TAX: 10 Things Every SME Owner Should Know

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With thanks to the O2 Ideas Room for blog posts…

At TaxandLegal we provide tax advice to SME owners on transactions, business structures, capital raising, pensions and more. The following are ten things we believe every business owner should be aware of:

1. If you have a patented invention or innovation, then the income derived from the exploitation of that patent can be exempt from tax.

2. If you purchase energy efficient equipment (approved by Sustainable Energy Ireland), then 100% of the cost can be claimed as a capital allowance in year 1.

3. Under the business expansion scheme and/or a collective pension investment scheme, those who invest in your business can receive tax relief for doing so.

4. Even if you agree with someone that they are an independent contractor to your business, Revenue can look beyond that label and determine that the person is an employee – in which case, PAYE would apply.

5. An employee can invest up to €6,350 in his or her employer company and claim tax relief for the amount invested.

6. If you borrow to invest in your company, the interest paid on the loan can be allowed as a deduction from your income.

7. Losses this year can be offset against profits in previous years and trigger a tax refund.

8. An approved employee share scheme allows employee bonuses to be re-invested back into the business – improving morale and capital.

9. Many businesses are currently sitting on “rainy day” cash. However, if your company is controlled by 5 or fewer people and has not distributed profits from rent and other investments, it may be liable to a “close company surcharge” of 20%.

10. If you are contemplating riding out the current economic storm and retiring once things pick up, remember a) the reliefs from CGT and Gift Tax on retirement are tricky and require advance planning, and b) pension contributions remain one of the most effective tax planning tools.

If you would like to know more, please feel free to contact us for a no obligation chat. Visit: