For any SME owner/manager, it’s natural to become absorbed in the day-to-day running of the business and to lose sight of short, medium, and long-term goals. Tax optimisation is an essential but often-neglected area writes Tommy Walsh, Head of Taxation at CDS Law & Tax LLP, a leading Irish law firm specialising in taxation, mergers, acquisitions, corporate structuring and property
Whether you are an individual, a sole-trader, a partnership or a limited company, tax is a major cost consideration for all small to medium-sized business.
It is vitally important that SMEs are structured correctly to minimise this cost and ensure that common tax pitfalls and opportunities are identified.
For any SME owner/manager, it’s natural to become absorbed in the day-to-day running of the business and to lose sight of short, medium, and long-term goals. Tax optimisation is an essential but often-neglected area and yet making the correct and informed decisions can dramatically improve your day-to-day cashflow and impose structure and purpose on your long-term business plan.
Due consideration should be given to the structure that best suits your personal and business objectives. The correct structure will depend on your objectives and projections for the business: Is there an exit strategy? Is it your intention to sell the business in five to 10 years? Do you want to build the business to pass on to the next generation? Have you optimised your pension plan?
Having a clear objective in place with regard to what you want to get from the business allows you to put a tax plan in place early on, which can be very beneficial as some of the major tax reliefs and exemptions are often time sensitive.
Employee turnover can also have a negative impact on the performance of a business. A valued team member resigns out of the blue and you’re at a loss. Now is the time to confirm your business is doing the right things to drive job satisfaction and, ultimately, employee retention.
It is therefore important to understand not only the reasons behind staff turnover but also the tax efficient mechanisms which employers can introduce.
One of the most common mistakes made by SME owners when it comes to tax planning is treating it as a post-year-end exercise. Tax planning should be an ongoing process with important action items to take throughout the year.
Smart tax planning can not only lower the amount of taxes that you owe but also offer far more long-term benefits. Discussing your longer-term business plans with CDS Law & Tax LLP, at the earliest opportunity, will ensure effective tax planning for your business.
Should you wish to discuss this or any other tax optimisation/planning opportunities, talk to the tax team in CDS Law & Tax LLP, 4 Denny Street, Tralee or call 066-7169033.
· * Tommy Walsh is the Head of Taxation at CDS Law & Tax LLP, a leading Irish law firm specialising in taxation, mergers, acquisitions, corporate structuring and property