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8 Steps To Hiring The Perfect Business Development Representative

Business development representatives can be among some of the most influential people within a business, so when the time comes to hire one, you want to do everything you can to ensure you make the right choice. While your first instinct may be to go for the person with the most experience, there are a lot of things that should be considered if you want to find the right person for you. With that in mind, here are 8 steps to hiring the perfect business development representative.


1. Define The Role

The first question you should ask yourself is why you want to hire a business development representative at all. Although there are a lot of advantages to hiring one, you shouldn’t do so just because you have room in the budget for another employee. Before you can even begin your search for the right person, you have to know what it is you want that person to deliver.

At its core, business development is about identifying and securing opportunities that will grow the business and create value for its stakeholders. But this mandate is so broad that a successful business development representative in one company could be completely ineffectual in another. For example, expanding the client base, establishing strategic partnerships, and product innovation are all aspects of business development, but require different skills. While most business development representatives will be skilled in multiple areas, you should identify which are most important and focus on those.

 

2. Identify Your Company Culture

Another thing to consider, particularly when hiring someone in from another industry, is the kind of company culture you have. There are four main types of company culture, and in order to get the most out of your representative, you have to make sure that their tactics line up with your culture.

A “clan culture” is one in which employees work closely together, often sharing tasks. Someone with team-building and mentoring skills will get the best results from a group such as this. An “adhocracy culture” is one that is flexible, where creativity and innovation thrive, and is best led by someone who dreams big and is willing to try new things. A “market culture” is purely sales and profit driven, meaning a competitive and diligent leader will be most effective. Finally, a “hierarchy culture” is formal and bureaucratic, and best suited for someone who can monitor and coordinate large groups.

 

3. Speak to Department Heads

No matter how your representative decides to approach the task of developing the business, odds are they are going to be working across a number of different departments. Ultimately, you are bringing in this representative for their insight and expertise, and giving them the authority to pull the business in one direction or another, so they may technically “outrank” your existing employees, depending on your arrangement.

Some of your more senior staff may not take to kindly to a newbie walking in and telling them what to do, while others will be delighted to get the extra help. Either way, in order to get the best results and build a team that can work together, you should speak to the heads of your various departments before beginning the hiring process. Not only will this reassure your employees that their opinions still carry weight, but it also allows you to identify any skills gaps that you should look for in your new representative.

 

4. Speak to Floor Staff

They may not have the same levels of business experience as your more senior staff, but that doesn’t mean your floor staff can’t provide you with some useful observations. It goes without saying that there are certain viewpoints employees would never express directly to their bosses, and how they think their bosses could improve is right at the top of that list.

Your floor staff will be able to see more or less everything your department heads can, but from a different perspective. They may feel that their manager is very creative, but unorganised for example. Or they could say that they are so results-driven it stymies innovation. By speaking to your floor staff about the issues they feel are holding the business back, you can learn things you would never hear from senior staff.

 

5. Advertising the Role

At this point, you should have a pretty clear idea of the kind of individual you’re looking for, so the next thing to do is decide how you’re going to advertise the role. The first option is simply for you or your HR team to push out a public ad. This option gives the role a lot of reach, but with that will come a high volume of low-quality applications that someone will have to sift through.

The second option is to outsource the hiring process to a recruitment agency. Advantages of this include less time wasted on fruitless applications, a variety of strong contenders, and access to people who are not actively seeking work and might not spot an ad. The main disadvantage of using a recruiter is that they will not understand your company culture as well as you do, but you can use the final rounds of interviews to ensure the chosen candidate is a good fit.

A third option comes from a famous 1978 sociological study “The Strength of Weak Ties”, which should that 28% of successful professionals found their jobs through a “weak tie”, such as a former colleague or friend of a friend. The study found these hires tend to be quite a successful match, possibly because acquaintances feel they can be more honest than either close friends or complete strangers.

 

6. Test their Skills

As we said earlier, a representative who has a successful track record in one area may not necessarily be able to carry that over into another. With something like business development, the person in the role needs to have an exceptional understanding of the industry, so testing their knowledge is an absolutely crucial step in the process.

Depending on your industry, you may find that a detailed conversation is enough to suss this out, or you may decide to include a more formal exam. Since communication is one of the most fundamental skills for any business development representative, one option that works well in all industries is to ask the candidate to explain a complex subject to someone with no industry knowledge. If they can’t do that, you can almost definitely rule them out.

 

7. Assess Their Attitude

The interview is probably your first chance to meet a candidate, so beyond assessing their skills, which you probably have some idea of already, you should also be astutely aware of their attitude, which 96% of Irish employers say is more important than skill. Most people will, of course, be on their best behaviour during an interview, so you will have to keep your eyes and ears open for any indications of their real selves.

Apart from looking out for small things such as how they greet you and whether or not they wait to take a seat, one of the best ways to get an accurate picture of someone’s attitude is to ask the receptionist who greeted them. While most interviewees try to be on their best behaviour, many often focus solely on the interviewer, disregarding the people they pass in the halls on their way in. A receptionist may not be able to tell you if a person is right for the job, but they can often tell you if a person is a poor choice.

 

8. Offer Benefits

Although paying more doesn’t always mean you end up with a better employee, in general, you get what you pay for. But that doesn’t mean the best way to use your money is to put it in their pocket. A growing number of people are opting for the option of choosing their benefits, which can end up saving money for both the employee and the employer.

According to research by Lincoln Recruitment, benefits are now the third most influential factor in determining whether or not a candidate accepts a job offer, and 70% of employees say flexible benefits would increase their loyalty to a business.


Hiring a business development representative can be a huge boon to your business, as long as you do it right. Find the right person is not a matter of simply looking at a number of CVs and getting as many of the best people through the door as you can. It requires communication between the various levels of your team, a strong understanding of what exactly the role is, and a clear vision of the future that everyone can get behind.

How Technology Is Changing How We Treat Billing

The first recorded use of currency in human history was in 600BC, when coins were minted in what is now Turkey. It wasn’t until over 2000 years later in 1661 that the first bank notes were used. Fast forward to 1946 and we have the introduction of the credit card, and then in 1994, the first online payment.

Historically, human societies are extremely reluctant and slow to change how they handle money. The state of your finances is one of the most fundamental aspects in determining your ability to survive and thrive, and so people have always preferred to stick with what they know rather than making any radical and risky changes.

But over the last 100 years, and particularly the last two decades, our idea of money has shifted from metal and paper hidden in the mattress to the more abstract concept of numbers of a statement or screen. While this may not seem like a major change, the implications it has had are enormous.


Spending Habits

Over the years, there have been countless studies that compare consumer spending habits using cash with those using credit or debit cards, and they pretty much all come to the same conclusion: the further people are from their money, the more willing they are to part with it.

Take this study, for example, which found that consumers are willing to spend as much as 83% more when paying with credit compared to cash. The same study found that tips paid by credit are an average of 13% larger than cash tips, that the presence of a credit card logo can increase the amount spent by 10%, and that people will spend up to 15% more when using store credit or gift cards.

With the likes of online payment, direct debits, cryptocurrencies, and contactless payments becoming increasingly common with each passing day, understanding how consumers perceive their cash is critical to maximising how much they spend. But of course, technology hasn’t just impacted how payments are sent, but also how they are received.

 

Payment Methods

The kind of payments options you can accept depends entirely on the kind of business you run. The vast majority of market stall traders, for example, don’t take online orders, an online only business cannot accept cash, and a hotel will allow customers to pay in cash, but will most likely want credit card details in conjunction with any cash payments. If you live near the border, then you probably accept both Euro and Sterling as well.

Obviously, one of the easiest ways to ensure you maximise your sales is to make payment as easy and flexible as possible. This is where it is important to step back and properly reflect on the state of technology at present. It is easy to classify payments simply as either “cash” or “electronic”, and think that you have both of those in place already. But terms like online or electronic payments are outdated and vague, and don’t capture the reality of how people handle their finances anymore. You may have an online payment portal that customers use to pay with card every day, but that’s useless to someone who uses Bitcoin, or gets paid via PayPal. Up until 2018, all eBay sales were processed through PayPal, while Bitcoin now has an estimated 32 million users, with around $100 billion of Bitcoin in circulation. These examples illustrate how oversimplifying payment methods can cut you off from enormous groups of potential customers.

Similarly, if we return to the example of a market stall traders, it seems perfectly logical for them not to accept online payments, but only because that term is misleading. Online payments no longer need to be made behind a computer screen sitting at home. These days, there are apps such as Stripe that allow customers to make online payments in more or less the same manner as a contactless payment, which enables traditionally off-grid traders to enter the digital realm, without the need for investing in expensive POS systems.


Billing Software

Clearly, technology has made it a lot easier for vendors to accept a variety of payment methods, but not all payments are issued on the spot. Invoices are far from a recent invention, but since about the 1950s, technology has continued to make this an increasingly automated and streamlined process.

There is now a plethora of billing software that business owners can choose from, with services like Freshbooks and Xero enabling them to track exactly how much is owed by who, how much you owe others, when payments are due, and so on. Depending on the service and plan you choose, most also offer insights and analytics to help entrepreneurs get an accurate snapshot of the financial state of their business, and identify any negative cash trends. Obviously, you get what you pay for with this software, so while the cheaper options may require you to manually execute certain tasks, the more advanced subscriptions can do more by themselves. For example, the cheaper option may require you to hit “Send” on an email reminder, whereas the more expensive option will detect whether or not a payment is late, and send a reminder if required.

Making this process as seamless as possible is essential in ensuring you get paid what you are owed, and helps prevent your finances from running away from you. As we have noted before, 67% of Irish businesses have issues with late payments, and that is despite the technological advancements. If a business does not have these processes in place, not only will manually handling the billing take more time, it will make it more likely that payments will be late or missed altogether.


Productivity Paradox

While it may seem counterintuitive that there could still be so many payment issues despite these technological advancements, it is actually what we should have expected. There are many examples of productivity paradoxes in history, such as the drop in productivity that occurred in the US during the 70s and 80s, despite significant investment in IT infrastructure. While some dispute the significance of this, many experts believe that when technology improves, we work less, not better. So when looking at how technology has impacted how we treat billing, this is the point we must remember.


It has been well-documented that our attention spans are getting shorter, and people increasingly want more instant gratification. So while on paper, all the technologies we have looked at have made it easier for people to pay and get paid, the reality is that people are mostly interested in what is easiest for them personally. If they see you don’t accept their preferred method of payment, they are quite likely to move on to your nearest competitor. While not every business will need to accept every form of payment, making it as easy as possible for as many people as possible will ultimately mean more people are attracted to your business.

A Guide To Looking After Your Own Bookkeeping

No matter what your business is, you can be sure that bookkeeping is one of the most important parts of it. Ultimately, the purpose of every business is to make a profit, and if you want to know whether or not you have, and if so, how, then you need a comprehensive overview of your financial transactions.

To some, bookkeeping may sound like a simple matter of addition and subtraction, while to others, it will seem like a bewildering puzzle. The reality is somewhere in between, and while bookkeeping may not be as easy as adding sales on top of expenses, this guide aims to provide you with everything you need to know to start looking after your own bookkeeping.


What is Bookkeeping?

Before diving into detail on how to do it, we first need to ensure that we are clear about the definition of bookkeeping. Although they are quite similar and often confused, bookkeeping is clearly distinct from accounting, and the two terms should not be used interchangeably. .

While bookkeeping can be defined as the identification, measurement, and recording of financial transactions, accounting is the analysis, interpretation, summarisation, and communication of their significance. Unlike accountants, bookkeepers do not require any specific qualifications, and are not tasked with making business decisions based on the numbers. They are there purely as a reliable record keeper, like an independent observer.

If the difference in their roles is still unclear, imagine a woman working as the top advisor to the EU on climate change. She will be highly qualified and have degrees in her field, just as an accountant would. Her job is to look at all the data across the EU, interpret what it means for the current and future state of the climate, and advise policymakers on the steps they need to take to tackle climate change. However, she is not going out and reading thermometers or emptying rain gauges. Those tasks do not require degrees and the people carrying them out will not be making decisions based on what they see, they are simply making a record. These are the bookkeepers.

 

Types of Bookkeeping

There are two main types of bookkeeping, and although the one that suits you best will probably become clear quite quickly, it is worth understanding both.

The first of the two is single-entry bookkeeping, which is essentially reserved for very small, very straightforward businesses with few employees. Single-entry bookkeeping means that any transactions that occur are only recorded once. It includes a column for incoming funds, and one for outgoing funds. The sum total can then be reconciled against your bank records. Single-entry bookkeeping is best suited for sole-traders or businesses that deal exclusively in cash.

The alternative is to use double-entry bookkeeping, which as the name suggests, means that every transaction is recorded twice. Under this system, there are five main accounts. We will look at these in more detail in the next section, but they are as follows:

  • Assets

  • Revenue

  • Expenses

  • Liabilities

  • Owner’s Equity

Each of these accounts can then be sub-categorised into smaller accounts e.g. Assets could be broken down into Cash Assets and Equipment Assets. Each account then has two columns: one for debit on the left, and one for credit on the right.

A debit entry will increase the total of an asset or expense account, but decrease the total of a liability or equity account. Conversely, a credit entry will decrease asset and expense accounts, but increase liability and equity accounts.

When using the double-entry system, every entry into a credit column of one account must be accompanied by an entry into the debit column of another. This is where we get the phrase “balance the books”, as just like a set of scales, any change on one side must be matched by a change to the other.

To understand why credits and debits must be matched, let’s use the example of purchasing some new equipment for €1,000. If you pay with cash, you will make your credit entry under the “Cash Assets” account, as you are taking €1,000 away from that, and once it is spent, it is no longer an asset of yours. However, you do now own some equipment worth €1,000, which could potentially be sold, so the value of your “Equipment Assets” account would increase, meaning a debit entry of €1,000. If you were to take out a full loan to fund this investment, you would need to credit (increase) your liabilities account, and debit (also increase) your equipment assets account.

Clearly, the single-entry system of bookkeeping is far more straightforward, but also more limited. While it may work for some, the overwhelming majority of businesses would need to use the double-entry system to properly manage their finances.

 


Chart of Accounts

The five categories of accounts mentioned above (Assets, Revenue, Expenses, Liabilities, Owner’s Equity) make up what is referred to as the Chart of Accounts. The purpose of a chart of accounts is to segment and categorise all financial transactions in a logical manner, so that every possible transaction that could take place has a designated spot in which it should be recorded. This will reduce the amount of time and work it takes to maintain your records, and will make it much easier for them to be reviewed by others in future, such as during and audit or loan application.


Assets

Anything that increases that value of your business is considered an asset, whether it is physical cash, or an item with monetary value. After value, the key feature in determining whether or not something can be classified as an asset is ownership. A business that owns the premises on which they operate can count that as an asset, as they have the option of selling it for cash. A business that leases their space cannot count that as an asset, as they ultimately have no way to exchange it for cash.


Expenses

Expenses are defined as any costs incurred during the ordinary course of business. This refers to any expense that can be legitimately claimed is necessary for the business to function, such as rent, utility bills, and wages. Certain employee benefits, such as health insurance or annual bonuses, can also be counted as expenses as, although they are not technically required for the business to function, they are legitimately associated with it.

Revenue refers to any income that comes from the sale of a good or service. This includes payments that have been received, as well as those that have not. Both cash and credit sales would fall under this category.


Liabilities

The “Liabilities” account is probably the one where most people can get a little confused, so make sure you understand what should and should not be considered a liability. In the most literal terms, a liability is any money that you owe to another party. The easiest example of this is a bank loan, where borrowing €5,000 would be recorded as a credit in your Liabilities account, and as a debit in your Cash Assets account. This means both accounts increase by €5,000, as you now have that much in cash, but also owe that much to the bank.

The main reason people can get confused about liabilities is because so many of these financial transactions overlap with expenses. An electricity bill is a perfect example of this. You have already used the electricity, so you need to pay for it. Between the time you receive the bill and actually pay it, it is technically a liability, as it is money you owe to someone else. But since this is a recurring, relatively predictable cost, the payment of which is rarely disputed, it is counted as an expense. The same can be said of unpaid wages.


Owner’s Equity

Owner’s equity is the final category in the chart of accounts, and probably the one that you will change least frequently. It is a record of any money or assets that the business owner has personally invested into the business. Although it is basically a record of how much the business owes the owner, it is not categorised as a liability because the owner is the very last person to receive any payment in the event that the business shuts down.

Owner’s equity can be calculated by subtracting any withdrawals the owner has made from the deposits they have made. This number is then added to the net income of the business (or subtracted from the net loss), and the final figure is the amount of money the owner is legally allowed to walk away with when leaving the business.


Reconciling the Accounts

Occasionally, you will need to reconcile your accounts, which means comparing the records you have been keeping in your book against your bank and credit card statements. This is done to ensure that the transactions recorded in your book have occurred as stated, and that all the numbers match up correctly. How often you decide to reconcile your books is up to you, and is probably a judgement best based on the volume of transactions you deal with. However, you want to avoid going too long without reconciling, as not only will it be more difficult if you allow a large number of transactions to build up, but it also makes it more difficult to identify where any discrepancies may have taken place.


Closing the Books

Once you have reconciled your accounts, you have the option of closing your books. This is effectively a way of grouping all transactions within a set period together and determining whether you have made a profit or a loss. This will allow you to analyse and judge the success of that period in isolation. This is usually done on an annual basis, but can also be used to look at specific timeframes, such as the summer season. Once your books have been closed, both the revenue and expense accounts go back to zero.

To do this, you first need to create a new account called “Income Summary”, which will only be used temporarily to create your retained earnings report, which is the amount of income from the preceding period that can be carried into the next, after dividends have been paid out.

Once you have your temporary account ready, you need to empty your revenue account. If you had €1,000, which would be marked in the credit column, you would do this by debiting the revenue account and crediting the income summary account, both by €1,000.  

Repeat this step in reverse to balance your expense account. So if your expenses totalled €100, which would be marked in the debit column, you need to credit the expense account €100 and debit the income summary by €100.

Your income summary should now have a number in both the debit and credit columns. Take the debits from the credits, and the final figure is your retained earnings. If your revenue exceeds your expenses, this will be a positive number, or a net profit. Using the example above, you would take €100 from €1,000, and arrive at a figure of €900 profit. This will be marked in the credit column on your income summary account, so the final step is to move it to retained earnings by debiting the income summary €900, and crediting your retained earnings account by the same amount.

Now that the books have been closed, you can begin the next reporting period with a clean slate. Moving forward, this will make it easier for you to analyse your figures and gain a better understanding of how your business model functions overall.


Lexicon

What follows is a list of some of the most common terms you will encounter when doing your own bookkeeping. Many of these terms appear quite similar, but have distinctly different meanings, so ensure you familiarise yourself with the list in full.

Accounts receivable: Outstanding payments owed to you by customers who have already availed of your goods and/or services.

Accounts payable: The amount of money you owe others for goods and/or services that have been delivered or used.

Accrued Expense: Any expense that has not yet been paid.

Balance Sheet: A summary of a business’s assets, liabilities, and equity of owners and shareholders.

Capital: The financial assets necessary to maintain operation of the business, usually equity or debt.

Cash Flow: The amount of money that moves both in and out of a business during a set period of time.

Credit: An accounting entry that increases a liability or equity account, but decreases an asset or expense account.

Current Assets: Assets that are expected to be converted to cash within a year.

Debit: An accounting entry that increases an asset or expense account, but decreases a liability or equity account.

Expenses: Any costs incurred during the running of the business.

Equity: The net value of your business, calculated by deducting liabilities from assets.

Fixed Assets: Assets intended for long-term use and not expected to be converted to cash within a year.

Fixed Expenses: Regularly scheduled expenses, such as utility bills.

General Ledger: A full record of all financial transactions throughout the history of the company.

Liabilities: All debts and financial obligations incurred during the running of the business. Can be either current (expected to be paid within a year), or long-term.

Net Profit/Loss: The final profit or loss a business makes after all expenses have been paid.

Operational Expenses: An expense that is necessary for the business to operate, but not in the production of the goods or services themselves e.g. Insurance.

Variable Expenses: The opposite of fixed expenses, those that will change from transaction to transaction.


10 Ways To Reinvest Leftover Budget After Expenses

Cash flow, which refers to the movement of any money in or out of a business, is a subject we’ve discussed extensively. Not to be confused with bottom line profit or loss, cash flow management is about ensuring that you have enough funds at any given time to keep your business operational, whether that means keeping enough on hand to pay suppliers and staff, or simply keeping your costs lower than your income.

BA major aspect of good cash flow management is appropriate and thorough budgeting. Most good entrepreneurs will incorporate some leeway into their budget so they can cover any unexpected costs if they arise, such as repairs or even seed money for an unusually large deal. And in most cases, particularly in the early days of a business, most, if not all or more, of the budget ends up being used. But occasionally, whether it’s because sales were better than expected or costs were kept low, an entrepreneur will find themselves with more money than they were expecting.

Such unexpected leeway can be a fantastic opportunity for your business, but if you get too excited and don’t plan things properly, you could spend that money and have nothing to show for it. If you do find yourself with some spare cash at the end of the year, here are 10 great ways to reinvest it.


Asset Investment

If your business is in its early days, then one of your top priorities when you find a bit of spare cash should be to invest it in a business asset. A business asset is anything your business owns that increases its value. This includes tangible things, such as property or equipment, as well as intangible things such as patents or trademarks.

Simply put, a business asset is the next best thing to cash that you can have, as it can be sold (by itself or with the business as a whole), allowing you to recoup most, all, or more of the cost of the asset itself. Additionally, investing in an asset should improve business operations, such as by investing in a machine that can produce better quality goods, or one that will allow you to produce a new product.


Bookkeeping Software

As you probably know by now, bookkeeping can be a lot more complicated than it first seems, and it doesn’t even seem that easy to begin with. But, for both legal and planning purposes, bookkeeping is a critically important aspect of any business, so it is extremely important that you make as few mistakes as possible. When you are just starting out, you may not have the workload or budget to justify hiring a professional bookkeeper, but the utility of investing in bookkeeping software should not be underestimated. Not only will such software make it easier and quicker for you to budget for expenses and follow up on unpaid invoices, it will also serve as a comprehensive and reliable overview of your accounts for any audits, loan applications, or bookkeepers that may come along in the future.


Email Software

These days, most people setting up a new business will be on-top of their social media, their Facebook page filled with information on contact details and opening hours, and their Instagram highlighting how great everything looks. In the rush to establish a strong social media presence, email marketing can often fall by the wayside, either because it is seen as outdated, or because the subscriber count is so low.

There are no quick fixes when it comes to getting high-quality subscribers on your list, but it is definitely something worth investing time and money into. Statistics such as a potential 4,400% ROI or 320% more revenue from automated emails compared to non-automated illustrate that email is still a marketing powerhouse. You won’t see the impact on day one, but investing in email software can yield huge returns in the long run.


Access to Marketing Data

One of the biggest advantages to running a business in the modern world is that you have access to so much data, often for free. If you have a question, odds are somebody, somewhere has already answered it. If you’re looking for studies on consumer behaviour, or the most effective marketing techniques, you can easily find material that was published as recently as this year.

The problem with being able to access so much information so easily and quickly is that it means everything changes quickly too. Laws are adjusted, policies change, and consumer behaviour can change at the drop of a hat. Accurate information is in high-demand, so if you want the most accurate, you’ll have to pay for it. Most market research companies, or businesses that carry out research in their own field, will only make that information free to the public when it is no longer valuable. By paying for the most accurate information, you will give yourself an edge over your competition, and avoid running a campaign that is not fit-for-purpose.


Experimental Marketing

Although you obviously want to avoid flushing money down the toilet, you also shouldn’t be so afraid of loss that you never take any risks. If you already have part of your budget allocated for marketing, the likelihood is you are promoting posts on social media or paying for ads on search engines. Even if these seem to be working great, you should consider using some leftover funds to try out a platform you may otherwise write off. Whether that’s paying for blogs from an industry expert, targeting a specific group using in-app advertisements, or running an ad in the local newspaper, it can be worth finding out that something doesn’t work, just on the off chance that it does.


Create a Quality Resource

Whatever your line of work may be, potential customers want to know that they’re dealing with someone who knows what they’re talking about. Whether that means you’re offering advice on what’s going to be in fashion next season, or providing a list of “must watch” stocks, people want to be able to get something from you without giving you anything. Then, when the time comes to part with their cash, they’ll remember you as a source of good value.

If you are planning to use some spare cash to create a high-quality resource, the best way is to invest in something evergreen. This means it is not specific to a certain time, and will remain useful for the foreseeable future. For example, a florist could invest their money into creating a gardening manual, which will remain useful as the nature of gardening is not going to change. Providing this for free online will then attract the attention of more serious customers, which will have knock-on effects such as improved brand recognition and SEO rankings


Training

There is much debate among business leaders as to whether or not employees should be considered “assets” of a company, remember our earlier definition of an asset as anything that adds value to a business. While many say that employees are their greatest assets, others argue that they are not “owned” by the business. Either way, everyone agrees that good employees add value, including the employees themselves. According to research by Unum, 39% of workers placed help with career progression as one of their top five workplace benefits.

 


Team Building

Even though it’s supposed to be fun, team building exercises are not always the most well-received activity by a team. It doesn’t matter if you’re cooking a meal together or trying to escape from a room, there are usually some team members who enjoy it a lot more than others. But whether the naysayers are lying or everybody bonds over how lame the event is, research has shown that team building events do work, yielding improvements in areas such as interpersonal skills, role clarification, goal setting, and problem solving.


Debt Repayment

Many recent studies have shown that the younger an employee is, the more likely they are to prioritise financial security. One of the biggest aspects of this is student loans, with 80% of graduates stating they would like to work for a company that helps them repay their debt. Despite this, only 4% offer such help. Even in Ireland, where student fees are substantially lower than the US, they have risen dramatically over the last decade, and are now the second-highest fees in Europe. Barring some unforeseen policy changes, debt repayment is likely to remain a popular benefit in the near future.


Rewards

At the end of the day, business is ultimately about making a profit, which means keeping sales high and costs low. Your staff are inherent to achieving both of these goals, so if you find that you have done so, it only makes sense to reward them. You can do this as a one-off payment, but recent research suggests that smaller, more regular rewards are best at motivating employees and improving productivity, so you may want to set that money aside and use it gradually instead.

Having money left over if your budget is not something you should get used to. It is a rare opportunity, but one that can be very useful. The most important thing to realise is that there is no “right” way to spend the money. Every business is different, and could benefit from that money being used in different ways. So take the time to examine your options, determine which area of the business could benefit most, and spend wisely.


7 Business Expenses You Might Not Have Considered

We’ve written before about the importance of maintaining positive cash flow. 40% of Irish businesses cite cash reserves as their main concern, with many struggling to ensure that they have enough money coming in to cover what they need to send out. Achieving a healthy cash flow can be a fine balancing act, and one that can be easily thrown into disarray. A single unexpected expense or one that has been building quietly in the background can do a lot of harm, so here we’re going to look at 8 business expenses you might not have considered.


1. Repairs & Maintenance

Whether your require some industry-specific equipment, such as a sewing machine or a buzzsaw, or simply some relatively standard equipment such as a computer and a cash till, the price of obtaining these will likely be incorporated into your setup costs. When drawing up a budget, these kind of costs are viewed, rightfully, as one-off purchases.

What many entrepreneurs fail to consider is that the equipment will not be in perfect working order forever, especially if it has been bought cheaply to keep costs down. The cost of maintaining, repairing, or even replacing equipment can be a major issue, as there will usually be no warning, the price can be quite high, and the business could be out of action until the equipment is up and running again. There are two “rules” businesspeople use to prepare for this. The 1% rule advises that you budget between 1% & 3% of sales revenue for repairs, while the 50% rule states that if the repair cost rises above 50% of the price to replace, you should replace instead.


2. Unpaid Invoices

In the same way that it is a mistake to believe all of your equipment will work exactly as expected all the time, it is unfortunately a little optimistic to assume that you will always be paid any money you are owed. 67% of small-to-medium sized businesses in Ireland have had issues with late payments, with half being forced to lay off staff as a result.

If you operate long enough, you will come up against bad debt, so planning ahead for it can help minimise the impact. This can include taking steps such as implementing a deposit policy for larger orders, as well as keeping a rainy day fund. But ultimately, not all debts can be chased successfully. But if you have taken the proper steps to follow up and concluded that the debt needs to be written off, it is possible to make a claim for relief.


3. Staff Replacement Costs

The last example of something that too many people assume will be around longer than they will be, staff can be a surprisingly expensive thing to replace. Adare Human Resource Management estimates that it costs Irish businesses an average of €13,100 to replace a member of staff, with an average staff turnover of about 11% a year. The costs of replacing staff include advertising and the cost of time spent researching candidates and conducting interviews. Even if a member of staff gives their notice in plenty of time, it can take weeks or even months to fill a role, especially with unemployment numbers going down, so the costs of lost earnings are hard to calculate. Unfortunately, other than budgeting for this, the best approach you can take to minimise this cost is to hire people who will stick around.


4. Marketing

While you may not think that marketing costs could be considered “unexpected”, we have decided to include them here for a good reason. There is a saying in the business world that the marketing budget is always the first to be cut, and the reason for this is that it is not always easy to draw a clear link between your marketing and your sales figures. Well in addition to being the first to go, marketing is often the last to arrive as well, as many people setting up a business try to keep costs as low as possible.

Usually this results in using social media as a free form of advertising, and there are always some vouchers floating around so you can run a few ads anyway. But we know that most of the major platforms earn their money from advertising revenue these days, which is why those who spend less reach fewer people. Your organic reach may work well in the beginning, but that is simply a tactic to get you to rely on the platform so you pay for it when your reach inevitably begins to taper off. While you may not need to budget for marketing from day one, you need to be prepared to pay for it in the future.


5. Bank Fees

Most people understand that banks are a private business at the end of the day, and simply take bank fees for granted. But while there may be no way to avoid bank fees completely, they are not something that should go unquestioned. Every bank has a different policy with regards to how much they charge, how often, for which services, and at what threshold. The amount you will end up paying in fees can vary wildly from one bank to the other if you make a lot of small transactions, for example, so shop around, compare how each bank sets its fees, and determine which model is best for you.


6. Subscriptions

The longer you are open, the more likely it is that you will begin to build up a string of subscriptions. You may start by subscribing to a music service to help the atmosphere, and then an email marketing platform, followed by a TV streaming service, and then a bookkeeping app. Each of these may be deemed necessary at the time, but these regular expenses can quickly pile on and eat away at your cash each month. To reduce them, start by cutting whatever you can, looking for free alternatives, consolidating multiple subscriptions into one service, or buying a one-off, time-limited subscription for peak periods.


7. Petty Cash

If not managed correctly, your petty cash can easily become a black hole for your finances, particularly if you have a lot of staff. It is all too easy for people to take some cash out here and there, throw some in, and before you know it, nobody knows how much has moved through the petty cash, and you’ve lost too many receipts to work your way backwards.

There needs to be one person solely responsible for handing out the petty cash and tracking the expenses. Even if your petty cash is well managed, you will still find discrepancies every now and again, as coins go missing or receipts for small purchases are forgotten. But if you don’t manage it at all, you’re going to lose a lot more.

 

All business can ultimately be boiled down to profit, and half of the fight for success is keeping your expenses low. While some expenditure is completely necessary, others are not. They may not be the most expensive, and they may even be somewhat useful, but every penny counts, so before you spend it, make sure you have given that expense enough consideration


8 Myths About Business Development

The term “business development” is one of those phrases that somehow seems both perfectly self-explanatory, and intriguingly vague. Obviously, if someone says they are in business development, it means they are tasked with growing the business, and helping to make it a success. But what exactly does that entail? There are a lot of misconceptions surrounding business development, so here we’re going to look at 8 of the biggest business development myths.


1. Sales are the End Goal

You have probably heard the phrase “Everyone is in sales”, and while in the grand scheme of things, sales are extremely important, they are not the be-all and end-all, especially if you are in business development. While a sale may mark the culmination of negotiations or tender processes, it is only the beginning of your official professional relationship with that client. Although you may have met your clients many times by this stage, the period after the sale is like a second first-impression. Vanishing as soon as you’ve gotten what you want won’t have that client rushing back for more.

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2. You’re Annoying

While the idea of NEVER taking no for an answer may not be the best one, persistence is still important. And any entrepreneur who truly puts themselves out there will know the familiar fear of feeling like a nuisance. Constantly reaching out, only to get no response, or told they’ll be in touch soon. This is where the ability to spot a dead end comes in handy. If you’re not actually able to meet a client’s need or solve a problem, then incessantly trying will annoy them. But if you know you genuinely can help them, it may be a matter of simply finding a time or means of communication that works. If this is the case, then you need to keep trying, or someone might swoop in and steal your jackpot at just the right moment.


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3. Never Take No for an Answer

One point that you’ll hear from almost every successful entrepreneur is the value of persistence. Whether it’s J.K. Rowling submitting The Philosopher’s Stone to yet another published after 12 rejections, or Mark Cuban selling bin bags door-to-door, there’s no shortage of inspiring tales that highlight the value of persistence.

Harder to come by are the tales of people who knew when to quit and cut their losses. Persistence is admirable, but you need to be able to recognise a dead end when you see one, or you’ll end up wasting your time, money, and resources on a hopeless endeavour.


4. You’re Desperate

Another common fear among entrepreneurs that have been cursed with enthusiasm is that their zeal will be mistaken for desperation. “Desperate” is a word that nobody ever wants to be used to describe them, but in business, there is the added worry that coming off desperate could affect your ability to negotiate, or make it appear as though you struggle to find clients satisfied with the quality of your work.

In reality, most successful businesspeople will choose who they do business with based largely on their levels of enthusiasm, as it illustrates their level of devotion to succeeding. Showing no persistence at all won’t instill a great level of confidence in your abilities. Far from being viewed as desperation, the astute professional will see such enthusiasm as hunger for success, which is always a good thing.


5. Meetings Mean Progress

It should go without saying that meetings are a critical aspect of business development, so hopefully you haven’t just skimmed this post and cancelled all your meetings (although if you are skimming, you probably left after we called you annoying and desperate).

Whether they take place in-person or online, meetings are inevitable. But, the fact that meetings are such a common and deeply ingrained aspect of working life mean many people often take them for granted. As this mind-bogglingly large study of 19 million meetings shows, 40-50% of employees believe meetings cause confusion, loss of focus, and less time to do the actual work. While meetings are important, they do not represent progress. You need to ensure that each meeting has a goal, and avoid falling into the trap of bouncing ideas off each other, dispersing, and not having a clear path forward.

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6. Clients are Forever

Our first point was that sales do not represent the end of the road, but the beginning of a relationship. But these relationships are not something that can be taken for granted. Securing a sale with a client once is absolutely no guarantee that they will be back, so it is critical that you follow up and maintain that relationship from the moment the sale is made. This will not only make a good impression, but also give you an opportunity to address any issues that may arise.

Even when you do put in the effort and nurture your client relationships, you need to be conscious of the fact that they could still disappear. Whether they find a better deal, go out of business, or simply don’t like the service, retaining clients is not something you will always be able to control.


7. You Can Buy SEO

Search Engine Optimisation (SEO, or “Google rankings”) has swiftly become a major consideration for most businesses across the globe. And like most niches that open suddenly, the SEO market was soon flooded with people offering quick fixes, reputational scrubs, increased conversions, the moon, and the stars. But when it comes to SEO, you want to consider the people you put in charge very carefully.

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A major problem with SEO as a concept is that it follows computer logic, and there are plenty of people who have no problem reverse-engineering it and figuring out how to game the system. This is known as “black hat SEO”, and the real danger to you is that it works. In the short term. But by the time you’ve seen your site move up the page, and paid for the privilege, the engineers at Google have already figured out how their latest update has been hacked, and when they see you took advantage of the loopholes, they’ll hit you where it hurts most: your SEO score. In rare cases, they may even remove your site from Google altogether.


8. Business Development is Marketing

Finally, one of the most fundamental issues with business development is that so many people think of it as marketing, using the two terms interchangeably. But they are two very different things, and it is essential to know the distinction.

Business development can be best described as the pursuit of strategic opportunities. This can mean building and maintaining client relationships, identifying new markets, and developing new products. Marketing, on the other hand, is the act of presenting goods, services, and deals directly to consumers.

Business development is not always an easy road to travel. It involves plenty of rejection, dead ends, and disappointment. Oftentimes, it can seem like a neverending task, and in many ways, it is. Business development is never about a single client, product, or market. It is about moving on to the next opportunity. And if you can avoid making the mistakes we’ve looked at here, business development can be one of the most interesting, exciting, and lucrative career paths to take.

11 Reasons You Shouldn't Avoid A Business Audit

Many words in any language can become so heavily associated with one thing, that it becomes almost impossible to separate them. People don’t think of Timbuktu as a city in Mali, or a matrix as a cultural environment. Similarly, when people hear the word “audit”, their minds pretty much always rush to something along the lines of “Oh no”.

But, as unappealing as they may be, there is a lot to be said for conducting an audit. Although the word has certainly been tainted with negative connotations, audits can do a lot of good for your business, and could be the difference between success and failure. Here, we look at 11 reasons you shouldn’t avoid an audit.


Advantages of Internal Audits

The findings of internal audits, which are always conducted on a voluntary basis, are usually reserved for the likes of company board members and senior management. The primary purpose of an internal audit is to evaluate the efficiency of business operations, and allow business leaders to make well-informed decisions.

 
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Productivity

One of the main advantages of an internal audit is the effect it has on productivity levels. It achieves this first and foremost by evaluating how risks are assessed, the management structure, and the efficacy of the actual work process itself. Furthermore, simply knowing that their work will be reviewed with a fine tooth-comb will result in greater levels of productivity from employees.


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Fraud Detection

While the main purpose of an audit may be to find inefficiencies or reduce costs, the fact is that some of the money disappearing in a business may be disappearing on purpose. No matter how many staff you have, how well you know them, or how much you think you can trust them, there will always be a risk of people siphoning money from the business. Some of these methods can be as simple as staff simply putting cash in their pockets and walking out the door, while others can be much more sophisticated and harder to detect. Internal audits can help clear the obscurity in certain areas of cash flow, and identify when funds are being misused, misappropriated, or just flat out stolen.


Legal Compliance

Although checking to ensure a company is compliant with the law is officially the role of an external auditor, using an internal auditor to evaluate the legality of the company’s operations can mean beating the external auditors to the punch. Whether it is due to incompetence, criminal intent, or changing laws, it is perfectly possible that your business may be breaking laws without you knowing it.

By conducting an internal audit, you will be able to identify and rectify any legal gray areas you find yourself in, before being forced to do so. This means you can avoid big fines and exposure to lawsuits, and also illustrates that you are a business interested in following the law, not circumventing it.


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Increased Stakeholder Confidence

As the primary purpose of an audit is to ensure that everything is running smoothly, and suggest improvements that could be made, carrying one out voluntarily is a sign of good management. While stakeholders may not see the results of the audit itself, knowing that audits are taking place will give them more confidence in the abilities of the board.


Advantages of External Audits

 

Professional Services Withholding Tax

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Unlike internal audits, external audits are often reported to people outside of company management, such as shareholders. There are many reasons that external audits take place, but one of their biggest advantages is lending credibility to the company, particularly by using a well-respected auditing company.


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Unbiased Feedback

One of the biggest disadvantages of an internal audit, particularly for smaller businesses, is that bias can seep through. Risk assessment is one of the most important aspects of an audit, but people who have a vested interest in the company may, on a subconscious level, downplay the true level of risk in certain areas. The unbiased nature of an external auditor makes this less likely, and paints a truer picture of the health of the business.


Better Recommendations

Whether you’re conducting an internal or external audit, by the end of it, you want to have a list of improvements that can increase quality and productivity while also reducing costs and waste. Generally speaking, the advice you will get from an external auditor will be of higher quality than that received from an internal auditor, as they will have the experience of seeing different businesses face similar challenges, and will have a better understanding of which approaches do and do not work.

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Sole Focus

Unlike internal auditors, who will almost definitely have other tasks to carry out, external auditors are focused solely on the audit at hand. As well as being completed faster, the work they produce will be less likely to omit anything important, or rush through certain areas, as their focus will not be divided by other deadlines or responsibilities. The reverse is also true, with employees free to execute their normal duties without the distraction of also conducting an audit.


Credibility

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As mentioned earlier, one of the biggest advantages of an external audit is that they lend credibility to your financial statements. With self-reporting, there are lots of ways for a business to get creative with its figures and make itself appear much healthier than it is in reality. While this may not be a tactic you employ, the potential that you could will plant the seeds of doubt in the minds of potential stakeholders. An external audit is a quality seal that will give any potential clients, investors, or business partners the assurances they need.


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Improved Credit

Following on from that point, the documentation provided by external auditors will always carry more weight than those provided by internal auditors. This can make a huge difference when calculating your credit score or applying for loans, which are fundamental elements of growing your business and helping it to succeed.


Legal Issues

Regardless of whether you’re running a small business or a major corporation, you probably having money moving in and out from all different directions. Things may seem clear cut at first, but as the business grows and more money is invested, loaned, and drawn out, things can quickly get murky. The unbiased nature of an external auditor is a very effective and definitive way to settle any legal issues that may arise, and the more often such audits are conducted, the less trouble you will encounter.

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The word audit has been saddled with negative connotations for so many years that it is unlikely to ever be widely regarded as a good thing. But the reason we have audits is to ensure that business are being run well, fairly, and legally. Despite the images the word may conjure up in your mind, you need to recognise the value and utility an audit can bring to any business. If you can manage that, an audit could be the key to your success. But fail to do so, and you are setting yourself up for a lot of issues down the line.

10 Things We All Hate About Business Tax Returns

The first records of taxes in the world date all the way back to ancient Egypt, at a time when they didn’t even have a currency, and would pay their taxes with goods or labour. The Greeks then used taxes to fund their wars, but typically took from the rich, and refunded them with the spoils of war. The concept of income tax was first introduced by the British in 1798 to fund the Napoleonic Wars, and although it was abolished in 1816, it was brought back for good in 1842, and the world has been grumbling ever since.

It’s safe to say that taxes have never really been anyone’s favourite thing, but at least in ancient Egypt, they were a lot easier to calculate. In the modern world, people literally devote their lives to figuring out the ever-changing, increasingly complex systems that vary from place to place, and industry to industry. With that in mind, here are 10 things we all hate about business tax returns.


1: Income Tax/USC/PRSI

If you are the director of a company, the exact amount of income tax, USC, and PRSI you will pay may vary slightly. If you are an owner-director, you would be classified as self-employed (Class S), paying the standard rate of income tax, as well as 4% PRSI, and up to 7% USC.

If you are a non-owner director, you will most likely be classed as an employee (Class A), paying income tax, 4% PRSI, and USC of up to 11%, depending on how much you take home. As a non-owner director, your company will also pay either 8.7% or 10.95% PRSI, depending on whether you earn below or above €386 a week.

As either an owner or non-owner director, you can shelter a certain amount of your earnings from tax by putting them into a pension fund. The cap is 15% of earnings for people aged up to 29, which gradually increases to 40% by age 60.

 

2: VAT

One of the most common taxes there is, Value Added Tax (VAT) is applied to most goods on the market, with several different VAT rates, which depend on the good or service being sold.  There are a few thresholds for annual turnover that determine when a person is required to register to apply VAT, but the two most important figures to remember are €37,500 for services only and €75,000 for goods.

If you are required to register for VAT, you are then tasked with applying the correct rate of VAT to your goods and services. Unfortunately, this can be a bit of an arduous process, as you pretty much need to check each item individually. Luckily, Revenue has a comprehensive and easy-to-use database where you can quickly search products and see the correct rate of VAT to apply.

 

3:  Relevant Contracts Tax

The relevant contracts tax is a form of withholding tax, which is a tax that is paid to the government by the issuer of payment, not the recipient, similar to employer’s PRSI. In the case of relevant contract tax, it must be applied by primary contractors making certain payments to subcontractors in the forestry, construction, and meat-processing sectors. There are three rates of tax (0%, 20%, 35%), but which is used actually depends on the tax compliance of the subcontractor. Therefore, the primary contractor must use the Revenue Online System to determine which rate to apply.

 

4: Dividend Withholding Tax

Another form of withholding tax, the DWT is applied to dividends and other payments made by Irish resident companies to the shareholders. There are a small number of rules about when DWT should be applied, but in general, it is applied to all cash and non-cash dividend payments, with exceptions for things like pension contributions. The recipient of the payment may then be able to claim a tax credit or refund if they meet certain criteria.

 

5: Professional Services Withholding Tax

The last form of withholding tax we’re going to look at here is the professional services withholding tax, which is a 20% deduction taken from payments paid by a state or semi-state body to certain professionals. The recipient of the payment can then claim a refund when filing their end of year returns. For a list of the professional services to which this applies, click here.

 

6: Automatic Late Fees

Although Revenue understands that tax liabilities fluctuate, and therefore it is not always possible to predict the exact amount due, but at least 90% of PAYE, PRSI, USC, AND LPT must be paid on time, as must at least 80% of VAT. Anything below this would qualify as a late payment, and incur an interest rate of 0.0274% for each day that payment is unpaid.

 

7: Preliminary Corporation Tax

Preliminary corporation tax is an estimate of a business’s tax expected liability for the following year, combining income tax, PRSI, and USC. Although new companies that qualify as “small” (their tax liability being under €200,000) are exempt, this is still a very frustrating tax for people who are new to business; overpaying can mean waiting for a refund, which Revenue won’t be issuing at the speed of light, while underpaying can mean incurring interest charges of 0.0219% a day.

PCT can be estimated by paying 90% of the tax due in the current year, 100% of the tax due the previous year, or 105% of the tax for the year before that (only payable via direct debit).

 

8: Benefits-in-kind

This is a tax that can trip up people who may be new to business or not too familiar with the tax system. A benefit-in-kind is any non-cash benefit given to an employee, such as a company phone or car. Although there is a one-off exemption of benefits-in-kind worth €500 or less, any non-cash benefits given to an employee earning above €1,905 a year are taxable, based on the value of the benefit.

Please note that the exemption of up to €500 is a ONE-OFF of up to €500. That means if you give two separate gifts worth €250, one of them must be subject to tax.

 

9: Bookkeeping

If numbers have never been your strong point, then bookkeeping will be one of your least-favourite aspects of entering the business world. But bookkeeping can quite easily bring down a potentially successful business if it is done badly, so if this is an area in which you struggle, be sure to take the time to read out blog on the most common bookkeeping mistakes.

 

10: Archiving Records

Many people might put this in the same category as bookkeeping, but the process of bookkeeping has been around for thousands of years, yet the standards have recently become much higher. Now that we are able to cheaply store an essentially limitless amount of information, the quality that is expected of our records has gone up dramatically. More importantly, you should plan for these standards to keep rising.

 

At the moment, you are required to hold all bookkeeping records for 6 years. But it is perfectly possible that in 20 years time, you will be expected to provide records of transactions occurring today, so find a suitable form of online storage, and get into the habit of keeping the best records you can.


The tax system is many things, but simple is not one of them. But as complex as it may be, paying the correct tax is one of the most fundamental aspects of making your business a success. A genuinely innocent mistake could come back to haunt you at any point, so as much as we may hate them, calculating your business tax liabilities is something that will always be worth the necessary time and effort to get right.

7 Tax Reliefs You Didn't Know Were Available To Contractors

One of the most difficult aspects of moving into contract work is learning how to manage your cash responsibly. Usually, contractors are paid above-average rates, due to the short-term nature of their work. It can be exciting to see how much is paid for just a few hours, or days, of work, but it is important to remember that this money needs to be budgeted and spread out, as there won’t always be work available.

Budgeting is an important part of making contract work a sustainable employment option, but it doesn’t end there. Ensuring you are paying the correct tax, and claiming all the relief available to you, is instrumental in making contract work a success. But the tax system can be confusing and hard to navigate, making it easy for people to miss out on opportunities for relief. Below, we look at some of the tax relief available to contractors that could make a big difference to your take-home pay.


Travel Expenses

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Travel is probably the most well-known allowable expense, but there are a few important things to note to avoid claiming relief where it is not allowed. Travel is an allowable expense when the journey is intended to advance the interests of the business. Travel to a client’s premises, a training course, or a business conference would all fall under this category. The cost of these trips can be reimbursed, tax-free, using either the actual cost of travel, or rates no higher than those offered to civil servants. If the trip is made using public transport, then the cost of the tickets can be reimbursed tax-free.

It should be noted that if you rent a working space, travel between home and here is not an allowable expense.

Subsistence

A freelance plumber is unlikely to spend more than a few days at the same location

A freelance plumber is unlikely to spend more than a few days at the same location

Depending on the nature of your contract work, you may or may not have what is considered a “normal place of work”. For example, a freelance web designer would likely work from home or in a shared office space, while a freelance plumber is unlikely to spend more than a few days at the same location.

If you do have a normal place of work, and need to leave that location for work-related reasons, you could be entitled to claim a subsistence allowance. Similar to allowable travel expenses, subsistence payments can be made tax-free either at cost or calculated using civil servant rates. The only requirements are that the destination is beyond a certain distance from both home and the normal place of work, and that the trip lasts a minimum length of time e.g. 100km is the minimum distance for an overnight trip.

Rent & Utilities

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“If you normally work from home, then it may come as a nice surprise to learn that you can claim tax relief on a portion of both your rent and your utility bills.”

The easiest way to claim for these expenses, which will suffice for most people, is to compare the square footage of your working space to the overall square footage of your home, and claim that proportion as a business expense. So if your office takes up 15% of your home, you can claim relief on 15% of your rent, broadband, electricity, and so on.

In some cases, the fact that you are working from home may mean you require more than just an office. A carpenter, for example, would require more space, such as a garage or workshop. In this case, you can claim relief on the rent difference between properties without such a space, and your own property, as it is clear that the difference is a result of business operations.

Wages & Fees

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As a contractor, you are highly likely to engage the services of legal and financial professionals at some point. You may also be required to bring in additional staff for some jobs, but not for others. Regardless of whether you are paying someone to handle your business affairs, or to actually provide labour/services, you can claim relief on any money you pay for people to carry out work on your behalf. This includes salaries, recruitment costs, insurance contributions, consultation fees, and in some cases, bonuses. However, you cannot claim tax relief for your own salary or for an owner’s draw.

Lease Payments

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One of the disadvantages of being a contractor is that you don’t have access to the same resources that larger businesses would. For this reason, it is quite common that a contractor may be required to lease a vehicle or piece of equipment on a short-term basis. As long as the item in question is being leased for business purposes, you can claim relief on any of the payments made for it.

Running & Repair

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For any equipment you do own, you will be pleased to learn that you can claim relief against any cost associated with keeping the equipment running and operational. It doesn’t matter if the machine needs to be filled with paper or petrol, if you need to purchase something for it to work, you can claim tax relief on those purchases.

It follows logically that any maintenance or repair costs needed to keep the equipment functional can also be deducted. If the equipment is used for both personal and business purposes, only a portion of the costs are allowed.

Small Benefits

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If you do employ other people, it is good to know about the small benefits relief. This allows you to give a one-off, non-cash gift worth up to €500, tax-free every year. The gift cannot be cash or directly exchangeable for cash, and while a gift can be up to €500 in value, only the first gift given will be exempt from tax, meaning you cannot spread this throughout the year.


There are a lot of challenges associated with contract work, with many of them being financial in nature. There will not always be a steady flow of cash or work available, so managing your cash flow is critical to your success. Fortunately, the government does offer support in a lot of different areas, so make sure you review the tax relief available to you, to ensure that you’re not paying too much and harming your chances of succeeding in the long run.

Self Employed? Here's Some Expenses You Can Claim Back

One of the most important aspects of being self employed is knowing how to correctly file your taxes. But self-assessment can also be one of the most confusing and worrying aspects of self-employment. You want to ensure that you are claiming any expenses possible, but incorrect filings can lead to big fines.

In order to legally claim something as an expense, it has to be used for business purposes. But for people who are self-employed, this line can often be blurred. Most self-employed people will use the same car and phone for personal and business purposes, for example, leading many to worry about how much to claim back.

Ensuring that you pay what you owe and claim back what you can is instrumental in helping you to succeed in self-employment, so below is a list of some key business expenses you can claim back.


Travel Expenses

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Let’s begin with one of the most common expenses: travel. Although this is often a major concern for self-employed people who use the same car for business and personal use, it will come as a relief that the rules are actually quite straightforward. You are entitled to claim a percentage of all maintenance and running costs, such as fuel, repairs, insurance, and NCT. However, you must calculate what percentage of the vehicles use is for business, and keep receipts in case you need to prove how you arrived at this figure. It should be noted that travel between home and a place of work is usually not a deductible expense.

Similarly, any travel expenses for business trips, such as train tickets, flights, or hotels, can be legitimately claimed as business expenses. Again, you should keep documentation to prove that a trip’s primary purpose was for business if need be.

Rent & Utility Bills

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If you work in some sort of shared office space, the cost of this can be claimed back as an expense. But many of the people working in self-employment do so from home, which can be confusing. The good news is that you can claim a percentage of bills such as electricity, gas, phone, and broadband.

Like motoring expenses, you need to be realistic about what proportion is used for business.

Like motoring expenses, you need to be realistic about what proportion is used for business. For example, there are 168 hours in a week, so if you work 40 hours online, you can claim back 24% of your broadband charges. Alternatively, if the space used for business is 10% of the total square footage of your home, you could claim 10% of your rent or heating as a business expense.

Marketing Costs

Marketing is critical to the success of any business, but it is particularly important for the self-employed. It should come as a relief to many then that these costs can be claimed back as expenses. Any promotional material that appears online or in print can be deducted, but please note that entertainment costs, regardless of whether they are for staff or customers, cannot.

Consultation

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If you are self-employed, you are likely to build up some consultancy fees for expert services, such as legal or financial advice. As long as the advice sought is related directly to the operation of your business, these can all be claimed as an allowable expense.

Staff Costs

Similarly, you can claim for any expenses that go towards employing other people, although you cannot claim back your own wage or any owner’s draws. But any salaries, bonuses, recruitment costs, or insurance contributions can be claimed back.

Financial Charges

They may not appear to be the biggest expense, but financial charges can add up over time, so you want to make sure you’re not missing out on any allowable expenses. Any fees, whether they are for maintenance, currency conversion, overdrafts, and so on, can be claimed back against your taxable income.

Interest on Loans

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In addition to being able to claim back fees and charges from financial institutions, you can also claim back the interest on any business loans you may have taken out. However, it is crucial to note that this only applies to the interest on the loan, and not to the repayments of the loan.

Lease Payments

Any lease payments for vehicles or machinery directly related to business operations can be claimed back. If the vehicle/machine is also also used for personal use, then only the business portion can be claimed back. There are also different limits depending on the CO2 emissions of a vehicle which will affect how much can be claimed. For more information on this, please see this document by the Revenue Commission.

 

Capital Allowance

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If you purchase a new piece of equipment for your business, such as a laptop, this is considered a business asset. This means it is not listed as an expense, as not only is the equipment intended to bring in more profit, but it can also be sold at a later date. However, as the value of the item will go down over time, you can claim back the cost of the asset as an expense.

It is important to note that you are not claiming back the depreciation, which is not an allowable deduction under Irish law. Instead, we allow the cost of assets that meet these criteria to be claimed back at a rate of 12.5% over 8 years. In simple terms, this means you can claim back 12.5% of the original cost of an asset per year, regardless of depreciation. 


Making the move from a standard 9-5 job to self-employment is a big leap. It carries with it plenty of stress and worries, and will often be an uphill struggle. That means it is all the more important to make sure you are filing your taxes correctly. It is not a simple process, but all these claims add up over time, saving you money, and making it a lot more likely that you will succeed in your endeavours.

How "PAYE Modernisation" will affect Employees and Employers?

In 1960 Revenue introduced the PAYE system. This system was designed for employees and employers to have the most accurate, up to date information relating to pay and tax deductions. Ensuring the right tax deductions are made by the right individuals at the right times, improves the accuracy, understanding and transparency for all the stakeholders. This version of the PAYE system has been used for the past 60 years but for not much longer…

On the 1st of January 2019, the PAYE system will get a long overdue update to evolve with the times. For example, people switch job more regularly and changes in personal circumstances   ( i.e marital status) are much more common compared to when PAYE System originally launched

Now you are probably wondering what do these changes mean for me. Don’t worry, this update will benefit both employers and employees.

 

For Employees

Before the start of the tax year, an online statement will be sent detailing your tax credits and standard cut-off points for the upcoming year. This will be based on estimated income and information available to Revenue for the employee. Employees will be prompted to make any necessary adjustments to or to update this online statement, including claiming any additional entitlements. This contrasts with the current system where the employee must wait until the end of the year for such reconciliation and wait for any refund or be faced with a tax underpayment.

For Employers

This update will have changes on how employers pay their employees. When processing payroll, a file must be submitted (electronically) to Revenue containing details of employee payments. The contents of this file will be like the details currently submitted in the annual P35, but unlike the P35 this file must be submitted each pay period e.g. weekly or monthly.

The update enables employers to submit a new employee’s detail before they start employment their details. This allows the final payroll run in the year will generate a pre-populated statement setting out the total tax deductions for the year both at the level of the employer and the employee. This, in turn, should reduce incidences of year end over/underpayments of income tax.

This new reporting process by employers to Revenue is anticipated to be fully integrated into the employer’s payroll run and will result in a significant modernisation of business processes and reduce the administrative cost for employers.

To discuss these changes further Contact us