Interview with Sean O’Flaherty Director, Rosscot Chartered Accountants
Who can set up a business in Jersey?
You are eligible if you have lived in Jersey continuously for five years, or are Entitled, Licenced, or Entitled to Work. You are also eligible if you are the spouse of someone who is Entitled, Licenced, or Entitled to Work.
Do you guide people in deciding whether they should be a sole trader, partnership or limited company?
Absolutely, this is one of the first steps to consider once someone has decided to set up in business. The type of entity is dependent upon each specific set of circumstances and it’s vital to get professional advice at this early stage to make sure you are in possession of all the facts.
Are there advantages to a ‘sleeping partner’?
A sleeping partner does come with advantages as they usually offer something that the business owner does not have themselves, such as business experience or financial backing. Consider though that the sleeping partner will invariably require timely financial reporting and does not ordinarily get involved in the day to day running of the business. They will also get paid for their involvement by way of profit share, return on investment or similar.
What personal liability do people need to consider when setting up a company?
If your business trades as a sole trader or a partnership then you are liable for all the business debts; and that of your partner(s) even if they were responsible for incurring them. With a limited company your liability is limited to the amount you agree to invest in the company by buying its shares. There are a couple of exceptions to this such as any personal guarantees in place (e.g. the company’s bank overdraft or supplier guarantees). Also, this does not eliminate liability for ‘wrongful’ or ‘fraudulent’ trading: you would be personally liable as a director in these circumstances.
Your liabilities do not stop there and you must consider the policies you need to adopt and the level of insurance required. You will need adequate insurance to protect against any claim made by a member of the public (public liability insurance) or a client (professional indemnity insurance). If you are employing staff you also need to have employer’s liability insurance in place. If you are holding data on clients, suppliers and even your employees you will need to notify and register your business with the Data Protection Office. I could go on!
When do you need to engage an accountant in your business lifecycle?
I can’t stress enough how important it is to seek guidance from an accountant early on, preferably before you start. This will ensure you have received the correct advice and that an appropriate structure is put in place from day one. This will save you time and money in the future and provide a supportive network to your new business that you will invariably need from time to time.
What are the most common business mistakes you see start-ups make?
The most common mistakes tend to be non-completion of required licenses, incorrect applications to authorities, failing to register for GST in time (businesses with sales of £300k or more) and record keeping. Invariably administration and paperwork are low down on most business owners’ radars and it’s all too easy to bury your head in the sand until a paper mountain has appeared. There are now numerous ways to keep on top of paperwork including super efficient programmes that link into your accounting software. Rosscot can provide advice on all of these matters to ensure that the business has sound administrative procedures. The business owners can then focus on what they are good at; which is running their business.
Do you just handle the accounts and tax returns or can you offer added value to a business start-up?
Historically accountants simply offered accounts preparation and tax compliance services, however, the world has moved on. Value added services are critical to all businesses; whether they are start-ups or existing businesses. Rosscot can provide a full suite of services to include accounting software setup and training, ongoing bookkeeping services, payroll, management accounts (with associated meetings with the owners), not to mention general advice and company secretarial services via Rosscot Secretaries Ltd. We can be as involved as a client wishes and they can pick and choose the services they would like us to perform for them.