relief allows for employment income before arriving in Ireland to be excluded from the charge to Irish tax (despite the fact that the assignee might be resident in Ireland for the year of arrival). A key advantage of this is that you will still be able to benefit from a full year’s worth of Irish tax credits and tax bands in the year you return, even though you might only be returning halfway through the tax year
  • Special Assignee Relief Programme (SARP) 
SARP relief is available for individuals arriving in Ireland up to 2022. This also includes returning workers who have been outside Ireland for at least five tax years. SARP allows for income tax relief on a portion of income earned by certain employees assigned from abroad to work in Ireland by their relevant employer, or an Irish associated company. An employee who claims SARP is deemed to be a chargeable person for income tax purposes and is therefore required to file an income tax return.  SARP provides for relief from income tax on 30% of the employee’s income between €75,000 (lower threshold) and €1,000,000 (upper threshold).
  • Payroll Obligations
If a foreign employer sends an employee to work in Ireland, they would be required to register for payroll taxes in Ireland. There are special rules regarding whether a foreign company located in a jurisdiction with which Ireland has a Double Tax Agreement would have an Irish payroll obligation which is dependent on the length of time the employee is present. A general overview would be that if an employee is present in Ireland for less than 60 days, there would be no payroll obligation. If the employee is present for a minimum of 60 days and does not exceed 183 days in total, a PAYE registration would be required but a PAYE clearance may be granted by Revenue to ensure no Irish payroll tax arises.  If an employee is present in Ireland for more than 183 days, PAYE should be operated.  However, above is a high level overview and the Double Tax Treaty Ireland has with the country from which the employee is being sent should be examined in each case.  Corporation Tax Considerations If a foreign employer sends an employee to work in Ireland, as well as considering the payroll obligations mentioned above, they would also have to consider whether this employee creates a Permanent Establishment (PE) in Ireland.  A PE is defined as “fixed place of business through which the business of an enterprise is wholly or partly carried on ''. The PE article in the DTA would ensure no PE arises where the duties of the individual in Ireland are auxiliary and preparatory in nature. However, it would be important to investigate whether a PE arises based on the duties of the employee.  If it is determined that a PE arises based on the duties of the employee, the foreign company may have an Irish corporation tax exposure.  Conclusion As we see more people considering moving home to Ireland or being allowed to work from Ireland for a foreign employer, we remind them to consider the tax impact from an early stage. Your tax position should form part of your planning stage when considering such a move.  We have a team of experienced tax advisors in Roberts Nathan who would be happy to discuss your position with you.  Please use the link to contact Brendan Murphy for any questions on any part of the above:
https://www.robertsnathan.com/member/brendan-murphy/
August 10, 2021
  Brexit

Recent Changes in Director Residency Requirements for Irish Companies (BITA Article June 2021)

Brexit continues to cause issues for companies and especially UK based Directors of Irish companies. Roberts Nathan Partner, and Dublin Chair, Aidan Scollard, explains. While the EU and the UK finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit in late December 2020 there were uncertainties created around the impact on UK resident Directors of Irish registered companies.   As the UK had left the EU and is therefore now regarded as a third country this created a significant impact where there was no other Irish or EEA resident Director on the Irish company board (even if this was a subsidiary of the UK parent company). While there are more than 60,000 Irish Directorships of UK registered companies there are also a significant number of UK based directors of Irish companies.  EEA Resident Director Requirement Companies Registration Office (the Irish equivalent of Companies House) had previously alerted that under Irish company law an Irish registered company must have at least one European Economic Area (EEA) resident Director on the board on an ongoing basis or put a bond in place to cover filing liabilities.  Where an existing Irish company had fulfilled this Director requirement by appointing a UK resident to the Director role up until 31st December 2020 this will no longer qualify.  They should now consider replacing that Director or adding an additional Director who is an EEA-resident unless exempted.  The CRO had initially muted that they would require a B10 for every UK Director stating a change in details from being an EEA resident to being a non-EEA resident but this is now confirmed as only requiring to be declared at the next annual return. The Director requirement is based on residency, not nationality and so, a company Director of Irish nationality who lives in the UK and has done so for a number of years is unlikely to satisfy the EEA requirement in the future.   Companies and their officers must self-assess their compliance with the requirements of company law Options There are a few options available for those companies now:
  • Appoint an EEA resident to your Irish company board
  • Put a bond in place - an insurance policy that CRO approves in replacement of having an EEA resident individual on the board
  • The Exception to the Rule – ‘Real and Continuous link’ -  It is possible for the Directors of an Irish Company who have no EEA-resident Directors to apply to the Irish Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014
How will this be enforced? CRO have now confirmed that where a company has only UK resident directors and requires a bond to be put in place due to the UK no longer being part of the EEA, that a form B10 will be required to be filed noting the change in particulars for the directors and attaching the bond.  The bonds are relatively easy to put in place but will have a premium cost to maintain for the two-year period and we have put these in place for a number of clients recently. Where no such bond is needed (under the exemptions) the company will not require the filing of a form B10 and companies can instead update the classification of the UK Directors from EEA to non-EEA resident Directors on the next filed form B1 annual return.   For most Irish companies the Annual Return Date is at end of September and so companies should now start to plan for these changes.   Final Word Company Directors need to consider the implications on their Irish companies since the UK has left the EU and consider their options.  As with any legal or accounting issue early advice is important as failure to deal with this is a company law offence. Contact us if you wish to discuss the impacts of any of these changes to your company structures here in Ireland or any planning or bond requirements. (aidan.scollard@robertsnathan.com / www.robertsnathan.com). To see the article in full, follow the link: BITA Article June 2021
August 4, 2021
  VAT

Debt Warehousing

Overview Revenue recently issued new guidance surrounding the debt warehousing of VAT, PAYE and Income Tax liabilities arising during a specified period of time and also the recovery of any overpayment of amounts received under the Temporary Wage Subsidy Scheme and Employee Wage Subsidy Scheme. We have set out a summary of the updated guidance below.  Details of the Scheme VAT and PAYE All VAT and PAYE liabilities arising during the pandemic can automatically be warehoused up until 31 December 2021 without the application of interest for businesses dealt with in the Personal and Business Division of Revenue. Businesses dealt with by the Large Corporates and Medium Enterprises Divisions of Revenue would need to apply to Revenue for inclusion in the scheme due to a reduction in trade.  There are 3 distinct periods outlined in the scheme;
  1. Period 1 - COVID-19 restricted trading phase
This period begins since the company first experienced cash flow trading difficulties due to the pandemic. For VAT this can apply as early as 1 January 2020 and for PAYE this can apply as early as 1 February 2020. This period ends on 31 December 2021.  Relevant tax debts incurred during this period can be warehoused. Relevant debts include the VAT and payroll liabilities arising when the business was restricted by the Covid pandemic (i.e. either stopped or significantly reduced).  During this period the interest rate being applied to unpaid liabilities is 0%. 
  • Period 2 – Zero interest period
This period runs from 1 January 2022 to 31 December 2022. During this period, the Interest rate being applied to unpaid liabilities is 0%.
  • Period 3 – Reduced interest period
This period begins in January 2023 and ends when the liabilities are paid. Interest at a rate of 3% is applied during this time.  Anyone availing of the debt warehousing scheme should contact Revenue with a repayment plan for warehoused debt before 31 December 2022. The repayment plan will be mutually agreed between Revenue and the taxpayer.  Returns should continue to be filed during this period. Income Tax Income Tax payments which fell due on 31 October 2020 and those falling due on 31 October 2021, subject to certain criteria, can avail of the debt warehousing scheme. The Income Tax liabilities affected are the 2019 Income Tax year balancing payment, Preliminary Tax and balancing payment for the 2020 Income Tax year and Preliminary Tax for 2021 Income Tax Year.  A declaration must be made to Revenue at the time of filing the return that total income for 2020 and 2021, as applicable, is expected to be at least 25% less than total income for 2019. The Income Tax Warehousing scheme contains 3 distinct periods, as follows;
  • Period 1 - COVID-19 restricted trading phase
This period runs from 31 October 2020 for paper returns or 10 December 2020 returns filed on ROS (in relation to their 2019 income tax returns) until 31 December 2021. This also applies for 2020 income tax returns that are due for filing on 31 October 2021 for paper returns and 17 November 2021 for returns filed on ROS.
  • Period 2 - Zero interest period
This period runs from 1 January 2022 to 31 December 2022. During this period, the Interest rate being applied to unpaid liabilities is 0%.
  • Period 3 - Reduced interest period
This period begins in January 2023 and ends when the liabilities are paid. Interest at a rate of 3% is applied during this time.  Anyone availing of the debt warehousing scheme should contact Revenue with a repayment plan for warehoused debt before 31 December 2022. The repayment plan will be mutually agreed between Revenue and the taxpayer. Income Tax Returns should still be filed before the filing deadlines of 31 October 2021 for paper returns or 17 November 2021 for returns filed on ROS. TWSS and EWSS The TWSS/EWSS warehouse scheme is available to employers who are obliged to refund amounts which are deemed to be overpayments of TWSS/EWSS following a reconciliation process undertaken by Revenue, and who are unable to refund these amounts because of the impact of COVID-19. The warehousing scheme for TWSS and EWSS is the same as the warehousing scheme put in place for PAYE & VAT. One of the most important aspects of the scheme for businesses is to ensure all tax returns are kept up to date while availing of the scheme. It is also important to monitor the interest free period as a payment arrangement would need to be put in place with Revenue in advance of the end of Period 2. Roberts Nathan tax team can help with all compliance requirements and liaising with Revenue while our corporate finance team can assist on cash flow management in order to assist on putting a payment schedule in place.
July 23, 2021
  Brexit

Six Months Since Brexit – Is the Dust Finally Settling?

It’s been over six months since the UK left the EU single market. We now know that many small (and not so small) exporting businesses in the UK have experienced multiple issues that have affected their businesses arising from new customs and vat treatments. Operating an export business in the UK since Brexit has become a lot more challenging. It’s been widely reported that moving part or all of their business activities from Britain to the EU has been successful and that they are “benefitting from abundant skilled labour and the ability to continue to avail of the freedoms of movement of labour and goods within the EU’. As a result of Brexit, additional challenges have come into play for UK businesses to continue their trading activities with their old EU customers. Many owners have experienced severe delays in the shipping of goods into Europe, due to changes in customs and export documentation as a result of being a third country and in addition, resulting higher processing costs to continue supplying their European customers. Several UK clients have restricted their trading initially with their EU customers as their profit margins have diminished or have been reduced significantly or eliminated entirely.  Other UK clients have sought advice from us on the requirement involved in setting up an additional EU location for their business in Ireland, in order to remain within the EU trading block as they had before December 2020 and so effectively ‘turning back the clock’.  In this way they can also avail of deferred Vat accounting on bringing goods into the EU and no potential for double duty costs on moving goods via the UK. Meanwhile other clients have approached us to seek our advice to establish an Irish subsidiary company (of their UK parent company) that allows them to continue to effectively service their European client base by conducting operations from Ireland and remain as an EU trading entity.  The solution remaining inside the single market in this way benefits those businesses with a more extensive client base as it allows the company to transfer goods in bulk, avoiding customs processing costs and delays on individual items that have otherwise resulted in higher costs and lower profit margins and potentially defer the VAT cash flow cost of bringing goods into the EU until ultimately sold on.  The Financial Times did a recent survey which found that of those UK based companies that continue to trade within the EU, over a third of businesses have experienced significant negative impacts on their exports to EU customers. Now that the dust is settling somewhat, if you are an advisor to affected clients, or are a business owner, whose business has been impacted since Brexit, we at Roberts Nathan are here to provide any help and assistance you may require. We have already helped many UK businesses in this evolving situation. If you would like to explore further options around your business, please contact Peter Roberts or Tomas O’Leary in our Cork office or Aidan Scollard in our Dublin office who would be delighted to assist you. Peter Robertspeter.roberts@robertsnathan.com  or Tomas O’Learytomas.oleary@robertsnathan.com Tel: +353214217940 Aidan Scollardaidan.scollard@robertsnathan.com Tel:   +35318764550 +353 86 2523 026  
July 22, 2021
  Taxation

Updates to EWSS scheme

The Revenue Commissioners recently issued new guidelines in relation to the eligibility of EWSS from 1 July 2021. The main change announced by Revenue was extending the turnover reference checks to 12 months rather than a 6 month period. This means that businesses whose trade was severely impacted due to government restrictions in the first half of 2021 can trade at higher levels for the second half of 2021 and still avail of the scheme, subject to meeting the scheme conditions which were already in place.  This adjustment means that a business would be looking at their turnover for the calendar year 2021 in full rather than on a 6 monthly basis. Businesses will need to review their actual monthly turnover for January to June 2021 and projected turnover for the months July to December 2021. The business is expected to experience a 30% reduction in turnover or customer orders due to the pandemic in the period from 1 January to 31 December 2021 compared to 2019 for pay dates on or between 1 July and 31 December 2021.  Therefore, in order to avail of the EWSS, you will need to provide the following;
  1. Actual monthly turnover details for January to December 2019, 
  2. Actual monthly turnover details for Jan to June 2021 and 
  3. Monthly projections for July to December 2021.
In addition to this, you will be required to complete an online Employer Eligibility Review Form (ERF) through ROS on a monthly basis, by the 15th of the following month. The initial ERF for the June period which will be used to assess eligibility for pay dates from 1 July needs to be completed and submitted online between 21 and 30 July 2021. Through ROS, you will need to provide details of actual monthly vat exclusive turnover or customer order values for 2019, together with the same detail for the first six months of 2021. They will also need to provide details of monthly projections for the remainder of 2021. On a rolling basis the projections can be updated monthly for the actual turnover figures and a business will be obliged to stop claiming the EWSS at any point where the expected 2021 turnover will exceed 70% of 2019’s turnover.  Revenue have advised, failure to submit the EWSS Eligibility Review Form that confirms the requisite reduction in turnover of 30% and related declaration will result in suspension of payment of your EWSS claims. Our tax team are available to discuss EWSS eligibility and applications at any stage, please use the link for contact details:  
https://www.robertsnathan.com/member/brendan-murphy/
July 21, 2021
  Uncategorized

BRSS Scheme

Revenue have recently published guidance on the new Business Resumption Support Scheme. Applications for this scheme can be made between 1 September and 30 November 2021. The scheme provides a once off payment to cover trading expenses of businesses which have reopened for business but have still seen turnover facing a significant decrease from pre-Covid times. The scheme will be available for corporates, individuals or partnerships that are actively trading.  Any business claiming the relief must not be entitled to claim the CRSS from 1 September 2021. Therefore, this scheme should be available for many non-essential retail providers that were forced to remain closed until 17 May 2021 but have now reopened for business.  The scheme will provide a once off payment up to a maximum of €15,000. To qualify under the scheme, a business must be able to demonstrate that the turnover from its trade, in the period from 1 September 2020 to 31 August 2021, will be no more than 25% of a reference turnover amount. This reference amount will be the turnover for the calendar year 2019 for any longstanding business.  The payment will be calculated as three times the sum of 10% of their average weekly turnover from 2019 up to €20,000, and 5% of any excess of average weekly turnover above €20,000. Subject to a maximum payment amount under the scheme of €15,000. Therefore a company with an average weekly turnover in 2019 of at least €80,000 should be in a position to claim the full €15,000.  As with other Covid supports the business must have a good tax compliance record and have an active tax clearance certificate. The application for the BRSS will be made via ROS and we would be happy to provide businesses with any advice and assistance needed in relation to the application using our details in the link provided.  https://www.robertsnathan.com/member/brendan-murphy/
July 19, 2021
  Business

How To Minimise Your Tax Liability As A Business Owner

We know that tax is a significant variable facing business owners, which is why we invest heavily in experienced, highly qualified tax advisors. Our team works with a wide variety of clients in businesses across various industry sectors to meet tax compliance obligations and provide beneficial tax strategies to all types of business owners. In today's blog, we wanted to look at some simple methods for lowering your tax liability as a business owner.  Taxes, like any other expense, can be controlled and lowered with our proper planning and guidance. Cashflow and money will always play a significant part in the potential success for any business so ensuring proper compliance and setup will be crucial for you. The Revenue Commissioners will always get their percentage from your personal and company wealth, but, here are some methods to help you minimise your business's tax obligations and reduce your tax liability as a business owner.

Methods to reduce tax liabilities as a business owner

  • Maintain systematic record 
While this may seem self-evident, many companies lose out on valid tax deductions or face unjustified add-backs or penalties as their accounting records are insufficient to identify and verify all of the expenditures they are allowed to claim.
  • Tax credit
A tax credit is an instrument that lowers your tax liabilities by decreasing the amount of tax you pay over a financial year. Some of these are provided automatically, while others must be claimed. Any credits that aren't claimed can't be refunded or carried over to the next tax year. By contacting us or by doing some research on your own, you can get to know what tax-deductible expenditures are suitable for your business.
  • Finance capital expenses for tax exemptions
If you buy equipment with cash or a loan, you may receive a 12.5% tax reduction across six and a half years. However, it may be more cost-effective to purchase equipment on a lease and claim tax benefits throughout the lease, usually three years.
  • Engage your spouse or any other family member
Employing spouses or other family members can also be tax beneficial if you can establish and explain their role in the business.
  • Change your company's accounting reference date
In some instances, altering your company's accounting reference date can be beneficial if your business is seasonal or if your profit measures are rising or falling.
  • Preliminary tax
Choose to pay your preliminary tax based on current year projections if your income is expected to decrease.
  • Travel and subsistence 
Revenue allows for the tax-free payment of mileage and subsistence as long as the proper paperwork is held.
  • Consider turning into a Limited Company
There are other factors to consider when starting a business, but if you're making more money than you need to cover your costs, it may be worth setting up a company to benefit from further tax reductions.
  • Generate management accounts before the end of the year 
Calculate your possible tax liability before the end of the year to allow yourself enough time to prepare and manage your tax payment.   The methods mentioned above will given you an idea of how you can minimise your tax liability as a business owner. However, as is often the case with financial planning, we look at every business owner individually and set out a plan that is customised and fitted for them. For expert assistance in maintaining your financial records,
digital accounting, beneficial tax strategies, auditing, and more intended to profit your business most productively, please reach out to me on shane.meade@robertsnathan.com or feel free to give me a call on +353 (021) 494 3977.
July 14, 2021
  Business Advice

Bidding On The Right Contracts

Our aim at Roberts Nathan is always to add value to your business and to support you as it grows. To do this effectively we listen and we understand. Only then do we offer expert financial and business performance advice to allow you make better decisions for you and your business. When it comes to our business advisory services, one specific challenge we help our clients overcome is around the correct process for bidding on new contracts. Making a bid is a time-consuming process that requires a lot of effort for any business. Hence, it's imperative that you carefully choose the projects you want to pursue. While you can see a lot of potentially lucrative contracts in your industry, there are some that won't be as suitable for your business. This is why it is really important you have a system and methodology to perform a comprehensive contract bidding analysis that is in accordance with your long-term plan and fulfils your company's objectives. Factors to consider to ensure bidding on the right contracts Here are a few variables you should evaluate before bidding on a contract to ensure that you are making a decision based on an agreeable logic.
  • Profitability
The main thing is that there's no contract bidding on a project if it doesn't generate enough profit. To accurately estimate your project expenses, ensure you have an accurate and detailed accounting of your yearly labor and equipment expenditures. Incorporate taxes, insurance, workers' compensation, holiday pay, tools and equipment, and any other perks you offer your employees when determining labor expenses. After determining how much it will cost to finish the project, you must examine additional factors such as location, contract requirements, expected construction technique, and so on to decide if the project will be lucrative if you make the winning bid.
  • Potential
After you've established that the project is beneficial for your business, you must evaluate if your business is capable of completing it. Examine your existing backlog of future projects to ensure that you have the workforce, equipment, crew, and other resources in place to devote to the project when construction is scheduled to begin and finish it on time. It is also important to verify that your business is financially competent to finish the project, which means that you have the necessary bonding capacity and cash flow to complete the job without compromising your other commitments.
  • Long-term planning
Check if the project you're interested in bidding on aligns with your business's long-term strategy and objectives. Whether you want to expand your business or to grow the business into new markets or geographical regions? Or maybe you want to switch to private work, or maybe you'd like to take on bigger projects, like hotels or hospitals. Irrespective of the company's long-term plans, make sure you're discovering and pursuing projects for contract bidding which support those objectives. Project location, duration, scale and nature, competitiveness, client, and designer are things to consider when deciding about the contracts to bid on. 

How can we help?

From comprehensive business advisory to making bids, we provide you with the assistance for each of these business aspects. When you choose us for your bidding solutions, we'll simplify the process and show you how to create winning bids that will incur the highest profits for your business. In addition, we'll assist you with identifying allocation bases and dividing pools of expenses, compiling indirect costs, and calculating fair and attractive rates for contract proposals.  By working with the Roberts Nathan team, you can rest assured that all your contract bids will be made after comprehensive, thorough analysis of your resources which will guarantee to deliver your business the best possible returns.  Please reach out to me on
shane.meade@robertsnathan.com or feel free to give me a call on +353 (021) 494 3977 if you have any questions in relation to any part of the contract bidding process.
July 7, 2021