Few entrepreneur questions

UpandComing

Hi all,

So I have been putting alot of research into a retail business that I will be starting in the near future and as I near the end of it I am finding a few questions creep through that I am hoping people could answer on this. Some details first about the company:

• It will be in the retail sector
• Company will be a LTD company
• Based in Munster
• Employing staff of less than 20

And now onto some questions:

1. In relation to paying PRSI for employees, what other "contributions" must I pay for the employee? EG, Levy fees etc...
2. What is the best way to look at investment? Does anyone know if the banks are lending in this environment? I am looking for something in the 50k bracket to start me up. I have looked at the other sources, can people tell me if they have had dealings with them and what they are like?
   • Enterprise Board
   • Irish Investment Network
   • Start-up.ie
3. In relation to tax, what sort of tax will I be looking at paying each year?

Some of these questions, I admit, are simple but it will help me sort out everything.

Cheers in advance

drunkmonkey

You'll get no support from any government agency in retail regardless of if your creating jobs or not so forget about the enterprise boards.

Talk to an accountant about your tax and for employees.

The bank will have plenty of experience in lending to retail so make sure your figures are correct. I can't stress enough how important it is to get your cash flow forecast right, get it wrong and you'll be closed in no time.

Location, Location, Location. Try and get the best possible street presence for your business. It will make the difference between success and failure.

UpandComing

Cheers for the response mate

So that scratches one off the list for that. What you think about the Irish Investment Network? I need around 50k to startup so I don't really want to go look for angel investors if I dont need to.

Can you recommend whats the best route to go for finance for the business?

Regards

Kinetic^

UpandComing wrote: »

Can you recommend whats the best route to go for finance for the business?

Speak with your accountant, he/she should know the best way to go about it.

Tipp man running

First of all best of luck with the business, i hope you get it off the ground.

Two good friends of mine are opening a retail business in the new year. Believe it or not they have got a bank loan to do this for a similiar figure that your looking for. They found once you have your figures done, know your business inside out, have a business plan backed up by an accountant you will have a decent chance of getting a loan. Be prepared though, the banks really know their retail and will put you through your paces so make sure you know your business plan inside out and that your figures show how they'll get paid back. They'll also expect you to be putting something in yourself. Also you won't get exactly what you look for so ask for enough.

Best of luck....Tipp man

UpandComing

Cheers for the help guys

So from what I gathered from everyone who replied is:

1. Talk to an accountant
2. Get my figures finalised with him
3. Finalise the business plan
4. Approach the bank

(Im one for organised steps) So this seems that this is the best route to go down. Just wary because I know how tight banks are but Tipp Man you gave me a good boost there. Did your friends approach the enterprise board? Also do you have any idea what bank they approached?

Tipp man running

They approached two banks at the same time, BOI and Ulster..they were put through their paces by both and asked really tough questions about their industry etc, the banks did their best to catch them out. But in the end BOI gave them 85% of what they were looking for. What they said the most important thing was that they had a business plan done up with an accountant who verified their figures and they had a good knowledge of the industry they were entering.

You have your steps correct and i would give them a shot. The enterprise board isn't really much help when your entering retail. Most important, talk to an accountant, get your figures right and arrange that first meeting. Make sure you push your case with the manager and be prepared to wait for a decision or to have to provide additional information.

The very best of luck.

mickmcl09

[QUOTE=Tipp man running;698110 The enterprise board isn't really much help when your entering retail.

The very best of luck.[/QUOTE]

What do the enterprise boards actually do?

UpandComing

http://www.enterpriseboards.ie/index.aspx

They provide grants for start up businesses. I thought they would be a good body to approach but from what I am hearing on boards, I am very wary about actually approaching them. I suppose there is no harm in approaching them but I don't want to be wasting my time with them either.

I just got to finalize my plan and present it to the banks listed above from Tipp Man.

Nerves are setting in but I guess the worst they can do is say no...

Tipp man running

This is just my experience so not going to knock them, i've done some very good courses with them but i find when it comes to opening a business and looking for a grant their not that helpful. Initial they'll give you huge encouragement with the concept but when it comes to trying to get a grant they only seem to want to take on technology based setups that are already up and running, already have some backing behind them and that they'll be exporting. Good to talk to them but dont expect them to fund a retail outlet. Again just my opinion and maybe someone else has had a difference experience.:rolleyes:

UpandComing

Im also wondering about investors?

The irish investment network is another option that was presented to me but im not sure about going down that route. Has anyone had any dealings with them?

drunkmonkey

UpandComing wrote: »

1. Talk to an accountant
2. Get my figures finalised with him
3. Finalise the business plan
4. Approach the bank

Have you done your cash flow forecast yet? You should have your figures more or less finalised before before approaching the accountant.

Have you all your suppliers in place and know your margin, rent, rates, wages and other costs figured out. Have you a location you've decided on, is there a suitable premises there now? Do you need to act quickly?

If your not already dealing with suppliers a lot may only do cash on delivery with you at the start. Would 50k cover 3mts stock?
If your you have to go cash on delivery what money will pay the wages and rent?, as what's coming over the counter is paying for stock.

Here's a sample one it's in uk pounds but the principals the same just change it to euro's
Download our sample cashflow projection spreadsheet (XLS, 82K) - Opens in a new window.
Just fill in all your figures and then your ready to go to the accountant. That's what he wants to see. Then he'll tell you what figures to put in for him.

Gloomtastic!

Kinetic^ wrote: »

I've been dealing with an Irish company who outsources their stuff to India, never again. Communication is non existent and it's taken about 2 months to do up a 1 page website.

Wrong thread me thinks....

91011

UpandComing wrote: »

Cheers for the help guys

So from what I gathered from everyone who replied is:

1. Talk to an accountant
2. Get my figures finalised with him
3. Finalise the business plan
4. Approach the bank

Almost correct

On the accountant side - get someone who is experienced in retail accounts and someone who is willing to guide you and someone who can do all the accounts work. - will cost about 10k a year based on what you are saying.

He / she will tell you if the rent is affordable, they'll do up a good cashflow, they'll tell you what the bank will want to hear and may even have connections with a bank manager who will listen.

From my own experience, the accountant ahs ensured I'm going into 2011 with a very heathly bank balance annd zero debt on a business started 2 years ago.

As for banks, Ulster & BOI are the ones listening at the moment - forget about AIB.

UpandComing

Many thanks for everyones replies, it is really helping me alot.

Im hearing bad things about AIB, and I have been with them for 7 years for personal banking... pity.

So a retail accountant works out at about 10k a year, thats good to know. At least i can do a rough estimate of my outgoings.

I have done estimates of cashflows and 3 years worth of income and expenditures, based on current market trend and my own experience in the sector itself.

91011 - Can I ask you, did you get what you wanted from the banks? Ie, did you go in with a certain percentage in mind and come out with what you wanted?

91011

UpandComing wrote: »

Im hearing bad things about AIB, and I have been with them for 7 years for personal banking... pity.

So a retail accountant works out at about 10k a year, thats good to know. At least i can do a rough estimate of my outgoings.

91011 - Can I ask you, did you get what you wanted from the banks? Ie, did you go in with a certain percentage in mind and come out with what you wanted?

AIB just don't have room for risky lending at present - a new business is risky.

I got what I needed from UB, 30k initially in 2008 - and a further 50k in sept 2009 to expand. - Once figures stack up and once they see you have done homework on both the sales figures, potential pitfalls and cost along with product/sector knowledge, then there shouldn't be a problem.

For the 30k I had to show 50k cash investment myself. The extra 50k was easy as I had met forecasts.

There are plenty of other ways of financing a retail business - get landlord to fit out and capitilise the cost over 10 years into the rent, get 33/33/33 credit deals with suppliers - 33% up front, 33% 30 days, 33% 60 days.

Also, little trick on accounting - you'll be doing vat on receipts. If you have Irish suppliers, plan buying at the very end of a vat period and unless its really needed, hold off the last week in vat period cash lodgements until 1st day on new vat period. - it can improve cashflow by a couple of k.

DoMyBooks

91011 wrote: »

AIB just don't have room for risky lending at present - a new business is risky.

I got what I needed from UB, 30k initially in 2008 - and a further 50k in sept 2009 to expand. - Once figures stack up and once they see you have done homework on both the sales figures, potential pitfalls and cost along with product/sector knowledge, then there shouldn't be a problem.

For the 30k I had to show 50k cash investment myself. The extra 50k was easy as I had met forecasts.

There are plenty of other ways of financing a retail business - get landlord to fit out and capitilise the cost over 10 years into the rent, get 33/33/33 credit deals with suppliers - 33% up front, 33% 30 days, 33% 60 days.

Also, little trick on accounting - you'll be doing vat on receipts. If you have Irish suppliers, plan buying at the very end of a vat period and unless its really needed, hold off the last week in vat period cash lodgements until 1st day on new vat period. - it can improve cashflow by a couple of k.

€10K per year on accountancy fee's sounds very high to me for a relatively simple business. You can reduce your accountancy fee's by keeping proper books and records yourself and not throwing shoeboxes full of invoices at the accountant. Competition is high at the moment get some recommendations and price around.

In terms of employing staff if you take their gross salary add 10.75% for employers PRSI and 8% for holidays that will give you a rough cost to you. You should always pay employees based on a gross salary. (For example don't ever offer someone a take home pay of €500 offer them a GROSS amount)

UpandComing

That is one thing that is confusing me, is the whole PRSI contribution and Tax that companies pay each year. But I gather that the accountant will be able to inform me of everything I will need to pay out at the end of each year?

Now I know this website gives me the PRSI and Levy contribution

http://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/social_insurance_in_ireland.html

Now im just wondering, on top of corporation tax, is there anything else I can look at to get a rough estimate of what i need to pay?

DoMyBooks

UpandComing wrote: »

That is one thing that is confusing me, is the whole PRSI contribution and Tax that companies pay each year. But I gather that the accountant will be able to inform me of everything I will need to pay out at the end of each year?

Now I know this website gives me the PRSI and Levy contribution

http://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/social_insurance_in_ireland.html

Now im just wondering, on top of corporation tax, is there anything else I can look at to get a rough estimate of what i need to pay?

Either your payroll system or your accountant will tell you how much to pay the revenue in Employer taxes every month. You pay this on a P30.

Dont get too wrapped up in those little details let the accountant handle them and focus on making money. For the purposes of costing and budgeting decide on the gross amount you want to pay your staff multiply it by 1.3 and that is a good guide as to how much it will cost you to hire them.

91011

DoMyBooks wrote: »

€10K per year on accountancy fee's sounds very high to me for a relatively simple business.

you get what you pay for - 10k for an overall financial management of my accounts, i think is cheap. One meeting with one of my landlords allowed a saving of an extra 8k in rent above what i was going to ask for as he went in hardball on giving the landlord facts about valuations.

the op is looking at the retail market with a staff of circa 15 - 20. this would mean a turnover of circa €1m at least. Some good advice about how many hours part time staff should work, advice on taking people on who are 6months+ unemployed (save prsi) etc, can be invaluable

DoMyBooks

91011 wrote: »

you get what you pay for - 10k for an overall financial management of my accounts, i think is cheap. One meeting with one of my landlords allowed a saving of an extra 8k in rent above what i was going to ask for as he went in hardball on giving the landlord facts about valuations.

the op is looking at the retail market with a staff of circa 15 - 20. this would mean a turnover of circa €1m at least. Some good advice about how many hours part time staff should work, advice on taking people on who are 6months+ unemployed (save prsi) etc, can be invaluable

I've seen 100's of accountancy bills over the years and I've never seen an audit exempt business turning over €1m pay anything near €10K

At €50 per hour for a junior and €100 per hour for the accountant you will get a very good middle of the road accountancy firm.

I would suggest to anyone hiring a professional be it accountant to quote around to get the total charge for the year and the hourly rates for ad-hoc work like negotiating with landlords.

In terms of your own accountancy fee's if youve done your research and feel your getting value for money then its irrelevant the thread only relates to a new business.

Kinetic^

91011 wrote: »

you get what you pay for - 10k for an overall financial management of my accounts, i think is cheap. One meeting with one of my landlords allowed a saving of an extra 8k in rent above what i was going to ask for as he went in hardball on giving the landlord facts about valuations.

the op is looking at the retail market with a staff of circa 15 - 20. this would mean a turnover of circa €1m at least. Some good advice about how many hours part time staff should work, advice on taking people on who are 6months+ unemployed (save prsi) etc, can be invaluable

It's pricey, I worked in a top 20 firm (5 partners) and for that sized company it would be about half that during the boom times. Not sure what it would be now.

91011

I believe I get value - he collects the invoices every week, does the payroll,(14 employees) acts as credit controller does vat, paye, quarterly management accounts, issues the payment schedule, does annual returns, advises on all financial matters and I run the business.

For me not to have to worry about any financial matter, is worth every penny.

Of course I could probably get it cheaper, but would I get the same value?

Anyway its about the op's questions - and all I'm saying is a good accountant / financial manager is the first thing a business needs.

UpandComing

Wow that is really good value for 10k a year. Is that a monthly payment or a lump sum at the end of the year?

Tell me, do all accountants offer that service because that is something I would seriously consider looking in to.

91011

UpandComing wrote: »

Wow that is really good value for 10k a year. Is that a monthly payment or a lump sum at the end of the year?

Tell me, do all accountants offer that service because that is something I would seriously consider looking in to.

Monthly by direct debit - I couldn't tell you if others do it. I have history with my accountant and he knows what I'm like with invoices and paperwork.:D

Obviously there's a lot of trust involved, so a personal reccomendation is usually best and someone who is in the locality that you are operating in also can be a help.

Kinetic^

Does seem good value if he's doing CC & payroll as well, it's probably the one part of self employment that I hate.

UpandComing

To do all the books myself and all the accountancy side, is it very time consuming. I like to break my week down to percentages, i.e 20% is one day, how much percentage wise would I spend on a week doing that kind of stuff?