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The post Budget 2021 | The Covid-19 Budget appeared first on Kenneth O'Connor & Co..

• No on-site or off-site business meetings.   We will endeavor to hold meetings by alternative means such as video conferencing or conference calls.
• Our staff will, in general, be working remotely rather than from our office.

At this time we believe our approach is proportionate but may change depending on advice received from the authorities. We are investing significantly in our IT and Communications infrastructure and we believe the approach we are taking will enable us to continue to meet our clients’ requirements while ensuring the health and wellbeing of our staff, families, and clients.

All of our staff can continue to be contacted via email or by telephone on our office number 091 771155

Stay Safe.
Ken, Grainne & Staff.

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• Most Recent Annual Accounts
• Management Accounts for the current year
• Copy of most recent Notice of Assessment from Revenue
• Copy of your tax clearance certificate
• Confirmation from your accountant that all taxes are up to date and paid

The Banks will determine the amount of loan that they sanction based on a multiple of the net profits of the business.

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Additionally, it may be possible to buy an ongoing business at a bargain price. While this option may appear to be attractive, the prospective entrepreneur would need to ask a number of questions before deciding whether or not to buy. Some of the most important questions are as follows:

• Why is the business being sold?
• What is the present physical condition of the business?
• What is the status of the assets of the business?
• How many of the staff are going to remain?
• What type of competition does the business face?
• What is the financial state of the business?

Due to the many commercial, legal and taxation implications of buying an existing business, satisfactory answers are needed to these questions. Ideally, the would-be entrepreneur should look at businesses that are well-established in the marketplace, with tried-and-tested products and services.

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The first decision to make is whether to start trading as a sole trader or a limited company. Each has their benefits and drawbacks. The choice of legal structure depends on personal tax circumstances, financial resources, degree of control sought and the level of risk assessed.

Details of the formats available, and the advantages and disadvantages of each, are listed below:

SOLE TRADER

A sole trader is a business that is owned and controlled by one person. This structure is very attractive for those entrepreneurs who wish to retain total control and ownership of the enterprise.

In legal terms a “sole trader” is described as a person trading under his/her own name, or a registered business name. Many sole traders who decide to operate under their own name can do so without any particular problem.

However, if you use a name other than your surname, you must register the name in accordance with the Registration of Business Names Act of 1963. The cost of registering a business name is €30.

Advantages of the Sole Trader

• Very simple to set up. No legal formalities compared to other structures.
• The sole trader is not required to register public accounts, therefore confidentiality is maintained.
• The income from the business is personal income and most business expenses can be offset against it for tax purposes. The tax is paid at personal rates.
• Total responsibility for the business is in the hands of the owner.
• The relative ease of winding up the business.

Disadvantages of the Sole Trader

• The owner is personally liable for all debts of the business.
• Since there is only one owner of the business, there is a limit to the amount of capital that can be raised for operations. Many may stay small because of financial restrictions.
• The life of the business depends entirely on the owner.

PARTNERSHIP

A partnership is, in essence, an extension of the concept of the sole trader, which covers cases where two or more people join together to start a business. Partnerships can have up to twenty members, some of whom may be “sleeping partners”, who have contributed capital to the enterprise, but who have no say in the running of the business.

While not a legal requirement, most partnerships start with the drawing up of a formal agreement. Normally drafted with the help of an accountant and solicitor, the agreement would typically cover such areas as:

• Profit sharing
• Drawings
• Voting rights.

Advantages of a Partnership

• Increased sources of capital and credit.
• Improved decision-making potential.
• Improved chances for expansion.

Disadvantages of a Partnership

All partners are liable for the debts of the business on a joint and several basis.
While all partners may have a say in the running of the business, managerial problems may arise.
Unless otherwise agreed, the consent of all partners is needed before a new partner can be introduced.

LIMITED COMPANY

A limited company is a distinct legal entity. It is quite separate from its owners, who are shareholders, and from its directors, who make decisions on behalf of the company.

As a separate entity it has sole responsibility for its debts, which frees its owners from this responsibility. Its liabilities are limited to the paid-up share capital – hence the company is said to have “limited liability”.

Advantages of a Limited Company

• Limited liability – shareholders are only liable to lose the share capital they subscribe.
• Shareholders personal assets are protected.
• Greater company pension scheme can be secured.
• Greater ability to raise finance by the issue of shares and also under the Business Expansion Scheme.
• Ownership of the enterprise is spread over a greater number of people.
• Personal tax advantages can accrue.

Disadvantages of a Limited Company

• Limited liability may be negated in practice by lenders seeking personal guarantees.
• Adhering to legislation contained in the Companies Act can be costly and time-consuming.
• The need to prepare and file audited accounts.
• The payment of additional taxation when accumulated profits are withdrawn from the company.
• The loss of profit-sharing flexibility.

Forming a Limited Company

The cost of the formation of a company and registration with the Revenue Commissioners is currently approximately €650.

Entrepreneur(s) should be aware of the following when forming a limited company:

• The company must have at least one shareholder and two directors.
• When forming a company from scratch, a suitable name will have to be chosen and two documents, the Memorandum and Articles of Association must be filed with the Registrar of Companies.
• A Certificate of Incorporation is necessary before trading can commence.
• Where companies are bought off the shelf, the name may be unsuitable and amendments to the Memorandum and Articles of Association may be necessary.

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When you’re filing your own taxes, this might put you off from getting started or getting the return completed on time, opening you up to surcharges and fees.

However, with a little organisation, the process is a manageable one.

Here are some little things you can do throughout the year to ensure a stress free tax return:

Timing

The deadline for submission of self assessment tax returns to the Revenue Commissioners is 31st October.

It is good practice to get your accounts prepared as early as possible for the following reasons:

• Establish your tax liability early to allow you gather the funds to pay your tax liability in October.
• You have plenty of time to review your accounts and identify possible missing expenses etc that may reduce your tax liabilities.
• Identify problems that may exist in your business early – October is far too late to identify problems that may have existed in the previous year.

Be Organised

Have a simple system for recording all of your business transactions. This can be either a hand written system or computerised using excel or one of the many online accounting solutions such as Surf Accounts, Xero, QuickBooks etc.

Keep receipts\invoices for all business expenses.

Claim All Expenses

The general rule for claiming business expenses is all expenses “wholly & exclusively for the business”.

Keep record of all expenses that you think would be claimable. Your accountant can advise you on these when preparing your tax returns.

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However, bloggers and influencers were put under the microscope this year regarding their content and overall transparency.

With more focus on this industry than ever before, here’s everything up and coming and established bloggers need to know about tax:

How do I know if I need to pay tax?

If you earn any payment as a blogger or influencer, this is considered taxable income. Whether this income comes from sponsored content, ads, talks, workshops etc, you have to pay tax.

Do I have to pay tax on gifts I receive?

Non monetary benefits are also taxable. If brands supply you with benefits, services or gifts in return for your endorsement, these are taxable.

When you are sent gifts with no obligation to review the item, it is not payment, it is a gift. However, if you are gifted items/services valued over €3,000 by a single entity are in a tax year, these are also taxable.

What if I earn below €5,000?

If what you earn outside of PAYE is under €5,000 and the gross amount before expenses is under €30,000, you need to simply contact Revenue to get your tax credit in order so that your tax is collected via the PAYE system.

What if I earn above €5,000?

If you earn €5,000 net or €30,000 plus gross total outside of PAYE you need to register for income tax. You may need to register for VAT also. This can all be done using a TRI Form, which is the form sole traders use to register for tax.

Can I claim expenses?

Yes – you can claim expenses for items requires for your blogging/influencing, such as travel, wifi, stationary etc.

What happens if I don’t pay tax?

If you are caught not paying your tax, you could receive anything from a warning to a prosecution for tax evasion.

TOP TAX TIPS

Report Everything

In the blogger/influencer industry, income comes in many forms. It is important to report all income, whether it is in cash, services, or products.

When you receive your income, put some of it aside for taxes

It is easy to underestimate how much tax you must pay. Avoid the panic, and separate money to pay your taxes from your income each time you receive it.

Be aware of expenses

Make sure you’re aware of all of the things you can claim as expenses for your blog.

Keep track of your income/expenses

Hold onto receipts and financial records and organise them regularly – this will save a lot of time and effort when it comes to paying your taxes.

Contact an accountant for help and advice

It’s better to be safe than sorry when it comes to paying taxes – paying more than you should is frustrating, and paying less than you should has consequences. Make sure you are getting your taxes right by contacting an accountant who advise and help you with figuring out your taxes.

If you have any questions, contact the Kenocon team today.

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The PAYE system has not seen much change since its introduction in 1960, and this PAYE Modernisation is expected, according to Revenue.ie, to make things much easier for employers by improving the streamlining of business processes and reducing the administrative burden of employers to meet the PAYE reporting obligations.

What do employers have to do?

Employers will need to adjust their business processes to meet the new PAYE requirements. From January onwards, they must calculate and report their employees’ pay and deductions as they are being paid.

How does this make things easier?

The improvements to the system will improve accuracy by calculating and reporting employees’ pay and deductions as they are being paid, it will make it easier for income tax, PRSI, USC, and Local Property Tax to be calculated.

It will also ensure that these taxes are deducted at the right time and from the right employees, as well as ensuring that the taxes are paid in the correct amount of deductions for every employee.

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