Financial Planning for You and Your Business Monaghan Women in - PowerPoint PPT Presentation

Financial Planning for You and Your Business Monaghan Women in Business 10 September 2019 Rose Tierney Tierney Tax Consultancy

Intro • Background • Qualifications • Tax Focused • Cross Border • Training • Mentoring

How does Finance work in Business Finance underpins every business and every household No business or household can operate without a bit of financial planning. Finance covers everything from pricing your product or service through to your retirement plan and everything in between. From birth to death.

Business Finance Lifecycle Startup Costing/ Tax Pricing Exit Plan Budgets Pension Finance Earnings Cashflow Structure

Startup Phase – Costing/Pricing • Costing • Pricing • Identifying Direct Costs • Take into account costing plus markup • Costs without which the product or service cannot be provided • Compare to competitor prices • Identifying Indirect Costs • Look at product/service position in • Overheads, variable costs , market • Identifying Fixed/Capital Costs • Is there a maximum price? • Premises, vehicle, machine purchase • Do you have a USP which can drive • Identifying Overhead Absorption your price? Rate • Premium product? • The best way to allocate overheads across products and services

Startup Phase – Costing/Pricing • May be a big generalisation but female entrepreneurs tend to undervalue/underprice themselves. • Not easy to raise prices – the average maximum price raise in the life of a customer relationship is 30%. • Changing price – do it for added value, give notice, consider exceptions for long standing customers.

Startup Phase – Financing • Look at the first year of trading – • What needs to be financed? • Sources of Finance • Equipment, Vehicle? • Grants? • Premises – rent, rates? • MLEO – Feasibility, Priming, Business Expansion, Microfinance Loans. • Up front training? • Jobsplus – employing unemployed • Staff costs? person grant €7,500 - €10,000 • Own salary??? • Crafts Council • Friends, Family? • Bank/Credit Union • TAX!!! • Need cashflow projection, ability to repay, security

Accounts, Budgets, Cashflow - what does it all mean? Past Present/Future Future Accounts Cashflow Budgets Tax Returns Snapshot of Earnings & Taxes due Measure of Cash in and out as Estimate of Income and Expenses on them prediction of future cash needs for future periods Used by/for? Business, Revenue, Lenders Business & Lenders Business for planning

Applying for Bank Finance • Ability to Pay? • Historical profits & Cashflow projection • Stress test • Security? How do banks value it • Typical Loan to Value? • 70/80% LTV Eg offer premise market value of €100,000 as security Bank might only value LTV 70% ie

Accounts -How complicated does it need to be? Depends on size of business • Sole Trader • Uncomplicated • Sales, Purchases, Receipts, Payments • Biggest problem matching. • Microtrade • System – Manual(includes Excel, Word etc) or Computerised/Integrated Package • Proper integrated Accounting • SME or Large Business System, Budgets, Cashflows • Move to Digitised Systems

Cashflow is Always Key • Set credit policy • Try and stick to it – be tough! • Refuse to do more work until bills are paid • Ask for deposits • Monitor your debtors days regularly to see improvement or regression • Spread creditor payments where you can • Keep a check on discretionary spend

Debtor Days Creditor Days • Debtors • Creditors X 365 X 365 • Sales • Purchases

Growth Phase • Step changes in cost base – • new staff, new premises etc requires costing/pricing review • Structure review – • Best time to incorporate? • Time to insert a holding company? • Exit plan?

Tax at Every Phase • Tax on Startups – first year , Tax reliefs • Tax on Growth moving above the lower rate band, incorporation • Tax on Exit – structuring for trade sale, succession planning within family, MBO

Personal Financial Planning • “One Basket”? • Pensions – Private, State, Self Admin • Savings • Always use a QFA – Qualified Financial Adviser

Exit Strategy • Succession within the Family, Retirement, Getting out , Passing on • Exit Strategy – Sale, Liquidation • Always focus on the After Tax Amount • Consider structuring to avail of reliefs • CGT • Entrepreneur relief 10% on first €1m • Retirement relief up to €750,000 • CAT • Business Property relief 90%

Inheritances • Minimising the exposure for your Family • Reliefs • Thresholds • Remainder Interests

• Other Issues • Year End Planning – maximise revenue spend , consider capital spend – green 100% CAs

• Cash Extraction – watch out for overdrawn directors loans • Currency Management

Brexit • Register VAT/IT/CT number for C & E = EORI number, Allows you to import or export to UK after Brexit. • Look at structure • Research applicable tariffs • Consider who will file customs forms • Agrifood sector additional regulations

Questions • Contact Details: • Rose Tierney • Tierney Tax Consultancy • Email: rose@tierneytax.ie