Beware Rogue Auditors

Posted on September 23, 2011 by Kevin Barry
Whatever about rogue bankers or rogue builders, there is now a new form of criminal called a “rogue auditor”.
Essentially, this is where an individual, not qualified to be an auditor, signs off on a limited company’s accounts and has filed the accounts with the companies office.  The downside to this being caught is horrendous.
The directors will:
  1. be in line for prosecution,
  2.  late filing fees will be payable by the company
  3.  and the audit has to be re-done by a qualified auditor.  

It is a duty of the directors of ensure that their auditor is listed with the Companies Office.  To be sure of this the auditor should have an ARN – Auditor Registration Number.  If he does not, then he is not qualified to lodge your accounts.

Ask about this!
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How To Avoid Over-Paying Your Taxes!

Posted on September 22, 2011 by Kevin Barry
Essentially, the most common form of mistake we see by business-owners is in the area of  not keeping proper books and records.  This often leads to:
  1. profits being declared higher than they should be,
  2. income tax will be paid higher than it should be and
  3. business cash-flow will be lower than it should be.
 
How does this happen?
Essentially, when you are in business the important thing is to keep track of where your money is going and where it is coming from.  Depending on the type of business you run, the cash register and the type of systems you use to get the money from the customer should keep track of where your money is coming from.
In relation to where it goes, the important thing is to have a system in place that is easy to manage and that you can look back on.
Simplest System?
The simplest system is that every bit of money that comes into your business should be lodged to the bank and every penny that is being paid out should be paid from the bank.  Using this method, you can then go to your bank statements and pencil in beside each cheque who it was to and for what, and pencil in beside every lodgement where it came from and what it is for.  This will effectively be your accounts for the year.  If there is money in the bank then you are making money.  If there isn’t, then you are not.
Simple Ways to Keep Receipts
Business Credit Card
Set up a business credit card and any business expenses should be paid for by using this credit card and not your personal cards.  The most common form of expense, and one that people don’t keep receipts for is paid parking, and parking in city areas.  There is VAT on parking and it is a business expense if you are there for business reasons.  Such receipts can easily get lost in your pocket, car or wallet. Therefore, by running them through a credit card they will come up are legitimate expenditure, proving you were there.
Holidays That Are Not Holidays
Most business owners that I know who go away on holidays are for semi-business reasons.  It could be to:
  • attend a conference,
  • to look at how a competitor runs their business, or
  • to research a product for implementation in their own business
  • This does not mean that the entire holiday is claimable, however if part of it is a business expense and, thus, part of the holiday should be included as a business trip in your accounts.  It is an expense which will reduce profit and reduce income tax.
Be Organised
In paying out money for business reasons. keep a receipt or at the very least pay it by credit transfer, cheque or credit card whereby the explanation of where the money went to will be easily followed up on.
Paying suppliers should be done on a once-a-month basis and not wily-nilly when the supplier calls you.  This way you can organise your schedule around paying suppliers once a month, pay them on your time and check out that they are owed what they say they are owed.
For further details on this, please log on to our webinar in www.kevinbarry.ie 
Computer System
Purchase an easy-to-use computer system.  Don’t buy it quickly, ask your accountant or research what other successful business-owners use.  Get organised today.
The more organised you are the further ahead of your customers you will be.
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Seafarers Allowance

Posted on September 12, 2011 by Kevin Barry

We regularly get asked about the Sea farers allowance. Basically it is a tax break for being outside of Ireland working on a ship/oil rig etc.  An individual can deduct from his/her “seafaring” earnings a certain amount, if they fall into this Category. (Seafarer)

How?

If you are employed on board a ship and spend at least 161 days in a calendar year:

  • At sea
  • Travelling to or from foreign ports

Then you may qualify for Seafarers Allowance.

Conditions to qualify for Seafarer’s Allowance:

  1. You must be at sea for at least 161 days in the Tax Year.
  2. The employment must be performed wholly on board a sea going ship in the course of an international voyage.
  3. The voyage must begin or end in a port outside the state
  4. You must not be a Public Sector employee
  5. You must not have claimed Foreign Earnings Deduction.

What Relief is Due?

An Income Deduction of €6,350 is available at the highest rate of Tax. That means you don’t pay any tax on this income.

(Please note: The allowance cannot be set against any other income of the individual or against the income of his/her spouse)

The Seafarer allowance claim should include a statement from the employer giving details of the voyage(s) and the number of days, with dates, of absence from the State.

Tip:

Just be aware that if you are outside Ireland for 183+ days, then you may not have any Income tax to pay on your earnings, by virtue of claiming non-residency.

Just log onto www.kevinbarry.ie if you require further information

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5 Year Business Plans and other Fairytales

Posted on September 6, 2011 by Kevin Barry

If asked for a 3- 5 year business plan, don’t waste the time preparing it. Save your energy.

Why?
The people that you prepare a business plan for never read them, unless you put a one-page executive summary at the front.

THIS IS WHAT I ADVISE:
Prepare a 1-page summary.
Then create a forecast of what you believe sales will be over the next 100 days, and the next 12 months. Nothing more. Beyond that it’s at best a wild guess.

The reason to make a 100-day plan is to ensure that in the short-term everything is much more intense, and your blue-sky effort has a deadline.

If your banker insists on a business plan try this…

1. Go online,
2. Download a business plan template,
3. Insert your name and logo,

and in five minutes you will have a business plan that your banker will never read anyway.

It’s all about the immediate future!

Here is the much more worthwhile suggestion:

Rent a van and driver, invite your banker(s), any potential customers, some of your key employees, and your best salespeople to come with you for the morning.

Set up a morning out  that touches five of your biggest customers in four hours. Start at 8AM at the first customer’s business, bring coffee, and talk to the people who actually buy from you. Find out why they love you, talk to the owner, tell them what your game plan is for the next 12 months – maybe have it prearranged so that they give you an order right on the spot – thank them for their business, their support, and their loyalty, and then go to the next customer.

Bring a video camera, or even record some of it on your Iphone, so that throughout the morning you’re video taping.

Each time you visit a customer, go through the same process. Talking to the people that use your product or service, talking to the owner/manager picking up an order, telling them your 12-month plan, and filming the entire process.(BE CERTAIN YOU DO THIS)

Get testimonials from each one of the five customers you visit. Ask why they buy from you. Get their history of doing business with you. Ask why they would refer you. And get a call to action from them.

After you have visited the last customer, take everyone to lunch. Nothing fancy, but not fast food. A local restaurant will work best. Make certain that they’re prepared for you. Have a card or little memento sitting by each person’s plate. And have a general discussion about what just happened.

Film the luncheon. Film peoples comments. Keep in mind that your video camera has a limited battery life only has about two hours worth of storage, and you will be on a five hour trip, so bring two cameras and make certain that you have someplace to download the video to during the morning if necessary.
Edit the entire thing down to 30 minutes or less. Put it on www.youtube.com and link it to your website.What you will have as a result of the morning will be a business plan, a marketing plan, loyal customers, excited bankers and investors, and a real-world look at your business and the relationships you have with your customers.

REALITY NEWS: In spite of banker’s delight, they have one prime agenda with respect to lending you money: making certain that you can repay. Period. Just keep that in mind as you listen to his or her glowing comments of the day.

Or, you can write a fairy tale. (Er, I mean a business plan.)

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Ask Mr Video!

Posted on September 2, 2011 by Kevin Barry
It is now proven that people who browse the internet are 70% more likely to watch a 60 second video than they are to read an article for 60 seconds.
When it comes to promoting your business these days, video is the best media to use.
Everyone has access to it.  It doesn’t cost you anything apart from time to set it up.  A huge amount of people already know how to operate it.
The most useful site at the moment, that we all use, is www.youtube.com.
A very good website to look at is www.askmrvideo.com.  He talks a lot about the power of video advertising but it is also useful if you are:
  • promoting your business,
  • promoting your product,
  • training your staff or
  • recording your seminar. 
In fact, no matter what you are doing, don’t worry if you are having a bad hair day, set up your pocket sized digital camera, set it to video, rehearse what you are going to say, record it, up load it and link it to your website.
You have just got to get started using videos.
Also, Google is more alert on a search for videos than articles, so tag your videos appropriately.  We currently use YouTube.com for recording video walk-throughs in our properties for rent, recording inspections of properties, informing clients of staff training and testimonials from customers.
Get going!
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5 Essentials Every Company Director Must Remember

Posted on September 2, 2011 by Kevin Barry
Some people are really chuffed when they become a company Director. But it’s a serious business.  make sure you note the following.
1.    Income Tax Return
Even if the only income you have is a salary from a company, every director in Ireland is obliged to file a personal income tax return every year.  Although this is a straight forward process, it is an offence not to do it.  Therefore, even if you are the company director of a nearly dormant management company that looks after the up keep of an estate, you still must file an income tax return.
If you don’t, a fine of €750 may arrive in the post.
2.    Paying Yourself
Directors can only withdraw money from a company as:
  • salary,
  • share dividends,
  • reimbursements of expenses incurred,
  • or repayments of a loan already given to the company.
  • If you borrow money from a company, withholding tax needs to be paid to the Collector General, which is refundable when the loan is repaid by the director.  Either way, a director must not use a company’s funds as a piggy bank.
3.    Companies Office Deadline Dates
Apart from the filing of Revenue Forms, there are strict deadline dates for the filing of Companies Office forms. Generally, abbreviated accounts need to be filed with the Companies Office 9 months after the accounting year end.  Failure to do this can trigger an audit and late filing penalties which are very onerous.  A sharp accountant will keep you well aware of these dates on an annual basis.
4.    Mileage and Subsistence Travel
If a director uses his personal funds or assets in order to make money for the company,  this is reimbursable at maximum civil service rates.  There are strict procedures to be followed but the payments are tax free.  It is important that the paper work is maintained and the claim is approved by a co-director.  Click here for more information on this.
5.    Duty of Care
The directors and Secretary are appointed by the shareholders and they have a duty to run the company in a way that safeguards the shareholders investment.  This should never be forgotten.
There are over one hundred ways that a directors can be prosecuted for failing to follow company law.  It is straightforward not to run into this type of trouble but be aware of your responsibilities.  Click here for more details.
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How to Build a Website for Free

Posted on August 23, 2011 by Kevin Barry

Did you know that Internet sales rose by 60% in 2010, compared with high street retail sales in the shops.

The only way that people can purchase good or services online is via a website. Sometimes, setting up website can be prohibitively expensive. This is because highly professional persons are very skilled and adept at building high powered websites, using: -

  • Videos
  • Flash Photography
  • Photographs
  • Multiple Pages
  • Super graphics

And although this may all look good, it may not even be looked at by anyone.

Essentially, as with everything, the more you know yourself, the better you can judge who to hire for the task.

But You Need to Get Going Now

You can set up a web presence for free – this will only take you one evening.

What we, at Kevin Barry & Co Chartered Accountants used ourselves to get going many years ago was http://smallbusiness.yahoo.com/. On this website, you can: -

  1. Buy a domain name (Your web address address)
  2. Set up a website (Your home)
  3. Fill in your details (so people know who you are and what you do)
  4. Set up an email address – so that people can contact you
  5. Set up a payment facility with PayPal – this will be how people pay you

Advantages

Essentially, a website keeps your business open 24 hours a day, seven days a week. The main purpose of a website is to gather a base of customers whom you can contact again and again. Eventually, they will probably do business with you again.

Statistics show that you have to make contact with customers a minimum of eight times before they will decide to do business with you. However, by this stage, through your communications, they should trust you, feel familiar with you and feel that they already know you. This makes the purchase much easier for them.

With the prices of petrol and diesel escalating, people are a lot more reluctant to jump in the car and race into town to make a purchase. Furthermore, 90% of people will check the price of a product or service online before they will actually travel to town to purchase it.

If you don’t have an email these days, you are no-one.

Get an email address, get a website and get going!


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Five Signs You Need to Change Your Prices

Posted on August 19, 2011 by Kevin Barry

Knowing how to price your goods and services is a lot more scientific than working out your costs and having a mark up.

If you charge too much no one will come near you and if you charge too little you will have more business that you can handle whilst being a busy fool.

Obviously, you need to keep aware of what is going on. Here are the 5 key signs that tell you you need to do something: -

  1. Your competition are charging more for an inferior product or service

No matter what business you are in, if your competition are getting more Euros or dollars for what they sell compared to what you sell, then you are doing something wrong. People just don’t know about you. You can afford to put your prices up and justify the increase price using the increased quality. This will involve notifying your customers and your database of what you sell and the value you offer for the price you charge.

2.    You have no cash in the bank

- if it is a case that you are busy all the time but there is no money in the bank this must tell you something. Essentially, the price you are charging is not covering the cost that it is taking you to get the goods or services out the door. Make sure you always take into account:

  • your own time,
  • VAT,
  • commissions
  • and the cost of buying in.

You need to know your break even point so as to know what to charge people. It is often easier to bank six separate €1 profits than a single €6 profit – you get the point.

3.   Your shop front is covered in “Sale” posters -
If the only way you will get people into your shop is by always having a sale, you are discounting sharply in order to shift stock, without ever making any real profit. These are not the customers you want long term. Customers will always buy if you provide something of value. rather than just because it’s cheap – especially in this day and age.

4.   Bargain hunters outside your door
When you turn up at your business these type of people are outside the door. They are looking for a bargain because you are providing one and you now must ask yourself and how have you put yourself in this position?
A New York barber had a great business where he was doing men’s’ haircuts for $10. A competitor opened across the road and had a sign “All Haircuts $6″. He lay awake at night fretting thinking that his business would be wiped out. Then he came up with a perfect response: The next day he put up a sign “We Fix $6 Haircuts”.

5   Sales staff cutting prices themselves
Sales staff operate on commission and they and they keep needing price cuts in order to close sales. They are over-relying on price to close the deal. You need to provide training in allowing them to justify the price verses the quality of the product/service.

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How To Give Customer Discounts and Still Make Money

Posted on August 4, 2011 by Kevin Barry

Every business owner should hate giving discounts. However, if you use discounts in the correct way, they can be a powerful tool in driving your business forward.

The skill is giving a discount to the customer that costs less for you than the value given to the customer. For instance, if a gentleman comes into your store to buy a new suit for €300, rather than he bargaining you down to €250, why not  include a shirt that retails at €50 – but only costs you €10 to buy.

The customer’s perception is that they have got a €50 shirt and it is something that they will attach a value to. However that shirt possibly only cost the business owner €10.  Know Your margins

Bringing down the price is quickly forgotten, so trade smart.

Another example is if you are in a professional business, e.g an Accountant and a customer complains about the fees being charged, the simple way to deal with this is to ask them “why do you think the fees are too high?” If you have properly set up the fee arrangement with: -

an engagement letter before you issued a bill, the simplest way is then to perhaps include a free financial review which would normally cost them €150 but from your point of view it may only cost €20.

Essentially, the skill is giving a discount that does not cost you the value that you offer.

Further examples:

  • Free dessert in a restaurant,  Cost 50 cents  Value €6
  • Free pension review:  Cost €80   Value €200
  • Free heating service  Cost €10    Value €40

This can be a powerful way to drive the business forward rather than spending €1,000′s on adverts that are extremely hit and miss and that you don’t measure.

To further drive the business forward, Click Here and remember give a free gift that cost you less than what you sell it for.

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How You Spend Says Who You Are!

Posted on July 26, 2011 by Kevin Barry
Whether you are a sole-trader or a limited company, every business must keep proper books and records.
This is a legal requirement.  It is not a bad thing, as you need to keep track of where your money is coming from and where it is gone to, to be successful anyway.
As an accountant, the way people spend there money can tell you a lot about the type of person they actually are, so always bear this in mind.
Every company that is audited by an accountant needed to get the all clear from the accountant that “proper books and records” have been kept.
What does this mean?
It essentially means that there is evidence of: -
  • Where the revenue of the business came from and what it related to
  • Where the expenses of the business actually went and the receipts for same
  • There is a clear path in identifying what the business owes and owns on an on-going basis
The Revenue have a guide on this matter, but just as a matter of note, it is not a legal requirement to have a cash register, for instance, but if you have one (which most businesses have) then it is a requirement to keep track of individual sales.
Every successful business in the world has this proper books and records culture in place.
Copy them.

 

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