Advice on cashflow planning and asset protection for SMEs

As a business advisor it is critical to be active not just reactive to client's needs.  Whether meeting an existing client or a new client, I always try to anticipate strategy and tax planning advice. You might be interested in some of the discussion points that I bring to nearly every meeting. They include:


· Tax minimisation
· Cash flow
· Loss planning
· Personal and business asset protection
· Use of new 'tax-free' company for new business ideas
· R&D tax credit regime
· Transfer assets to the next generation
· Use of holding company to avoid tax
· Use of non-disclosure structures

Taken on their own these headings are not very meaningful. Some examples of the types of discussion that this list would generate include:


CASHFLOW - have you changed your year-end to defer a tax liability, or have you looked at using personal losses (shares/property) to reduce the cost of taking drawings from your business. There are a number of tax strategies that will enable you reduce the cost of taking a salary thereby enabling you to reduce tax, access cheaper working capital and improve cashflow.


ASSET PROTECTION - most companies have cash and/or valuable business assets sitting in the same company that carries on the trade. The issue with this is that there is no protection in the event of business difficulty. Look at separating cash/assets - whether by taking out of the company (tax efficiently) or by moving them around your corporate structure. With planning, you can protect your assets with little/no tax cost.


NEW 'TAX-FREE' COMPANY - have you started a new business or restructured your existing business (scale up or scale down) - are you using the new 'tax-free' company to avoid paying corporation tax for 3 years?


R&D TAX CREDIT - many qualifying companies are underclaiming this relief and many qualifying companies are oblivious to its benefits. This relief entitles a business to a 'cash' rebate of 37.5% of qualifying R&D expenditure. So if your business has an R&D activity examine your costs and put a claim together.


TRANSFER TO THE NEXT GENERATION - Did you know that transferring assets to your children can trigger CGT (for you), gift tax (for them) and also stamp duty (for them). Currently, there are reliefs which significantly reduce - and in many cases wipe out - the CGT and gift tax liabilities. However the Commission on Taxation made recommendations which if introduced would significantly increase the tax burden for SMEs on the transfer of family businesses.  These proposals were passed over in the last Budget but there is concern that they might be implemented in the next Budget this December.  For this reason, I recommend that family businesses consider early transfer of assets to avoid tax.


USE OF HOLDING COMANY - 99% of Irish owner-managed companies are set up with one trading company. By establishing a holding company you may be able to structure your affairs to avoid CGT on a future sale/wind-down - a tax saving of 25%.


NON-DISCLOSURE STRUCTURES - If you have a company you are probably submitting your financial details to the CRO each year. This information is freely available to your competitors, your employees, your landlord, journalists and others. You can avoid having to disclose this information by implementing a non-filing structure. Many PR companies and larger family owned Irish companies have implemented this type of structure for various reasons.