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/ Pricing Budgets Finance Cashflow Structure Earnings Pension Exit Plan Tax

Startup Phase – Costing/Pricing

• Costing
• Identifying Direct Costs
• Costs without which the product or

service cannot be provided

• Identifying Indirect Costs
• Overheads, variable costs,
• Identifying Fixed/Capital Costs
• Premises, vehicle, machine purchase
• Identifying Overhead Absorption

Rate

• The best way to allocate overheads

across products and services

• Pricing
• Take into account costing plus

markup

• Compare to competitor prices
• Look at product/service position in

market

• Is there a maximum price?
• Do you have a USP which can drive

your price?

• Premium product?

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
• f 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?
• Equipment, Vehicle?
• Premises – rent, rates?
• Up front training?
• Staff costs?
• Own salary???
• TAX!!!
• Sources of Finance
• Grants?
• MLEO – Feasibility, Priming, Business

Expansion, Microfinance Loans.

• Jobsplus – employing unemployed

person grant €7,500-€10,000

• Crafts Council
• Friends, Family?
• Bank/Credit Union
• Need cashflow projection, ability to

repay, security

Accounts, Budgets, Cashflow - what does it all mean?

Past Present/Future Future Accounts Tax Returns Cashflow Budgets Snapshot of Earnings & Taxes due

• n them

Measure of Cash in and out as prediction of future cash needs Estimate of Income and Expenses 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
• Microtrade
• SME or Large Business
• Move to Digitised Systems
• Uncomplicated
• Sales, Purchases, Receipts, Payments
• Biggest problem matching.
• System – Manual(includes Excel,

Word etc) or Computerised/Integrated Package

• Proper integrated Accounting

System, Budgets, Cashflows

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

• Debtors

X 365

• Sales

Creditor Days

• Creditors

X 365

• 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