There are currently over 240,000 small and medium enterprises in Ireland.
The online presence of these businesses varies considerably. Some operate entirely in the online space, with no physical premises at all, while others operate as traditional “brick-and-mortar” organizations with no online segment.
However, the COVID-19 pandemic has provided a lot of businesses with fresh motivation to look at expanding their involvement in the online world.
Read on as we take a closer look at small business online in Ireland, and how you can optimize your approach to trading online if it is a new departure for you.
There are currently over 240,000 small and medium enterprises in Ireland.
A Plan for A Small Business Online
The first thing you’ll need to do when setting up a small business is to come up with the viability of your business plan. There are many elements to a successful plan for a small online business.
Such a business plan format should involve a roadmap for development, an estimate of all relevant costs and inflows over the short and long run and a disaster recovery plan.
If you’re taking an existing business into the online space, you’ll need to devise a hybrid business plan to do this successfully.
The COVID-19 pandemic has added an extra layer of complexity to this part of the process. The movement restrictions that the virus has imposed on us has affected all businesses in one way or another, even those that operate exclusively online, so it’s worth carefully considering the bearing it will have on your operations. Although financial support for businesses during coronavirus has been helping many business owners, unfortunately, some businesses have already resigned.
Best Online Platforms for Small Businesses
There are a huge number of online platforms upon which new businesses can choose to conduct their trade. Each of these has advantages and disadvantages. The type of business you are involved in should have a significant bearing on the platform you choose to use.
You should bear in mind that some of these are more user-friendly than others. Depending on your budget, you might want to hire a professional to help you get established, or just ask a tech-savvy friend.
We've taken a brief look at some of the main online business platforms here.
Low-Cost Online Startup Opportunities
One of the biggest draws of online business for many people is the fact that business startup capital costs are negligible in many cases. Because there’s no need for physical premises, many online businesses require almost no capital to get moving at first.
We’ve taken a look at a couple of the best low-cost startup opportunities here.
Dropshipping is one of the fastest-growing industries worldwide. It involves arranging for the shipment of goods from a manufacturer directly to a consumer and making a profit on this transaction.
Many online stores use dropshipping as their method of distribution, as it means they don’t have to invest in storage space and don’t tie their cash up in inventory – supplier orders are only placed when a customer order is received.
Fulfilment by Amazon is a method of selling whereby you sell items that are shipped through Amazon’s fulfilment system. Because this fulfilment service is highly reliable, and delivery is free for customers, it has become a popular means of driving business for many online operators.
Sole Trader vs. Limited Company
When you have your business plan & your online platform selected, consideration should be given to how you will structure your business from a legal and tax perspective. There is much publicity around Ireland’s low corporation tax rate of 12.5%. However, this is not available to every business. If you’re starting an online business in Ireland, you’ll be operating as either a sole trader or a limited company. Only the latter can avail of Ireland’s low corporation tax rate. Sole traders pay income tax at 20% for all earnings below the standard rate cut-off point, and 40% thereafter. However, that doesn’t mean that every new business should set up as a limited company. There are other costs associated with limited companies that do not apply to sole traders. Therefore, the right choice for you will depend largely on the size and scope of your business. This blog post gives a more detailed breakdown of the advantages of each type of business structure.
Tax Requirements for Online Startups in Ireland
Like it or not, every business has to pay tax. This applies to online businesses in Ireland just as it applies to those with physical premises.
As noted above, your tax liability will depend heavily on the type of business you decide to set up. As a sole trader, you will have to pay income tax, PRSI and USC.
Depending on the nature of your business, you may also have to pay VAT. Sole trader VAT does not apply to goods or services you sell to buyers outside of the EU. For a more detailed explanation of the tax liabilities you are likely to face when doing business online, consider booking in for a consultation with our tax and accountancy team.
Grant Funding for Startups in Ireland
There is a number of grant funding options for businesses starting up in Ireland in 2020. These allowances can make a huge difference to businesses during early stages, so it’s worth being aware of your entitlements in this area.
The Local Enterprise Office’s Trading Online Voucher Scheme is one grant that may apply to your business. Businesses that have fewer than 10 employees and a turnover of less than €2 million can use this scheme to avail of a voucher up to the value of €2500. This is to be used on expenditure relating to online expansion.
Feasibility Study Grants, also an offering of the Local Enterprise Office, may be relevant to you as well. These EU-backed grants provide up to €15,000 for the purposes of market research and other similar activities for businesses.
Building a Brand Through Social Media
As noted above, there are a few social media platforms that you can use as the selling medium for your business. However, social media is equally important when it comes to brand building.
If you run an online business, social media will be your most important advertising platform. With billions of users worldwide, it is the forum to which people now pay the most attention.
Whether it’s Facebook, Instagram, Twitter, or YouTube, you need to consider your approach to social media marketing carefully from the outset. A difficulty here is that the same approach will not necessarily work for each platform.
On Instagram, for example, visual content will be your main concern. On Facebook and Twitter, however, your use of text may be the most important thing.
Consider which platforms you’d like to use from the very start and optimize your approach accordingly.
Find a Good Small Business Accountant
Setting yourself up for success in your own business in Ireland is greatly helped by hiring an accountant for a small business. Ideally, this will be an accountant who deals regularly with small businesses. We have worked with small businesses in Ireland for over 35 years. We pride ourselves on our client-centred approach. We listen to your needs and act as the financial brain for your business to help you with decision making and to help you grow your business. We like to be proactive regarding tax, VAT and other deadlines and we don’t just look after the financial affairs of your business, we look at you as the business owner and ensure you have the right set up in place for your personal finances – from tax planning (and claiming all tax reliefs applicable to you) to pension and retirement planning. We like to take the stress out of something you don’t want to spend your time on when your passion is your business and ours is accounting!
Cloud Accounting Software
Long gone are the days when a company’s accounts were recorded on paper. Technology trends in accounting all take place on a computer, and newer technology means that these accounts can be stored online rather than taking up space on your hard drive.
This technology is known as cloud accounting software. There are certain cloud accounting products that every business should consider working with.
Integrating your online business with Xero cloud accounting software, for example, has a number of benefits. It will allow you to run operations remotely to a far greater extent and will cut down on your paper recording requirements considerably.
Xero also provides monitoring functionality for your inflows and outflows and a streamlined payment system, and if configured correctly for your business can help automate your bookkeeping process which as your business grows will become more and more important so that you cut down and streamline administrative workload so that you can focus your attention on developing your business rather than buried in paperwork.
Bringing Business Into the 21st Century
If you run a small business, there has never been a better time to bring it into the online space. This applies equally to anyone planning on starting a new business from scratch.
Lower operating costs, increased engagement and the avoidance of movement restrictions associated with the COVID-19 pandemic all mean that online business is the way of both the present and the future.
Bringing a small business online is not without challenges. That’s why services like ours are essential to the process. Contact us today to learn more about what we can do for you at this time.