Starting out is daunting. You want to focus on your business, you want to get customers, but theres a few things you need to tick off before you can do that. They can seem daunting initially but I honestly found the process of setting up to be pretty straight forward, painless, and more importantly not very expensive (~€500.00). Its a well trodden path, and you’ll be dealing with professionals all along the way.
TL;DR Some things you might need to know about:
- VAT registration (If your annual gross turnover is > €37,500),
- Register as a sole trader or Private Limited Company,
- a company bank account,
- a payroll provider,
- a domain name,
- An Accountant/Financial Advisor,
- A Grant
I found Incorporation to be very straight forward. I was meeting with my soon to be accountant and we decided to do the paperwork there and then. I needed the usual items: proof of address, passport, PPSN. Remember to have a company name ready, but be ready to change it if another company is registered under that name or something similar, they check.
The Company Formation Bureau did all the leg work, name checking and express company registration 2/3 day turnaround, I dropped the paperwork out to them; they’re based around Christ Church in Dublin.
As a Private Limited Company you no longer require two Directors so I was able to register as the sole Director but I did need to appoint a secretary – this can be a family member and they assume less risk.
This all cost around ~€250, I received a certificate of incorporation and a company stamp. Hurray!
I would advise you register when you’re incorporating, even if you don’t expect to hit the threshold it lends professionalism to the company. It could look odd to a customer/client if you do not charge VAT.
Go with an accountant or professional for registering, you need to submit a TR1 to the tax office, you can read a bit more about VAT here. Its simple once you leave it to the pros, but it can take a few weeks to get registered. I’ve found charging VAT and just paying it once my registration came through to be fine.
Lets be honest, they’re pretty much all the same. You’ll get about 2 years free banking as a startup account, none of them will easily hook up with any online accounting software your best bet is exporting your history as a csv. You should look out for banks giving out debit cards for the account as this makes it way easier to pay small bills or expenses(AIB for example).
In terms of Business banking BOI has a nicer interface but I haven’t used it hands on. I’ve heard that it can be pretty bad from other users. Then there is the outages they’ve suffered this year to consider..
24 months free transaction and maintenance fees
You apparently get some free webdesign stuff from FCR media, but I wouldn’t get excited.
I haven’t had much experience with Ulster, but my accountants tried to sell me them so be wary that you may be getting a referral not a recommendation..
They do claim to have a banking mobile app, but it keeps referring to ‘small businesses’ so its possible this is only for sole traders with current accounts..
24 months free transaction and maintenance fees
Apparently Ulster Bank integrates with Kashflow.
I’ve used AIB and the process was.. fine, it took about 1 month overall from first email. There was a fair bit of paper work but they help you over email and in the bank, the IBB website is god awful, really archaic stuff but it works.
24 months free transaction and maintenance fees
You need an accountant or dedicated payroll company to look after payroll, they’ll handle P30s, P45s and all other nasty P related forms. They’ll create the payslips, distribute tax credits etc. You should expect to pay upwards of €80 a month for this, more depending on your pay frequency and number of employees.
*As a proprietary director (50%+ Shareholder) you will be Class S you don’t need to pay Employers PRSI (10%~) for your own wage.
Hosting is an issue we all face, finding an email and domain name provider as well as a place to host our website/apps. In terms of domains I decided .io and .ie were the domains for me. It seems like you can’t be a startup nowadays without a .io and I couldn’t pass up the chance to grab a .ie too. A lot of people mistake .io for .ie when trading in Ireland too so its good to have both.
Google for Business will be the next thing to use once I pass the Gandi forwarding restrictions of like 5 accounts. Google for Business is like €2.5/5 per employee per month IIRC.
I’ve found Digital Ocean to be quite reasonable for hosting wordpress/server side stuff, handy backup tools and easy configuration options for scaling up/down.
Rackspace’ offer for Startups is also particularly good:
Rackspace offers up to 1,803.43€ per month in free hosting for 12 months for qualified startups
I’ve signed up for this twice and been required to put a logo on my site and that was it, so its a no-brainer. I also cancelled both and it took nothing more than an email. So yeah!
Grants are a great help when money is tight, a great source for reading about this is BulletHQ’s ‘How to get 100k free off the government’ I’ve a source here.
The Irish government recognises Startups and SMEs as being big employment opportunities, and there are some nice grants and help given to companies in their early stages, especially their first 3 years.
Some of the big ones are R&D Tax credits, and 3 year Corporation tax exemptions. Now they’re not full on golden tickets, but they do help.
Corporation Tax is a tax on profits made during the year, it is 12.5%. The tax that can be sheltered amounts to the sum of Employers PRSI that the company pays. So lets say the CT charge is 20k and the Employers PRSI is 10k then 10k CT will be payable. As a director you will not pay Employers PRSI on your behalf. Any ordinary employees of the company will incur Employers PRSI and so will reduce your tax.
So as you can see, it pays to employ people, or at least takes some of the sting out of employing people.
Below is an example of some of the benefits you can get from the combination of R&D and Corporation Exemption
“The R&D Tax Credit Scheme allows companies a 25% tax credit for the cost of carrying out qualifying R&D activities.
This is in addition to the normal 12.5% writeoff against income for Corporation Tax purposes, and means that companies can recoup 37.5% of such costs against their tax liabilities.
For example a company spends €100,000 (eg wage costs) on a qualifying R&D activity.
They claim this expenditure as a deduction in their accounts and Corporation Tax return. This yields a 12.5% tax saving, worth €12,500.
They can also claim a further 25% credit if the cost relates to a “qualifying R&D activity”. This yields a further 25% tax saving, worth €25,000 payable over 3 years.
The total tax saving is €37,000, on spending of €100,000.”
Another good source of grants and advice is the Local enterprise office (LEO) find your local branch and organise a meeting, this is a good stepping stone towards getting an Enterprise Ireland advisor, which should be next on the agenda.
I came across a few companies in this space that got good recommendations:
BCK – Byrne Curtin Kelly
I’ve found my dealings with BCK to be really great. I’d heard good things from the Irish Tech Community and asked for an introduction, I was referred to them by email; Its great to have a quick back and forth over email, not everyone wants to commit to a phone call straight away. It was easy to schedule a meeting with a Partner from BCK(Darren) they came to meet me in town which I thought was a nice point.
I was really impressed with the meeting, sending aPartner really shows that they value customers. I was blown away by the conversation; I had been floundering without a financial advisor and Darren had answers to pretty much everything I asked. He was rattling off tax rates, due dates for annual accounts, had a really pragmatic approach to applying for grants and even name dropped some great technologies like Stripe.
The time came to talk about money and I was pleasantly surprised with their approach to startup accounting: ‘We act from from start up situations right through to retirement‘ seemed to be their motto. They look for recurring, lifelong clients, so the focus was on cutting costs and keeping things trim. We settled on monthly payroll and a once off session on how to do my own VAT, this is trimmed down from the services Icon was charging for:
- Online Accounts
- Dedicated Accountant
- Preparation of VAT
- Monthly Payroll
- Annual Accounting & Tax
Darren seemed really open to the idea of emails and keeping in touch, as I said I had been lacking a financial advisor so this was music to my ears.
‘If anything is going to require more work or cost money you’ll be the first to hear of it’
Seems more than fair to me.
I’ve used them and they are fine for contractor stuff – monthly invoicing and payslips. I did find myself having to correct payslips and prompt them a lot, I’ve heard the €160 ex VAT per month charge is actually quite steep.
In terms of software freeagent.com and bullethq are excellent pieces of software, for tracking time, contacts, VAT, payroll, expenses etc. Don’t let your accountant sell you some oldschool webform or excel approach do try out one of these apps and add your accountant as a user.
You won’t regret it.
I’m a big fan of FreeAgent, I take a weekly export of my AIB business bank statement as a csv and import it (seamlessly) into Free Agent. Free Agent figures out if any out the incoming/outbound transactions match invoices, recurring bills, expenses that you’ve logged with them and automatically match up.
I track my projects and time sheets, logging hours against clients, once I’ve finished a project or billing period I can export an itemised timesheet, which I can theme and send directly from the app. Super cool.
I monitor my VAT payments as any banking imports that I flag as VAT allowed are tracked, so I can see what I owe/what I reclaimed in a date range.
By the way, heres my referral code: http://fre.ag/45girb1c
So thats some of the stuff i’ve learnt so far, its been a fun challenge getting to grips with all of this. If you’re thinking about starting up my advice to you is to just do it.