For owner-managed business, growth can be complex. Businesses need to ensure they have the right structures in place as they look to grow. This includes providing the appropriate resources and maximising their tax efficiencies.
Holding company structure as many advantages to businesses, particularly at the expansion stage of the business life cycle. When the business is branching into new sectors, locating in a new geographical area, or offering new products or services, it needs to give regard as to how that expansion will be funded and how to protect the current business from risk associated with new enterprises.
The holding company structure enables companies to protect the existing business, create a Special Purpose Vehicle for new ventures, utilise the contacts and goodwill of the existing business and tax efficiently access retained earnings in the company for expansion and investment.
Under Irish tax law, the holding company structure offers long-term tax benefits on the sale of the investment holding where the holding is greater than 5% of subsidiary.
Tax is a significant expense for businesses and with all costs, it is vital that the business is paying no more than necessary. Ireland has a broad range of taxes, exemptions and reliefs that should be considered when reviewing the business activities. It is important to consider the short, medium and long term goals when tax planning.
For example, a business should consider the Research & Development tax credit scheme and increased deductions for green energy investment and pensions.
Other issues to be considered is how the business accounts for VAT, a tax efficient employee rewards program that also promotes loyalty.
Due to the increased regulation, compliance and reporting, it can a challenge to stay on top of the administrative aspects and business will need to decide it outsourcing is more beneficial to allow owners and management to focus on core activities.