Uncategorized

Partnerships

July 6, 2011 – 5:17 pm

Like the ‘Sole Proprietorship’, the Partnership is almost totally exposed to third party actions. Legally, a Partnership can often be formed with no written agreement, however, one would be ill advised not to set-out the rights and obligations of the partners. If no such agreement is in existence, standard legal interpretations will generally be imposed unless there is clear evidence that the partners are subject to their own set of criteria, which would be the case for those belonging to a professional institution such as the Law Society. One point that should always be born in mind is that in the case of economic difficulties each partner will be liable not only for his shareholding but for all partnership debts which means that any person with assets should be very careful before going into business with a less well off counterpart as whilst the gains will be equal the potential losses will not!

ADVANTAGES
1. It brings together two or more people who have a personal interest in the welfare of the business enterprise.

2. A partnership is generally seen as more professional than a sole proprietorship

DISADVANTAGES
1. There is always the potential of partnership disagreements.

2. Each partner’s personal assets will often be subject to creditor action, no matter his personal obligations/liabilities under the’ partnership agreement’.

3. Generally, the burden of being a partner falls unfairly on the wealthier individual. In other words, if X and Y become partners but X has twice the assets of Y, then – accepting an equal partnership – X and Y will share equally in the profits but X has twice as much to lose should the partnership fail.

4. The cost of drafting a ‘partnership agreement’ can be prohibitive. As with sole proprietorships, the problem with partnerships is that it is very difficult, if not impossible, to separate partnership business activities from the individual partners.

5. A partnership structure inevitably requires ‘insurance’ cover to be taken out. In most cases this will cost far more than a Standard Irish “Limited Liability” company.

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Business Advice Uncategorized

National Insurance (NI)

July 6, 2011 – 5:17 pm

National Insurance (NI) is the name given to the British social security tax; national insurance contributions are paid by employers, employees and the self-employed to a national fund from which benefits are provided in certain events, such as, unemployment, sickness or other incapacity, maternity, and retirement. In essence NICs are a tax on earned income and are calculated according to an employee’s earnings, and also on benefits in kind that an employer gives an employee.

National Insurance Contributions are divided into four classes, with Class 1 paid by employees (primary contributions) and employers (secondary contributions), Classes 2 and 4 by the self-employed, and Class 3 by anyone wishing to make up payments to meet the requirements for receiving associated state benefits.

People who are self-employed are legally obliged to pay Class 2 National Insurance Contributions as a flat rate payment collected by the Inland Revenue. The weekly contribution rate is £2 for earnings over £4,095 per annum. Contributions are payable between the ages of 16 and retirement age (60 for women and 65 for men). These contributions count for Incapacity Benefit, Retirement Pension, Widow’s Benefit and Maternity Allowance but not for contribution-based Jobseeker’s Allowance. To start making contributions form CWF1 ‘Notification of Self-employment’ must be completed. Any subsequent changes in circumstances, such as a change of address, trading title or even telephone number, should be reported to the Inland Revenue. In addition, a self-employed business may have to pay Class 4 NICs which are based on a percentage of annual profits. It should be noted that a self-employed person does not need to pay NICs if they are sick or have Small Earnings Exception.

Employees are liable to pay Class 1 NIC on their earnings in addition to a further secondary contribution due from the employer but contributions are only due when earnings exceed a ‘primary threshold’ (currently £89 a week). The amount payable is 11% of the earnings above £89 up to earnings of £595 a week. There has been a further 1% charge on earnings above £595 a week since 6 April 2003. Secondary contributions are due from the employer of 12.8% of earnings above the ‘primary threshold’. Employer’s payments have no upper limit and it should be noted that employers providing benefits in kind such as company cars for employees have a further NIC liability under Class 1A. Contributions are payable on the amount charged to income tax as a taxable benefit.

Class 1 contributions and PAYE are payable at the same time (monthly). Class 1A contributions are not due until 19 July after the tax year in which the benefits were provided. Earnings for NI purposes include salaries and wages, holiday pay, bonuses, commissions and fees and certain termination payments. Expense payments will normally be outside the scope of NI provided that they are specific payments in relation to identifiable business expenses. Round sum allowances are not recommended as they give rise to a NI liability. As a general rule benefits do not attract Class 1 NIC liability with the exception of stocks and shares, most vouchers, other assets which can be easily converted into cash and the payment of an employee’s liability by an employer.

Directors are employees of the company and are therefore obliged to pay Class 1 NIC. Employee’s NIC liability is higher than for a Self-employed individual with profits of an equivalent amount. Hence there is an incentive to claim to be self-employed rather than employed. Normally if a person has investment and profit responsibility, managerial control for their operation, the right to employ and dismiss and the right to work and not to work for client, that person is in business for their own account. In practice it can be a complex area where professional advice should be sought at an early stage and in any event certainly before obtaining a written ruling from the Inland Revenue – should Inland Revenue discover that someone has been wrongly treated as self-employed, they will re-categorise them as employed and can be expected to seek to recover arrears of contributions from the employer.

Inland Revenue is expected to make over 100,000 compliance visits annually. It is advisable to keep records supporting any NI payments made as Inland Revenue is entitled to collect any additional NIC that may be due for both current and prior years. Any arrears may be subject to interest and penalties.

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Business Advice Introduction

Marketing

July 6, 2011 – 5:16 pm

The reasons you are wanting to go into business vary greatly from one individual to the next – before embarking on a business venture it is crucially important to work out what you want from your business and ask yourself what makes you different from the competitors. The next step is to give your business something you can be remembered by… effective marketing is the solution

It may be obvious but nothing says more about your business, on initial impact, than the business card you leave behind. Spend some time thinking about what marketing materials you need and allocate some of your expenses to having your collateral materials designed and printed. They are what makes you stand out from the crowd.

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Business Advice

Feel free to join

July 6, 2011 – 5:16 pm

Whereas certain professions require you to be licensed (e.g. plumbers wishing to work on gas fittings and appliances are legally required to register with the Confederation for the Registration of Gas Installers), most new entrepreneurs/businesses are not legally obliged to be licensed or to belong to any certain organisation. Some organisations though offer benefits like free legal advise and all of them offer an opportunity to network get support and meet other likeminded people. The following organisations will give you a little taster of national SME organisations.

The Federation of Small Businesses is UK’s largest organisation working for small businesses and lobbying on their behalf. Registration fee is £30 and annual subscription fees start from £100. Benefit range includes legal protection, credit card, vehicle solutions and medical plans just to mention few. For more information, please visit www.fsb.org.uk.

The Forum of Private Business (FPB) is a not-for-profit pressure group representing over 25,000 businesses in the UK. FPB offers a wide range of business solutions and benefits to help its members grow successfully and profitably. For more information, please visit www.fpb.co.uk.

The Irish Business and Employers Confederation (IBEC) has over 7000 members. IBEC represents its members’ interests to Government, the trade unions, state agencies, other national interest groups as well as to the general public and aims to shape policies and influence decision-making in a way that both develops and protects members’ interests and also contributes to the development and maintenance of an economy that promotes productive employment and enterprise. IBEC membership offers a wide range of benefits – for more information please visit www.ibec.ie.

The Irish Small and Medium Enterprises Association (ISME) also offers a wide range of membership benefits and aims to guarantee that small and medium enterprises in Ireland have an independent voice. For more information, please visit www.isme.ie.

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Business Advice

Companies Act

July 6, 2011 – 5:15 pm

The Irish Companies Act which although similar to the legislation employed in Northern Ireland and the United Kingdom, nevertheless is considered to be more restrictive.

The principal features of Republic of Ireland companies are:
1. Directors must be individuals and not corporate entities.
2. At least one of the named individual directors must be resident in Ireland. There are no other constraints on non-resident or foreign directors.
3. A company secretary can be either an individual or company and may or may not be resident in the State.
4. All companies must have at least one subscriber/shareholder at the time of incorporation although as with the other positions mentioned above initially these will be taken by your company registration agent who upon registration will resign and appoint the permanent officers.
5. The company must have a real and substantive presence in Ireland and not merely a local registered office.
6. The company must at the time of incorporation be very specific about its intended objects and complete a NACE Code.
7. The Companies Registration Office (CRO) does not offer a same day expedited service as available in the UK and many States in the United States. However, In-a-Minute Companies is part of the Fe Phrainn Scheme, which means that company registration should take no more than 10 working days.
8. Irish law demands that all limited companies have an official seal.
9. Any alterations to a company’s structure will normally require the payment of a small government duty.
10. Stamp duty is approximately 1%, which is levied upon issued but not nominal share capital.
11. Shares should ideally be denominated in Euros (€’s) as to denominate shares in Irish Pounds (Ir£’s) will result in such shares having to be cancelled when this currency is no longer legal tender involving potentially significant expense as shares would have to be cancelled and re-issued in the new currency.

To Electronically Register Your Irish Limited Company for €325.00 + VAT including hardcopy documents and a special main objects clause for trades people (worth an extra €25) click below:
www.startingmybusiness.biz/irlltdtrades

Directors’ and Secretary’s responsibilities
Every limited company in the UK must have at least one director and a secretary; these can be either individuals or corporate entities. There are no nationality or age restrictions with the exception of Scotland where the minimum age is 16. Those disqualified by the court and undercharged bankrupts are not eligible.

The position of a director is one of responsibility and not one to be undertaken lightly. Directors must comply with the Companies Act and the general law and they have three primary duties namely to act honestly and in good faith and in the best interests of the company as a whole (fiduciary duty), to exercise such a degree of skill and care, when carrying out their duties as a director, as might reasonably be expected from someone of their ability and experience (duty of skill and care) and a duty to carry out the statutory obligations imposed by the Companies Act and other legislation.

Company secretary’s duty is to ensure company rules (Memorandum and Articles of Association) are followed and official records maintained. They are also responsible for keeping the Registrar of Companies informed of any changes of directors or secretary, filing annual returns and resolutions to change the memorandum and articles. Failure to comply can result in heavy fines or for the company to be struck off the register. Company Secretary also minutes all meetings of the board and shareholders and maintains statutory registers, such as registers of shareholders and directors. Certain registers must be kept at your registered office where they can be inspected by the members of the company and in some cases by the general public.

Irish companies require at least two individuals over the age of 18 to act in the capacity of director with at least one such director being a permanent resident of the country. In simple terms, the directors constitute the decision making body of a company commonly known as the board of directors and are liable at law for a company’s actions. The directors have a duty of care to the shareholder(s) of the company to act in the company’s best interests even where doing so might come into conflict with their own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards – In which case, the corporate “veil” can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their decisions have negative consequences for the company.

A company secretary occupies similar pivotal position in an Irish company than he/she/it does in a UK company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a director a Company Secretary has a duty of care to the shareholders/subscribers.

Northern Irish companies require at least one individual over the age of 18 to act in the capacity of director with at least one other person also acting as either the company secretary, shareholder and/or a second company director. In other words, in all cases there must always be at least two legal entities to form a Northern Irish company. In simple terms, the director/s constitute(s) the decision making body of a company commonly known as the board of directors and is/are liable at law for a company’s actions. The director/s have a duty of care to the shareholder(s) of the company to act in the company’s best interests even where doing so might come into conflict with their/one’s own personal interests. The concept of a company being a fully separate legal entity to the directors is accepted in Northern Irish law save where they have acted in a fraudulent and/or reckless manner which could not be deemed reasonable by normal standards – In which case, the corporate “veil” can be lifted fully exposing the individuals behind a company to the full rigors of both civil and criminal law. However, in the vast majority of cases this will not occur provided the board of directors have acted in good faith even if their/one’s decision(s) have negative consequences for the company.

A Company Secretary occupies a pivotal position in a Northern Irish company and has direct legal responsibility to maintain company records, file annual returns and/or carry out any other functions that may be elucidated within the Memorandum & Articles of Association. Like a Director a Company Secretary has a duty of care to the shareholders/subscribers.

LEGISLATION AFFECTING RETAIL TRADE
There are number of laws affecting the retail trade in general. These deal from consumer rights to trading hours and employees’ rights. Depending on what area you trade in (e.g. alcohol and/or tobacco), you may also be legally obliged to get a licence. For more detailed information on retail legistration, please refer to our CD entitled “How to Set Up a Retail Business”

LEGISLATION AFFECTING HOSPITALITY TRADE
There are number of laws affecting the hospitality trade in general. These deal from consumer rights to trading hours and employees’ rights. There is specific legislation relating to different areas of hospitality. For more detailed information on retail legistration, please refer to our CD entitled “How to Open a Hotel or Restaurant”

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Uncategorized

Legal Compliance

July 6, 2011 – 5:15 pm

These include keeping Minutes of the Board and both General and Extra Ordinary Annual General Meetings as well as submitting both annual accounts and annual returns to the Registrar of Companies and/or Inland Revenue.

Annual Returns
Under S.363 of the Companies Act 1985, every limited liability company is legally required to submit annual return information on their company to Companies House every year. An annual return can be described as a snapshot of general information about a company’s directors and secretary, registered office address, shareholders and share capital. It must contain the following information:
• the name of the company;
• its registered number;
• the type of company it is, for example, private or public;
• the registered office address of the company;
• the address where certain company registers are kept if not at the registered office;
• the principal business activities of the company;
• the name and address of the company secretary;
• the name, usual residential address, date of birth, nationality and business occupation of all the company’s directors;

If the company has share capital, the annual return must also contain:
• the nominal value of total issued share capital;
• the names and addresses of shareholders and the number and type of shares they hold or transfer from other shareholders

Every company must deliver an annual return to Companies House within 28 days of its made-up date (the date to which the annual return is made-up, usually the date of incorporation or the made-up date of the previous annual return registered at Companies House) at which all the information in an annual return must be correct. Companies House will not register an annual return Form 363a if it shows information that differs from the public record unless you have notified Companies House of the change on the appropriate statutory form. It is important to remember that failing to file the annual return or filing it late is a criminal offence, for which both the company and its officers can be prosecuted.

Companies House will send an annual return to the registered office address of every company about two weeks before the made-up date. This document is pre-printed with company information already held on the public record and most companies use this form to make their annual return. This form is known as the ‘shuttle’ annual return (Form 363s). As an alternative to the shuttle annual return, you can use the annual return Form 363a which does not include any pre-printed company information.

A company with share capital must provide a ‘full list’ of all its members on its first annual return following incorporation and every third annual return after it has provided a full list. The intervening two annual returns need only report changes to shareholder information that have taken place during that year – that is, shares transferred and particulars relating to shareholders who have become members or ceased to be members.

As stated it is the responsibility of the officers of the company to ensure that annual return is completed returned to Companies House within 28 days of its made-up date with the appropriate filing fee of £15. Documents may be delivered to the Registrar by hand (personally or by courier), including outside office hours, bank holidays and weekends to Cardiff, London and Edinburgh or sent by post or by the Hays Document Exchange service (DX). If you send documents, please address them to:

For companies incorporated in England & Wales:
The Registrar of Companies
Companies House
Crown Way
Cardiff CF14 3UZ

DX33050 Cardiff

For companies incorporated in Scotland:
The Registrar of Companies
Companies House
37 Castle Terrace
Edinburgh EH1 2EB

DX ED235 Edinburgh 1

Please note that Companies House will not accept any statutory documents by fax and will only acknowledge receipt of documents if you provide a stamped addressed envelope.

Further information, guidance booklets and statutory forms are available free of charge from Companies House website www.companieshouse.gov.uk or you can telephone 0870 3333636 or write to Stationery Sections in Cardiff or Edinburgh. Forms can also be obtained from accountants, solicitors, legal stationers and company formation agents.

Just like within the UK, all Irish companies must file an annual return by using From B1 once a year. Annual Return must be delivered to the Companies Registration Office (CRO), Parnell House 14 Parnell Square, Dublin 1 within 28 days of the effective annual return date. In most cases audited accounts are to be attached to the annual return and in every case the return must be accompanied by the appropriate filing fee (€30). Should the 28 day filing period expire on a public holiday, Saturday or Sunday or, the 28 day period is extended to the next working day.

There are two ways to determine the correct annual return date. For companies incorporated before 1 March 2002, the annual return date allocated is either the anniversary of the date which is six months after the date of incorporation or if an annual return was filed by the company before 1 March 2002, the anniversary of the effective date of that return. For companies incorporated after or on 1 March 2002, the first annual return date will be six months after the date of incorporation. It is worth noting that accounts are not required to be filed with the first annual return. A company’s annual return date in future years is 12 months from its previous years ARD (unless, of course, the company alters that date).

It is possible to set the annual return date to an earlier date by filing a return made up to a date more than 14 days before the company’s current annual return date. The company’s future annual return dates years will then fall on the anniversary of the date to which the return has been made up. Please note that If the annual return is made up to an earlier date, it still needs to be delivered to the CRO within 28 days of its made up date. If need to be it is also possible to extend the annual return date by filing Form B73 but this can be done only once within a five year period. If your company wishes to extend its current ARD, you need to deliver an annual return to the CRO within 28 days your company’s current return date (no accounts needed), and nominating on Form B73 the new date, which may not be later than six months after the first annual return date. Please note that B73 forms delivered outside the above-mentioned 28-day period will not be accepted by the CRO.

Should you fail to submit your annual returns on time, a late filing penalty of €100 becomes due on the day after the expiry of the filing deadline, with a daily penalty amount of €3 accruing thereafter, up to a maximum penalty of €1,200 per return. On top of this CRO may impose an on-the-spot fine where the company has a record of persistent late filing and/or summary prosecution of the company and/or any officer in default. Fines of up to €1,904.61 can be imposed on a conviction for breach of the annual return filing requirements. It is also worth noting that just like within the UK an Irish company may be struck off the register and dissolved for failure to file an annual return. In this case the assets of the company become vested in the Minister for Finance, and should the business continues to trade, the owners will no longer enjoy the benefit of limited liability and are therefore personally responsible for any debts incurred so long as the company remains dissolved.

Further information, guidance booklets and statutory forms are available free of charge from Companies Registration Office website www.cro.ie or you can telephone (0) 1 804 5200/Lo call 1890 220 226. Forms can also be obtained from accountants, solicitors, legal stationers and company formation agents

Accounting requirements
Every company must prepare accounts/financial statements and keep accounting records. A company’s financial year is determined by its accounting reference date – the date to which it will make up accounts every year – and for newly incorporated companies accounting reference date is the last day of the month in which the anniversary of incorporation falls plus or minus seven days. After incorporation a company has nine months in which to give notice of its accounting reference date. A company’s accounting reference period can be changed by giving notice to Companies House on form 225 but it cannot exceed 18 months.

The Companies Act require companies to keep accounting records to show and explain company transactions and reflect the company’s financial position with reasonable accuracy. The directors are responsible for the preparation of accounts and for ensuring that the balance sheet and profit and loss accounts give a ‘true and fair’ view’ of the company’s financial position and its transactions and also for compliance with the requirements of the Companies Act 1985. Records to be maintained on a day-to-day basis include list of assets and liabilities and details of cash receipts and payments, a statement of stock held at the end of each financial year together with stock taking details and a sufficient description of services and goods purchased.

Accounts must be filed by a private limited company within 10 months of the accounting reference date. New companies with accounting period in excess of 12 months from the date of incorporation have their filing period reduced to 22 months from incorporation. It is worth keeping in mind that the end of given period will end on the same date as the accounting reference date and should there not be a corresponding day in the last day of that month as well as the fact that the directors of the company are liable to fines should there be a delay in filing. Accounts must be in English or if you trade in Wales in Welsh. In latter case an English translation must however be annexed to the accounts sent to the Registrar. Accounts are to be approved by the board of directors and be dated and signed by a director on behalf of the board. A director’s signature is also required to be on the company’s balance sheet.

Companies that have not had any significant accounting transactions (have not traded) during their financial year are classified as dormant. Dormant companies are required to file non-trading accounts with the Registrar of Companies and in accordance with Companies Act s250 to pass a special resolution exempting it from the requirement to appoint auditor. Where a company becomes dormant after trading, if may pass the above-mentioned s250resolution if it has been dormant since the end of previous financial year and provided that there is no other reason why trading account should be submitted (qualifies as a small company and there was no reason to prepare group accounts for that year).

The requirement for an audit for small companies with gross balance sheet assets less than £1.4 million and annual turnover less than £350,000 was abolished in 1994. Full audited accounts are still to be presented to the shareholders but The Registrar of Companies will be satisfied with abbreviated balance sheet. The balance sheet must however include a statement by the directors saying that the company was eligible to take advantage of the exemption.

Irish companies are also required to keep proper books of account which give a true and fair view of the company’s financial affairs. Companies are also required to disclose details of their accounts at the Annual General Meeting and to attach a copy of those accounts to the annual return filed with the CRO. Should a company fail to comply with the above-mentioned, the annual return will not be accepted by the CRO. In addition both the company and every officer of the company who is in default will be liable to a fine not exceeding €1,905.

The accounting requirements vary for different company sizes and types but in general limited companies (public and private limited companies) are required to prepare and file annual accounts in accordance with the Companies (Amendment) Act 1986. Small sized companies can be exempted from the full extent of the requirements relating to annual accounts in respect of any financial year provided that in that year and the financial year immediately preceding that year the company’s balance sheet total does not exceed €1.9m, its turnover does not exceed €3.81m and it has 50 or less employees (please note that only two of the three conditions must be satisfied). The fact that a company is entitled to an exemption on the basis of its size must be certified by its auditors. Small companies may also be exempted from the requirement to have accounts audited.

It is worth noting that the currency of the Republic of Ireland is Euro and that accounts for financial periods ending on or after 1 January 2002 are and will be rejected by CRO unless completed in a currency which is legally effective at the date on which the financial year ends.

For more detailed information, please contact Companies Registration Office website www.cro.ie or you can telephone (0) 1 804 5200/Lo call 1890 220 226 or Revenue Commissioner www.revenue.ie

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Uncategorized

Health & Safety

July 6, 2011 – 5:14 pm

The health and safety information listed below applies to the United Kingdom and Northern Ireland. Generally very similar legislation applies in the Republic of Ireland. For more detailed Irish information please click visit www.hsa.ie

All employers have a responsibility to their staff within the workplace. The current legislation derives from the implementation of the Health and Safety Act at Work 1974 and the prime responsibilities under the legislation for employees are to provide a safe place of work for the employees which is taken to mean safety from physical harm as well as from harassment, bullying and discrimination and for employees to take reasonable care of both their colleagues and themselves. It is important to realise that as an employee you are responsible for the health and safety of everyone affected by your business, not only employees but also anyone working in or visiting your premises, people affected outside your premises, and anyone affected by services and products which you supply, produce or design. Alongside the Health and Safety at Work Act are a number of regulations, which address areas of workplace health and safety in more detail including (but not restricted to):

• Personal Protective Equipment at Work (PPE) Regulations 1992
• Manual Handling Operations Regulations 1992
• Provision and Use of Work Equipment Regulations 1998
• Management of Health and Safety at Work Regulations 1999
• Control of Substances Hazardous to Health Regulations 2002 (COSHH).

All new businesses must register for health and safety purposes with either the Health and Safety Executive (most factories, workshops etc) or your local authority (most offices, shops, catering businesses).
Under the Management of Health and Safety at Work Regulations, employers must carry out risk assessments and eliminate or significantly reduce any risks identified. Where there is likely to be minimal health and safety risk a simple audit held once a year is sufficient. For more details visit www.hse.gov.uk Employers are also obliged to have and maintain a Safety Policy which details company’s health and safety aims, the responsibilities of both employers and employees and gives details of the company’s Safety Officer. Under the Health and Safety (First Aid) Regulations 1981 employers should make all the necessary arrangements to provide adequate first aid equipment, facilities and personnel. This includes a suitably stocked first aid box, and at least one appointed person to take charge of all first aid responsibilities. You also have a duty to tell your employees where the first aid box is located, who the appointed first aider is and how to report an accident. The exact number of first aid personnel and the level of first aid equipment required varies depending on how dangerous the work is and how many people you employ.

There are a number of health and Safety regulations that apply to the Tradesperson specifically namely Construction (Health, Safety and Welfare) Regulations 1996 (building work), Construction (Design and Management) Regulations 1994, Lifting Operations and Lifting Equipment Regulations 1998, Provision and Use of Work Equipment Regulations 1998, Confined Spaces Regulations 1997, just to name few.

There are number of initiatives which suggest that Health and Safety Act at Work may shortly be revised. Also, British law is continuously being tightened up and rationalised as part of the European Commission’s programme to harmonise legislation across the EU. Health and Safety can be complicated and if in doubt seek professional advise as employers can and will be held liable for compensation for those injured at work or as a result of their work or activities. The Health and Safety Executive won 84% of cases that went to court last year, with the average fine rising to £12,000 and by 40% across all scales. For more information, please call Health and Safety Executive Infoline on 0870 154 1500 or visit www.hse.gov.uk

Employers’ Liability Insurance
Under the Employers’ liability Act 1969 as amended, every employer carrying on a business within the United Kingdom is obliged to take out insurance policy again liability for bodily injury or disease sustained by his/her employees arising out and in the course of their work. The insurance taken must be approved and issued by an authorised insurer.

Under Employers’ Liability Regulations 1998, employers are required to insure for minimum of $5 million per occurrence and retain copies of insurance certificates for the minimum period of 40 years. As a result of the level of damaged awarded and the growth in litigation, the cost of covering employers’ liability has risen dramatically during recent years. The insurance market is also trying to limit its exposure by making changes to policy wording to exclude liability so it is important to be extra careful when purchasing insurance cover.

Employers liability insurance is not compulsory in Ireland but the government is proposing to change this in the near future.

Public and Product Liability and Professional Liability Insurances
Unlike Employers’ Liability Insurance both Public and Product Liability insurances are, for most businesses, voluntary. Public Liability insurance protects the insured against his or her legal liability for bodily injuries to third parties or for damage done to property. The basis for premium calculations will depend on either on the pay roll or on the size and number of business premises.

Product liability insurance also covers the insured against third parties but this time the protection is against legal liability arising from death or injury or loss of or damage to property caused by goods, sold, repaired, supplied, serviced or tested by the insurer. If you are to take product liability insurance, take extra care to ensure that it covers all the territories in which your products are sold. If goods are exported or sold overseas additional cover may be needed; for example the cover for claims arising in the United States is often restricted due to the high level of damages awarded in the US.

Professional indemnity insurance protects the organisation and its employees from liability to compensate third parties who have suffered loss or injury due to professional negligence. The professional person is expected to exercise the degree of skill expected from an average members of his/her profession with exceptional levels expected only from specialists. The thing to remember with indemnity insurance is that you need to be covered when a claim is made, not for when the mistake is made – if you are ceasing to trade or are retiring cancelling your policy might not be such a good idea as somebody could still make a claim against you.

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Uncategorized

Franchising?

July 6, 2011 – 5:14 pm

Technically a business franchise exists when a legal person (i.e. an individual or company) provides consideration to a third party franchisor who/which in return offers a business system, intellectual property rights, training based upon an existing formula as expressed within a normally written agreement. In simple terms franchising can be described as aspiring to replicate a successful business format. In most cases, each business outlet is owned and operated by the franchisee and is the franchisee’s very own business. However, the franchisor normally retains control over the way in which the products and/or services are marketed, sold and/or distributed. In certain cases, the franchisor may also seek to retain “rights of pre-emption” should a franchisee wish to sell his/her/its franchise in the future. A right of pre-emption being a right to purchase shares before they can be offered to third parties, i.e. a right of first refusal.

Compared to starting your own business, franchising can provide a safer route into self-employment. Research shows that out of all the businesses started today only 20% will be trading in 5 years time – with franchising the figures are reversed so choosing a franchise could well give you a better change of success . As stated before, as a franchisor you will be buying into a business concept that is already operating and you are in business for yourself but not by yourself. The problems that you are likely to encounter as well as the mistakes that are lurking around the corner have in all likelihood already been met and dealt with by the franchisor and the knowledge acquired passed onto you. The Franchisor will also provide initial training and support the Franchisor through the growing stages. Where franchising can be safer than starting your own business, it still requires a lot of hard work and commitment – it requires more than just choosing a franchise, paying the necessary fees and being successful. The franchisor will provide name, support, guidance and a proven format but he or she will not do the work for you. In the end it will be your hard work and skills that make or break the business and it is vitally important to take enough time to consider not only the viability of your potential franchise brand but also the financial (and time) commitment required by you and whether of not franchise will be enough to fulfil your expectations. Most importantly make sure you talk to other franchisees to hear their views and insist on seeing solid evidence of business with sound proof of at least one successful franchise and no noteworthy record of failures.
The Franchise Agreement is the bedrock of the franchise relationship and potential franchisees are strongly advised to ensure they fully understand the Agreement they are going to sign and the obligations and restrictions contained therein. A specialist Franchise lawyer should be consulted, as he/she will be able to examine the Agreement carefully and advise on matters that require particular attention. In general special attention should be paid to the term (normally seven years), renewal arraignments (should be able to renew at least once without changing the terms and conditions), sales/assignment, the fee structure, territory (practically impossible to get exclusive territory), property (normally remains with the Franchisor after the agreement finishes), restrictions, advertising and termination.

After the legal formalities have been sorted, it is time to take care of the finances. In practise the franchisee pays the franchisor an initial franchise fee and if necessary the costs of shop fitting together with the costs of equipment required to run the business. Once established, the franchisee will normally pay the franchisor a further monthly payment, royalties, based on the turnover. Effectively this is where the franchisor gets paid for the ongoing support, which will keep him/her motivated to do his/her best to ensure the franchisee’s continued success.

Despite the 2003 NatWest/BFA survey findings that 26% of new franchisees were women – a 10% increase from last years survey – women are still under-represented in franchising. It is worth noting that franchising offers openings for women seeking flexible working hours to juggle the responsibilities of home and to add to the family income. Opportunities are available in training & recruitment, building and property services, estate agency and letting services, health & beauty and food & drink. In the United States more than a third of all franchisees are women. The UK franchise industry is aiming to match this figure.

The British Franchise Association works with Everywoman under the European Commission Social Funded CREATE project to promote franchising to groups under-represented in the current franchise market, women being a primary audience. Should you be interested in this option, contact British Franchise Association on 01491 578050 (www.british-franchise.org), Everywoman on 0870 746 1800 (www.everywoman.co.uk) or if you are in Ireland visit www.franchisedirect.ie.

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Need Money?

July 6, 2011 – 5:13 pm

There are many sources of funding available ranging from overdrafts to equity financing. Most are designed to meet particular needs and the choice will depend on the type of business, its structure and obviously the stage of its development. Due to the wide range of funds available making the correct choice can prove difficult. To determine which path is right for you need to pose yourself a series of questions: what risks are you willing to take, have you got savings, are you willing to invest friends and relatives capital, how long have you got to raise finance, are there any grants available, will you be able to cope with repayments, are you sure that the return on the investment is going to be worthwhile or even enough and also what type of business you are in as some business types are seen a high risk businesses.

The first and most important step in raising finance is a solid and convincing business plan. There is a fierce competition for the attention of banks, venture capitalists and other investors and potential investors receive hundreds of business plans every year. One business angel once stated that he received more than 300 a year, and therefore only read the first page of each. If you are to win backing for your new company, your business plan must stand out and should always be fine-tuned according to the target audience. Business plan templates can be downloaded from the Microsoft Office website (www.microsoft.co.uk) and also number of bank will offer free templates.

The most common ways of funding a business are your own money or the money of family and friends. If you have the money readily available this can be beneficial as there is neither bureaucracy nor waiting periods involved. You should however remember that if something goes wrong, you will have nothing to fall back on and losing family and friends over a business is rarely worth it.

You might well need to borrow some money to start your business. That will usually mean going to a bank and in fact, approximately between 60% and 70% of small businesses call on their local bank to borrow a sum of money to get the company up and running or to fund growth. Banks will however always ask for security and if you are unable to provide it you will most likely have to keep on looking. Also, always remember that banks are not the only source of finance and it would be advisable to obtain specialist financial advice from an Independent Financial Advisor. This is useful because they are in position to provide an objective analysis of your financial situation and have access to the whole of the financial market.

Grants range from local initiatives run by local development agencies to Business Link funding as well as private funds across the country and might be more suitable if you are looking for a smaller amount of money. Grants are one of the cheapest forms of finance but can sometimes have non-financial conditions attached to the grant such as number of people employed or restrictions on items on which the money can be spent. To find out what grants and loans are available, visit www.j4b.co.uk.

Lastly, you could also try to find an Incubator or Business Angel. Incubators (www.businessincubator.co.uk) normally take an idea at an early stage and support it until it reaches the next stage of growth. Incubators range from university business support units to pure venture capital led incubators and are generally backed by people with varying amounts of experience. Business Angels (www. nationalbusangels.co.uk) are private investors (often senior managers or former business owners or) who have a certain amount of capital in their bank accounts and who are interested in directly investing in private companies. In return for their investment (from approximately £25,000 to one million pounds) as either a single angel or a network of angels, the party involved will generally ask for an equity stake and perhaps take a seat on the company’s board.

Whichever way you decide to seek finance, always shop around for the best deal, have your business plan ready for inspection and just to be on the safe side, seek professional advice.

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Credit Cards

July 6, 2011 – 5:13 pm

To start off with Internet is a huge and diverse resource comprising of 450m connected people and over 40 billion registered domain names. If any of the statistics are to be believed having e-commerce capabilities will be the difference between winning and losing market share. According to the IDC e-commerce will be worth £563 billion by 2003 with online buyers spending $2 million every minute – in 3 to 5 years time, companies are expecting to see 20% or more of their sales achieved over the Internet. Other benefits include fast and low cost market entry, easier access to global markets, minimised overheads and improved customer relationships. For the consumer there is often more choice at a cheaper price and purchases can be made at any time of the day.

If you are looking to put your business on the internet you should first define the purpose, set objectives, decide what products you have which are best suited to internet sales if any at all and the return on investment expected. One of the most important e-commerce considerations should be your product/service – does it fit the profile of items sold online? You should then establish whether or not your target audience does or is willing to shop online. Lastly but not least have a look at your competitors, are on they on-line and if not why not. Have you managed to find an untapped market or is this just the case of no news being bad news? Careful attention should also be paid to choosing the name of your Internet domain. Good names reflect your corporate identity, are simple and easy to remember and say something about what your company offers.

If you decide to proceed with this, there are number of ways of setting up your own e-Commerce site ranging from very basic online product catalogues through to a full Storefront solutions with shopping cart/basket and checkout facilities. Starting My Business can provide a full package starting with a domain name registration and hosting to all the way to providing your site with full e-Commerce capabilities. See the pull down ‘Getting Started’ menu on the right.

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