Starting a business.

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Well myself and a friend of mine are planning on setting up a private limited company with the sum total of zero business experience between us.

I'd love to get the advice of any business owners here that have started from the bottom up and any pitfalls that you would advise us to avoid.

Nuttzz

what business are you planning to go into? different sectors have different pitfalls

RainyDay

First question - why are you setting up a limited company? This imposes serious obligations on you in terms of regular company reporting. Failure to meet these obligations can result in substantial fines. Do you really, really need the protections that a limited company offers?

ArthurDent

Go to your local enterprise board (see under your county council listings). You will get advice and may even be able to get some funding to carry out a feasibility study to dee if there ireally is a market for your business. Do a business plan (most enterprise boards and AIB/BOI have examples of them on their websites.). It is improtant to do so, even if you do not need to get a load for money to srt up, because it can gelp you see your strengths andweaknesses. Make sure you and your partner know exactly what you expect of each other and want from the business. Get a join bank account and make sure the you are both cosignees on wthdrawals/cheques etc.



And best of luck!

Mutant_Fruit

Well, i'm the second partner in this. Basically, its like this.

We want to set up a mini-company for computer building/selling/upgrades/advice etc. There are a few reasons why we're thinking of doing this as opposed to just doing it unregistered/sole trader style.

Firstly, VAT discount for when we buy parts. Secondly, as a company, i believe we would be able to get trade discounts on parts we buy (can anyone confirm this?). Thirdly, if anyone decides to sue us for breaking their computer, we're pretty safe.

Setting up the company will cost us about €500 afaik. Which is a once off fee. Then i assume we'll have to pay someone once a year to audit the books. Probably about €300 to do this.

Other than that, we don't really know too much, so any advice would be welcome, or places to read up on it.

fintan

You can be self employed and register for VAT.


You can register a ltd company for cheaper that 500 I have used these guys a lot http://www.privateresearch.ie/ and can highly recommend them ( i was a comlete newbie and they baby sat me through the process).

300 to have the accounts done at the end of the year is about right as long as you have kept really good records all year, if you hand your account a plastic bag of receipts and invoices expect it to cost more.

I think you should do a business plan first to get your thoughts straight, then sit down and talk to an accountant and see what they say.

You should also go to www.askaboutmoney.com and have a read of the business forum there.

The other website you should look at is www.basis.ie fantastic website for new companies.

SouperComputer

Thirdly, if anyone decides to sue us for breaking their computer, we're pretty safe.

Wrong!

Also, the computers themselves are worth feck all on the grand scale of things. Its data loss and downtime you need to be worried about it you are dealing with business customers.

If you are negligent, you are liable, regardless of Ltd company or not. Insurance is a must. You can get an office policy with Hibernian. Its about 700 a year. Covers up to 10k of cash on site a a couple of mil liability. You can opt for an out of office supplement if you plan on transporting computers yourself, but laptops cost extra on the policy. IIRC, its about 25euro per laptop!

For the 1st year, you should setup either as a partnership or sole trader. you will have enough on your hands without having to worry about the red tape of being Ltd. A partnership is a good compromise and I know a couple of guys with a similar business who have done just that.

Registering for VAT is fine and dandy, but remember that 21% (goods 13.5 services) of your sales income effectively belongs to the government! Also, you will not get VAT relief at source. You will pay the VAT on purchases 1st, and then the VAT you have paid on them will be credited againt VAT you owe on your sales. The exception to this of course is if you import from within the EU, if the company is useful they may not charge VAT if you provide them with your VAT number.

My last piece of advise is with pricing on service. A lot of guys charge too little and end up running around like blue arse flies making very little money. Name your price, market it to the right people and then you will have room to offer a better service to those customers AND feed yourself that week!

But whatever you do, make sure you get insurance 1st!

Im not sure what you mean by trade discounts? TBH most wholesalers here are not much cheaper than Komplett or Jes. You can deal with most "trade" companies without a VAT number. You'll have to rant a bit at them, but if your buying, remind them that the should be selling!

Are you thinking of having a premises (retail or otherwise) or working from home?

I work from home and its dandy as the company can pay rent, light and all kinds of bills. I try to avoid the hardware sales \ upgrade part unless its in conjunction with service as its thankless and low margin.

DC

Regular income is the most important thing to get. Look at opportunities for support contracts with monthly or annual fees. Put work into service level agreements making sure that the more service offered, the more you get paid. This can help limit your liability in some cases, but at least clears up what you are responsible for and allows you to monitor the service levels you offer customers. When the customer asks for something outside the scope of the SLA you can charge them your top hourly rate.

Waiting for adhoc business, e.g. waiting for a customer to find you in the golden pages when a hard drive goes kaputt, isn't really good enough. However, offering the insurance to a company with half a dozen PCs that you will keep them running smoothly for a regular fee, and replace parts quickly, will yield better results.

MartMax

a piece of advice, whether you go partnership or company, always keep good records of accounts. especially if you are registered for VAT. i am sure that you don't want a Revenue audit and like fintan said, proper book of accounts also help to reduce audit/account fees.

well if you are VAT registered, generally you are entitled to claim any VAT paid on business related expenses. also, if the turnover volume is low and below certain cap, you can register for VAT on receipt basis, which means you make returns for VAT payable based on receipts from your sales.

other thing, if you are working from home, you can surely claim expenses like water bill, electricity, etc by proportion to how much u think they are reasonable.

find a good accountant/auditor. bargain so that your audit/account fee covers annual returns, secretarial stuff, your personal tax returns, etc.

yes, like other business, get a business plan or at least a budget/cashflow projection done. it helps you to see.. yes see the forecast how the business will lead to... after all, profit is what businessmen aim for...

p/s : i'm an accountant, doesn't mean that i'm a boring person!