How to start your own business
Look at our checklist on what you need to consider when starting a business
If you are thinking of starting your own business, there are a lot of important elements you will need to consider to make sure your business takes off. It can be especially difficult when there is so much information out there on starting a business, so here, we present an overview of the information from already-existing sources.
Things to consider when starting your own business
The following checklist includes important things to think about and do before formally setting up your business:
- Finding a good business idea - not just for profit, but for market, your enjoyment and location
- Testing your business idea and doing market research - is there a demand/need for this business?
- Finding your target market through research - what age range are you aiming the business at and who will your product sell best to?
- Drawing out a plan of the finances you will need and how to get this credit, if you are seeking funding
- Branding your business - choose a name, a tagline, a logo, and colour scheme. Try to make it eye catching and memorable. Get the name trademarked
- Deciding on the legal structure of your business
- Applying for finance (if you need it) and getting approved - ways to go about that and services you can apply to
- Finding a building/location for your business to set up and budgeting for it
- Finding ways to market and advertise your business
- Considering whether you will need to employ staff or not, and be clear in the legalities of paying tax and their employer rights
How to pick a legal structure of your business
There are three types of legal structures that you can set up your business as. The type of structure you choose is dependent on the type of business you are running, your customers/clients, and your attitude to risk.
A sole trader is a business structure in which one person owns and runs the entire business. Setting up a business as a sole trader is relatively easy, but it comes with large risk. If your business fails, any personal assets could be used to pay off your debts.
To set up a sole trader business account, you need to have a bank account and a cash flow plan. You must also make sure you register with Revenue as self-employed and if you plan on using a business name, you must register the business name with the Companies Registration Office (CRO).
A business which is run by a partnership means that the two or more people involved in setting up the business have an equal say in how it is run. It also means that if the business fails, they will have to split the debt. In a partnership, an agreement should be drawn up with a solicitor.
If you set up your business as a limited company, the business is completely separate from you. If the company goes into debt, creditors can only claim assets of the business, and not your personal assets at all. Limited companies must be registered with the Companies Registration Office (CRO), and reports and accounts from the business must go to the CRO every year.
Funding when starting your own business
For sole traders and start-up businesses, Microfinance Ireland provide loans for businesses with no more than ten employees. Loans from €2,000 to €25,000 can be given to you when you prove they are for the benefit of the business. You do not have to have been refused credit by a bank to get a loan from Microfinance Ireland. To apply for a loan from Microfinance, you need to fill out a form.
There is also the Trading Online Voucher Scheme, which provides a voucher of up to €2,500 if you show you have a credible plan for your business trading online.
If you apply for credit from banks, you can apply to the Credit Review Office to have the case reviewed. Your application must be in writing to be considered for a review. There is an application form available for download on the Credit Review Office website, and you may be charged between €100 to €250 for an application review.
Under the Credit Guarantee Scheme, you may be entitled to more funding. This scheme focuses on lending to businesses who seem like they may be successful, but who are struggling to get credit. You can find out here if you might be eligible for credit under this scheme.
If you have any issue with your creditors, there are services that offer free advice on budgeting and money management, such as the Chartered Accountants Voluntary Advice service (CAVA), Money Advice and Budgeting Service (MABS), and Citizens information.
Tax, PRSI and employing staff
Earned income tax
Self employed people can claim an Earned Income Tax Credit of €1,350. Business owners and managers can also receive this if they do not have PAYE credit on their salaries. If you are entitled to both, you cannot receive more than €1,650.
SURE tax refund
The StartUp Refunds for Entrepreneurs (SURE) is a tax refund scheme which allows those eligible to claim back 41% of the capital they invested in starting a business. They may also be entitled to PAYE income tax refunds from the 6 years before their investment.
Start up companies
New companies may be entitled to tax relief on their first 3 years of corporation tax. This relief will depend on how much Pay Related Social Insurance (PRSI) is paid by the company within an accounting period. This is subject to a maximum of €5,000 per employee. You can claim relief for up to the last 3 years of business.
Capital gains tax (CGT) relief
A chargeable gain is the term used for an increase in the value of an asset between the time it is bought and the time it is sold. If you sell your business, a CGT rate of 10% will apply to the chargeable gain that comes from the sale of your business.
If you are hiring staff, this means you might have to register with Revenue for PRSI and PAYE. As an employer, you now have certain obligations. Make sure you take all aspects of being an employer into account, such as minimum wage, leave, and social insurance for your employees.
Learn more about the supports available for people setting up their own business.