Insights From the FMco Team

Starting Up

Starting Up

A large part of our own new business is businesses which themselves have just got started. At this stage the business may have started trading, but it is typical that the administrative side — in terms of the accounts — is not yet at the required footing. This stage is crucial for business because getting off on the right foot makes everything easier as a business grows, both for the accountant and most importantly, for the business itself.

While we mentioned previously that some clients are content to use their shoebox as a filing cabinet, in essence we are trying to guide new businesses away from that. We advise them of some simple practices with regard to bank accounts, expenses and so on that will put their business practices on a firm footing. These lessons are applicable whether the client is a sole trader, in a partnership, or in a company, and they apply across a wide range of industries, from restaurateurs, to shop-owners, to consultants.

The first check we make is to ensure that our client has separate accounts for their business and personal requirements, and if not, their existing account becomes their business account. We suggest they set up a new account for all personal matters so that they can be kept private.

Some clients will be in for a shock with regard to their profit and loss situation. Spending your profits does not mean that you have not made any, and income tax is still due on them. Our real message to these clients is not to put things on the long finger, or leave it to worry about for another day, or as sometimes happens, until their tax deadline.

We advise clients to decide on an early year end (not December) to work out their first year’s taxes, and to capture their expenses back as far as possible. The first day the idea of the business is formulated really should be the first date, because any expense at that date is allowable, and most people will save at a 50% rate. They can spend €2 on a coffee and get €1 back if it’s a client meeting. So there is lot of money to be saved by being efficient right from the start of the business.

The real message to those businesses is to not let things get out of hand. Instead, let us have a look at things together after six months and think about where things are going, and how much money they will likely be making. Once that first step is taken – and we are happy to assist with software set-ups – the job for the client is to go out and make money. We can meet again when it’s time for returns, safe in the knowledge that we have implemented best practice from the start.

Request a Callback

Let us know the best daytime telephone number to reach you and we’ll be in touch.