Banking for business by Frank McGivney in simple terms and a short history

Banks aren't the most popular institutions at the moment if they have ever been popular. The first banks similar to the ones we have today started in Italy in and around the 14th century during the Italian Renaissance. they were generally family run and controlled. There was older forms dating back to around 2000BC in ancient Greece and Babylon. The ancient ones arranged loans for merchants and charged them interest. These are the ones mentioned in the bible outside the temples. Banks have developed and changed since then but essentially provide the same service.
                     In my opinion banks play a vital part in any economy and so they are in a strong position to dominate the economies of the countries they operate in. They have the cash resources of a country in their hands and therefore they need to be controlled and strictly controlled. That is the reason in my opinion for the property bubble that happened to Ireland and a lot of other countries. After September 11th the American government flooded the world with hard currency and this feed into the banking system where previous controls were changed in order to allow this money to be given out to the public. This resulted in money been given out in circumstances where it shouldn't have have been given and this lead to property price increases as people had access to indefinite amounts of money. For instance during the boom a common way of financing a number of properties was to take out the equity in one property and using this as deposits on numerous other properties which were then geared up with further loans. i.e. Euro 200,000 of equity in one house was used to provide the four Euro 50,000 deposits for 4 new properties and then mortgages were taken out to top these Euro50000 to the purchase price of the properties. Equity is the difference between the value of a property and the mortgage on it. Methods like this just lead to property prices been inflated in order to allow for these finance models to work. Now that only my opinion.
                        If your in business you need a bank account. You also could probably do with having an overdraft and possibly a start up loan. The first thing to do is to set up a bank account in a bank you feel confident in. Make sure it offers the services you need and that it is close enough to you so that you can use it easily. There are three types of finance that businesses really use. There is of course loads of different products called lots of different names but these three classifications encompass all these products
                 (1) Operating Finance. This consists of short term loans, credit cards, invoice discounting, factoring and overdrafts. These are meant to be used to finance the working capital requirements of a business. They are meant to be short term and the most important thing to remember is that you need to keep them short term. Therefore use them to buy stock to process an order or to pay employees for a pending job . But then when you get paid for your sales make sure that the short term finance is paid back. In my opinion businesses should be self financing and short term finance is only a means to get income in. Short term finance is by its nature the most expensive form of finance.
                  (2) Financing Loans such as leases,medium term loan, start up loans and hire purchase agreements etc. The function of this finance is to allow you to purchase fixed assets such as plant and machinery, motor vehicles, computer technology etc which will be used to run the business in to the future. It allows you to buy that new low loader which you can then hire out to make money. This finance is well justified as long as there is the demand for the product or service that you will sell by using it. The same with office equipment which may reduce operating costs and free you up to concentrate on running the business. You have to do detailed financial projections in order to ensure that the item you are buying will add value to the business.
                    (3) Long term finance such as property loans and mortgages. These can be for 20 years or more and allow you to buy your business premises. Hint: Often in small and medium size businesses their is a justification for the premises to be bought by the share holders themselves and then rented back to the company (if in a company format) This is so that if the company goes into liquidation that the premises aren't used to pay the debts of the company and to secure the asset for the share holders
                       This may seem basic to people used to banks but I get a lot of client in starting in business who have never dealt with banks.So make sure you get either the bank or your accountant to show you how to do simple banking such as filling out lodgement slips and cheques. Get them to go through the internet banking system if you avail of it. You often can pay creditors directly into their banks. If they are in your own country you just need their sort code and account number and if they are international you need either their IbAN and BIK code or a swift code which they can find on your bank statement to give to you. Above all remember with your bank that you are the customer and don't allow them to treat you with anything but respect and of course show the respect back , remember it isn't the clerk at the front desk's fault that the bank lost billions of the countrys euro's. Building a good relationship with your bank will help you to run your business but you have to be firm and confident dealing with them and make them treat you as an individual not as only a number.


 Written By Frank McGivney & Co. Chartered Management Accountants, Kell, Co Meath fmcgivney@live.com For credit card processing from your smart phone https://sumup.com/#a_aid=Frankmc1000

Brief look at introduction of Income tax to Ireland

History and Lessons that can be learned about tax and the way society is structured:

In 1799 The English prime minister William Pitt who was also the chanchellor (and the youngest prime minister at 24) decided that income tax would be a great idea so they brought it into law for the empire so that they could finance a great war between Britan and the french under the leadership of the one and only Napoleon (now you know who to blame) It was based around schedules which reflected in descending order the class system of the population. This class system is still used today although the top few having been in effect abolished. So it started with a schedule for Landlords (the top class) then farmers then the privileged with annuities and then the self employed and then the poor trades people.
Capital Gains tax was introduced in Ireland in 1975 so up until then you could avoid paying tax (to some degree) by making sure you lived of money you got from selling assets and capital transactions (once again favoring the richer in society)
A detailed analysis of the current tax system would also in my opinion reflect a built in class system.
Anyway so now you know who to blame needless to say if I recall correctly William Pitt left office in 1801. In 1978 when the tax was announced it was estimated that 10 million pounds would be taken in but in fact only 6 million was taken. So even back then the departments of finance weren't the best at projections.

Even still some lessons can be learned from history because even today capital gains tax is lower than the high rate of income tax and therefore one way of reducing tax liabilities is to make sure a transaction is classed as capital in nature (i.e a one off transaction as part of an investment or an emergency sale) rather than as a trade. This was reflected in the celtic tiger when the revenue went after people for income tax for selling house they had bought and moved into and done up and then sold on. (they weren't always successful in getting this classed as income tax as a it may be shown to have not meet some of the badges of trade if set up correctly).
If you are in business take a look at this website to allow you to take credit card payments with your smart phone I use them myself and they are very effective Sumup Credit Card Reader For smartphones

Anyway so that a bit of history, Hope the dates are correct been a long time since i studied history.
Frank McGivney & Co Ltd, Chartered Management Accountants 38 Cherryhill Court, Kells, Co Meath Ireland 0469293891