Planning eases growing pains

  • Planning eases growing pains
    Independent.t. E.
    To improve the economic situation in Ireland provides many opportunities for growth of small and medium-sized businesses. The growth of economic activity in General over the last three or four years there has been a surge of activity of small and medium-sized businesses with business expansion and the next generation are brought up on Board in the company, as the owners are able to retire.
    https://www.independent.ie/business/small-business/planning-eases-growing-pains-37229389.html
    https://www.independent.ie/business/article37229388.ece/34c95/AUTOCROP/h342/2018-08-19_bus_43339278_I1.JPG

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To improve the economic situation in Ireland provides many opportunities for growth of small and medium-sized businesses. The growth of economic activity in General over the last three or four years there has been a surge of activity of small and medium-sized businesses with business expansion and the next generation are brought up on Board in the company, as the owners are able to retire.

The increased activity has led to growth of staff buy-ins, competitor acquisitions, business asset sales, restructuring of business to meet the extension of new structures for tax control leaks, such as foreign funds, accounting, entrepreneur, group structures, partnerships and joint ventures. This is a stressful time.

But in many cases, business owners don’t know what they need to do to effectively manage change or what benefits are available to minimize taxes. Here are five key areas that business owners need to keep in mind as they work hard to grow and take advantage of more opportunities.

1 retention of key employees through reward schemes

The lack of improvement in economic conditions for small and medium businesses is a struggle to keep high-quality personnel. Employers are forced to go above and beyond the normal pay package. More and more companies are looking for remuneration schemes and other such initiatives for key employees.

The fact that SMEs are struggling to retain key employees through higher wages. Instead of the key employees want a percentage of the profits or ownership, benefits, flexible, modern working conditions and so on.

SMEs are slow to use stock options or profit as they think they are for “big boys”. The truth is that they probably don’t understand them and think that they can complicate the work of the company or future sales.

What SMEs should be aware that the government has introduced a new optional program in the budget 2018, which is called the key program involving employees save for short.

Unfortunately, the government attaches too many conditions making it more complicated than it had to be from here and still was low. But the scheme is there to be used and with a little bit better, this could be a huge help SMEs to retain staff.

2 business Management and tax risks

As SMEs grow and become more profitable, their structure must evolve in order to manage business risks and tax risks. Without proper structure, the risks may be exposed which can be damaged if something goes wrong. For commercial and tax reasons, companies should seek their own structures on a periodic basis in order to protect the interests of shareholders.

For example, some business could pay attention to the creation of group structures where they would separate the property from the auction property as different risk factors are often used here. For obvious reasons, SMEs should regularly review their structure and ensure that it is fit for purpose. Otherwise, all those long hours can be wasted.

3 succession planning

We all agree that small business owners are some of the hardest working people in our economy. But when it comes to planning for the replacement and bring in the next generation is often left on the long finger with no real thought.

It can create all kinds of problems, such as tax risks, financial stress and disruptions in family relationships. It is incumbent on practitioners to get small business owners think, who will take over the business or business will be selling in the future? Each case is individual. Some SMEs already have a successor who don’t have children or relatives who are interested in the business. Maybe an employee may be interested in buying it? Without proper planning, CGT to the disposal of the business and the cat gifts can be a problem.

Fortunately, there are tax benefits, but the conditions have to be met. This is where you should plan to provide these conditions. The planning of these events should occur years in advance – it’s too late, when the deal is about to happen.

On the subject of inheritance, the current threshold for the acquisition of capital is just not enough in any case to cover even the most simple transfers of assets to the next generation. Transfers the children’s lives more than €310,000 is taxed at 33pc. It’s not so long ago, this threshold was more than €500,000. If the government advocates the establishment of a fair and equitable tax system is one threshold that needs to be considered seriously if we want to avoid children is subject to tax in the inheritance.

4 the CGT entrepreneur relief

There has been a steady increase in the disposal of SMEs in years, and business assistance currently widely used to minimize Tax on capital gains ‘CGT’ on the disposal of subjects of small and average business.

In simple terms, it works through the application of CGT of 10pc on the first €1m of taxable income per person, with 33pc applying for other taxable income.

However, as already widely reported, the UK has a much better entrepreneur reliefs, so the Irish government must begin to provide the promises to improve this circuit by moving the 1 million Euro threshold closer to £10m limit UK. There is a growing risk entrepreneurs looking to UK, to set up a business, if this is not addressed in the next budget or two.

5 farmers

Farmers are the largest small and medium business in rural Ireland. For many years, unique tax benefits, such as the dumping of shares, profit averaging and accelerated depreciation. Over the past five years, the government introduced a €25,000 tax credit for five years to encourage the transition to the family farm with was the continuity of the partnership in the farm.

In the result, there has been a significant uptake in registered farm partnerships to non-dairy operations. For dairy farmers, they are in a state of rapid expansion, so they are looking for the corporate structures to reduce their tax to reinvest available funds and effectively repay the tax debt. In summary, taxation requirements and recommendations farmers need an experienced tax consultant farm to provide the best tax planning for them.

PAT Sutton managing partner KellySutton chartered accountants and tax advisers (including Allen Morrissey & Co). patrick.sutton@okellysutton.ie

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