Start-ups: here’s why your accountant is your new best friend

When you’re an entrepreneur burning the midnight oil to turn your dream into a business reality, you’ve got a lot on your mind. You’re busy sorting the legal side of things, filling out that TA-22 form and getting all your paperwork in order, finding the talent you need to get things up and running, getting your marketing plan together to get the word out – the list goes on. Hiring an accountant can wait until you reach the SME stage, right?

Well, not quite. In my 15 years working in Malta’s accounting sector, I can’t begin to tell you how many promising start-ups I’ve seen take quite a costly tumble because they’ve tried to handle all their own accounting without the know-how. While most recover, there is a very real risk of not only stunting your company’s growth but stopping it completely. Outsourcing your accounting early on can save you money and stress in the short term, while helping you carve out fresh opportunities that’ll carry you forward long term. Let’s take a closer look at why your accountant is actually far more than that. 

Find funding opportunities

Your accountant will have their fingers firmly on the pulse of any local and EU funding opportunities that you can take advantage of, and that kind of cash injection early on can be what propels your start-up into success. They won’t just know about all the latest funding initiatives out there – they’ll have the industry knowledge you need to expertly navigate all the bureaucracy and sail through to approval. Minimal stress for you, maximum results for your business. 

Take the Business Consultancy Services Grant Scheme, for instance. While it’s not difficult to understand what it’s all about, you need someone in the know to guide you through the specifics. Are you eligible? Do you have everything you need to apply for it? When’s the next submission deadline? And so on and so forth. Having a trusted accountant by your side to guide you through the jargon jungle can be a lifesaver. 

Solid business strategy

I think I can speak for all the certified professionals at NM Group when I say that when it comes to the business world, we’ve seen and done it all, and that’s an experience we can share that goes beyond facts and figures. It’s a real boon to have someone on hand to offer insights on your overall strategy, especially when you’re still laying the foundations for your business. You can’t plan for the future without knowing your finances inside and out, and you can’t do that properly without an accountant by your side to tell you what’s worked and what hasn’t in the past.

When your weekly calendar is bursting with meetings, to-dos, high-priority asks and ten Zoom calls on top of that, it can be hard to find time to sit down and think about your long-term vision and what steps you need to take to get there. The last thing anyone wants to do at the end of a long day is go through an ocean of facts and figures – but then, that’s what your accountant is there for! They’ll take all that daunting data and give you a top-level view of it all that you can use to inform your business decisions going forward. You can even go to your accountant for advice on what you need to do financially to get where you need to be, and how long it’ll take to get there. 

Make sure you’re compliant

Rule number one of a successful start-up: make sure you’re compliant from day one. This is perhaps the most crucial part of the process that a qualified accountant can help you with because it can have long-lasting repercussions on your finances – and your reputation. You need to know what kind of company you should register as, do the mountains of due diligence required, sort out your VAT registration, carry out audits, and all this while you’re sorting out payroll and monthly expenses. 

The bottom line is this: failing to comply with compliance can lead to a crippling fine – and in some cases, jail time. Don’t skimp on it!

So here’s my advice to the get-up-and-go entrepreneurs out there: buddy up with an accountant and work together hand in glove to plan for the future of your start-up. Simply put, your business is your baby, and it’s worth considering your money-minded friend as the Mary Poppins of the nanny world. Outsourcing your accounting needs is cost-effective and can give you the inside track on what’s happening in the world of funding and finance.

To find out more about how a qualified accountant can help your start-up really take off, get in touch on [email protected] – let’s chat!

Starting Your Own Business: Limited Liability Company vs Self-Employed

The time has come to finally embark on that project that you’ve been dreaming of – but there’s one big question mark ahead of you. How should you register your business?

The two most common options are to operate through a limited liability company or as a self-employed individual.

Each of these options come with their own pros and cons, some of which really depend on your business model and the level of risk you’re willing to take.

Let’s start by looking at Limited Liability Company registration:

Pros

  • In the eyes of the law, a company is a separate legal person. As such, the company shall carry out its trading activity in its own name by providing the company director with full powers and responsibilities in relation to company operations. This implies that if anything had to go wrong with a company stakeholder (employee, supplier, customer), such stakeholder would have to resolve the issue (whether in Court or otherwise) with the company – and not its shareholders, personally.
  • The liability of a company is limited to the amount of authorised share capital. As such, if the company had to be sued and its assets do not suffice, the liability imposed on the company shareholders is capped / limited to the amount of authorised share capital. This does not imply that the company can be used to carry out fraud or any other criminal activity. In such cases the court can decide to lift the corporate veil.
  • It is considered to be more professional to trade under the name of a company because it implies a structured set-up. The company is also subject to an annual audit that is considered to be a plus when it comes to securing bigger clients/suppliers, dealing with banks, and tendering for work.

Cons

  • A Maltese-registered company has mandatory statutory reporting obligations.

    Any company registered in Malta must submit 3 annual reports;
    (1) Annual Audited Financial Statement (Malta Business Registry)
    (2) Annual Corporate Tax Return (Commissioner For Revenue)
    (3) Annual Return (Malta Business Registry).

    These reports must be submitted regardless of whether the company is in operation or not. In the case of a trading company, there also is the obligation of registering for VAT purposes and submitting quarterly VAT returns.
  • The formal closure of a limited liability company entails the formal process of a liquidation, which also would trigger additional costs.

Moving on to Self-Employed Registration

Pros

  • The reporting obligations of a self-employed individual are far less stringent and frequent than that of a company. Nonetheless, a self-employed individual still has its own reporting obligations as follows;
    (1) Preparation of an annual Profit & Loss statement
    (2) Filing of an annual personal tax return
    (3) Payment of National Insurance Contributions in 3 instalments (Apr / Aug / Dec)

Cons

  • A self-employed individual operates under his/her personal name, meaning that they will carry unlimited liability. Any issues with business stakeholders are to be resolved with the self-employed individual on a personal level. Furthermore, there is no limitation to the liability that can be brought against the self-employed individual.

Here are some other considerations worth weighing up

  • Corporate / Personal Taxes: Companies are subject to a flat income tax rate of 35% on profits. On the other hand, self-employed individuals are subject to progressive tax rates starting at 0% and gradually increasing to 15% then to 25% and finally to 35% (beyond €60,000 in profits). Overall income would probably be your deciding factor here, as in terms of taxation, this can be managed very easily with the help of a good accountant.
  • Grants / Tax Credits: Generally, grants and tax credits are normally equally available to all registered businesses regardless of whether they operate as a company or self-employed business.
  • Set-Up Procedures / Costs: The incorporation of a company requires one to draft the companies Memorandum and Articles of Association. Such documents will regulate the governance of the company in line with Malta’s legislation (The Companies Act). Furthermore, such a process would also require the submission of additional applications/disclosures and the registration of the company for VAT and Tax purposes. The set-up process of a self-employment is less bureaucratic and thus less costly. In terms of timelines, both set-ups can be managed within one week.
  • Malta Tax Refund System: Malta’s tax refund system for international investors can only be availed of by corporate structures and thus not by self-employed individuals. 

If you’re looking to start up a new business and require assistance for anything ranging from company incorporation, VAT registration, government funding, tax refunds and much more contact NM Group today!

What To Consider When Writing A Business Plan

Just the thought of launching and building your own company from scratch can be as overwhelming as it is exciting. There’s a lot to think about – and even more to do – but even when you’re surrounded by never-ending to-do lists and you’re being bombarded by a barrage of emails marked ‘high priority’, you know all your hard work, late nights, and early starts will be worth it in the end. To help you a) calm down and b) get organised, we’re going to have a little talk about business plans and the most important points yours needs to address if you want to give yourself the best chance at success. 

Introduction and background information

Start things off with a summary of your business idea, together with any experience and qualifications you have that’ll help the enterprise not only get off the ground, but thrive in the long run. Here, you want to put your best foot forward and demonstrate that you can handle the scope and pressures of such a massive undertaking; explain your business model . Nobody knows your idea better than you – so present it with confidence. You’ve got this. 

Why does the market need your product or service? 

Is there an existing need your product/service can meet, or a gap in the market that your business is addressing? Here, you’ll outline what inspired you to set up your budding operation. The more evidence of a need or gap in the market that you can include, the better. This can come in the form of anything from surveys to national statistics and existing studies on the market – if it helps you make the case for your business idea, it’s worth mentioning. 

Core values and mission statement

To be truly successful, your business needs to mean more than money. Today’s  intelligent consumer – and the kind of talent you’d be keen to hire – seeks out brands that share the same values as they do. From environmental sustainability to giving back to local communities, investing in innovations that’ll help people live better lives, and global charity initiatives, it’s absolutely essential to show that at your core, you’re a positive force in the business world, and not some kind of soulless corporation. What’s your message? What do you stand for? If your business was human, what kind of person would it be? 

SWOT and competitor analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and is a tried-and-tested model for making an objective assessment of your business, product, or service. It’s a major part of analysing your competition (locally or otherwise) and understanding what you need to do to get to the front of the pack, so take your time researching and exploring this stage.

Strategy for growth and internationalisation

What’s your long-term plan? Potential investors need to know that you have a strategy that’ll help you manage your company’s growth and scale your business operations accordingly. If your business has the potential to go international some day, outline how you’d handle it and how you’d keep your brand strong and standards high while replicating your efforts in other parts of the world. 

Financial projections 

No matter how fabulous your idea is, it all comes down to euros and cents. The launch and long-term success of your business hinges on money; from investment sustainability and how much you need to get up and running to the cost of manufacturing your product, training people to deliver the kind of service you want, day-to-day operations, and what kind of ROI you need to hit to stand the test of time. You’ll also want to make some educated comments on the potential impact this project could have on the local economy. 

Translation: don’t skimp on the financial details. Be as transparent as possible about your projected costs and profit margins – there’s nothing worse than a nasty, expensive surprise later down the line. 

Email us today for expert advice on devising the perfect business plan.

Launching A Compliant Start-up In Malta

Coming up with the perfect idea for a start-up in Malta feels a lot like reaching the top of a mountain, but don’t pop the champagne bottles just yet – that’s just the very first step in your entrepreneurial journey.

We have already talked about the importance of due diligence and taking care of the legal side of things in previous posts, but today we’re going to dig a little deeper into the labyrinth-like world of compliance.

First things first: what is compliance? You’ll definitely hear this word from time to time when you’re setting up your business. In its broadest sense, ‘compliance’ refers to your ability to operate according to a set of rules and/or laws; it’s basically doing what you need to do to make sure everything is above board.

In the world of finance, compliance can be said to work on two levels:

  1. Compliance with any external rules or regulations applicable to a business or organisation as a whole
  2. Compliance with internal structures created and imposed to align with any external rules or laws

Why is it so important to do things the right way in terms of compliance?

Even though legal compliance is central to starting a real business, you’d be surprised to know how many new companies shoot themselves in the foot by ignoring or forgetting about this part of the process. The benefits of being compliant far outweigh the risks, which include anything from a hefty fine to jail time. Long story short: don’t skip out on compliance, ladies and gentlemen. It’s a pricey mistake to make and when you’re just starting out, every euro counts.  

Getting Started with Compliance

At NM Group, our lovely team of experts know exactly what to do when it comes to launching a fresh new business and helping it get the best possible start right here in Malta. Our advisors are second to none when it comes to taking care of the technical side of starting a business. It’s our job to make sure your success is built on solid ground so that you can enjoy long-term success–that’s why we cover everything from compliance to payroll, legal advice, funding, and beyond. When it comes to compliance procedures specifically, the most important points to cover include:

  • VAT registration: any person or entity who carries out commercial activity must be registered with the VAT department – even if you are exempt.
  • VAT reporting: if you are charging VAT then you also need to keep a record of this. VAT reporting must be carried out monthly.
  • MFSA: if you would like to register your venture as a company, then this must be done through the MFSA.
  • Tax payments and NI: being your own boss means having to pay your own taxes and national insurance, along with that of your employees.
  • Audits: By law, every company registered in Malta must engage an external entity to carry out a financial audit.
  • Jobsplus: You as well as your employees must be registered with Jobsplus

These are just a few important processes that our team can take care of to make your life easier and put your start-up en route to success. If you’re looking to learn more about launching a start-up in Malta or simply want some advice on how to make sure you’re following the letter of the law, get in touch with one of our consultants today!

Setting up as a freelancer in Malta

Setting up as a freelancer in Malta

The life of a freelancer seems to be synonymous with freedom, flexibility and the empowerment that comes with being your own boss. That is of course all true, but as we already know (thanks to the Spiderman franchise), ‘with great power comes great responsibility’. Being your own boss is fantastic, but only if all your paperwork is in order before you start bringing in those euros. The last thing you want to deal with when you are getting your operation off the ground is some sort of hefty fine or awkward conversation with the Tax Man. Not to worry – today, we’ll take a look at some key points to keep in mind when you’re setting up as a freelancer in Malta.

First things first

Before you do anything, you need to register with Jobs Plus (formerly ETC) as self-employed – full or part time depending on the intensity of the work you plan to take on. Registering is straightforward – just head over to their forms page and print the one entitled ‘Self-employment engagement form’ according to your preferred language. When you’re done with that, send it to the address included in the form.

Pay your dues

When you’re employed by a company, your National Insurance (NI) and tax is sorted out for you. If you’re registered as full-time self-employed, you’ll need to take care of your own NI and tax. Tax is due each year, and you’ll need to fill out a tax return form with information including your profits or losses, along with any income you may have earned.

Did you know? If you work as part-time self-employed, you can benefit from a preferential tax rate of 15% on the first €12,000 of profit earned.

Don’t forget about VAT

VAT stands for Value Added Tax and applies to specific products and services, so when you’re setting up your business make sure you check whether or not you’re exempt from that. If you are selling something within the scope of VAT, then make sure you’re charging for VAT. Getting a VAT book is a must if you’re offering good and/or services to non-VAT registered individuals – whereas you only need to issue an invoice if your clients are registered individuals.

Top Tip: If you make less than €20,000 a year in sales through your freelance work, you qualify as VAT exempt and are registered as such.

Keep those receipts/invoices

That’s right, ladies and gentlemen – remember to keep all of your receipts and invoices. Why? Well, the money you spend on business lunches, driving around from client to client, and buying the equipment you need to work can all be expensed. If you’re eligible, you might be able to claim a tax credit through Malta’s Micro Invest scheme. Want to know more about that? Just get in touch with one of our advisors!

Good to know: Gozitans and businesses with female majority ownership benefit from higher thresholds in the Micro Invest scheme!

Be prepared

Just because you’re your own boss now doesn’t mean you should work without a business plan or check your progress as you go along. Create a plan complete with goals and targets for yourself – always, of course, making sure they’re realistic to help you stay motivated.

Signed, sealed, delivered

This bit might sound tedious, but it’s probably one of the most crucial parts of setting up a business. If you want to make sure you’ll get paid, it’s important to draft a little something called a ‘work contract’. For smaller jobs, it might feel a little superfluous, but when you’re working on a €500 contract and you’re still waiting to be paid three months after completion, you’ll be glad you protected yourself in writing.

Follow your finances

This one applies to your day-to-day life, but you should be even more organised when it comes to your freelance work. Keep track of your invoices and stay on top of how much money is coming in and going out, and you’ll be fine. A proper invoicing system like Xero will make this super straightforward, so set that up ASAP.

If you’re looking for guidance regarding all things freelance, just give us a call! Our team of experts have all the information you need to help you get your business off the ground. Get in touch today!

Launching Your Start-up: The Planning Stages

Launching Your Start-up: The Planning Stages

One of the most frequently asked questions we get here at NM Group comes from budding entrepreneurs looking to get their start-ups off the ground and launched. They ask (rightly so!): ‘what do I need to know about the financial side of things?’ Luckily, our team is highly experienced when it comes to all matters related to launching a start-up in Malta, so we can give them all the answers they need.

The first thing we’d say is that planning is crucial. Before doing anything, get in touch with a financial advisor to help you prepare cash flow projections. These projections will help you to decide whether or not your project makes financial sense, but will also serve as a your guide and target of sorts. Once that’s done, here are a few things to consider:

1. Set some goals – big and small

Okay, while becoming the next start-up success story and making loads of money is (understandably) one of your goals, you’ll need to sit down and set a few financial goals before you let all the excitement carry you away. First things first: set daily, weekly, or monthly revenue objectives to help keep your start-up growing consistently on its journey to success. Once you’ve sorted out the more bite-sized goals, set yourself some bigger benchmarks to hit along the way. Hitting those smaller goals will keep you motivated as your start-up grows, and the bigger ones will give you an extra boost of satisfaction while showing you how far you’ve come.

2. Control that cash flow

Start-ups can fail for any number of reasons, from questionable business ideas to a lack of planning and beyond. One common start-up faux pas that has ruined many a budding business is simply burning through all your money. It sounds obvious, right? Don’t spend it all at once! Well, unfortunately things aren’t as simple as that. From day one, you’ll need to know exactly where every single euro (or Bitcoin!) is coming from, where it’s going, and where it should go. If you lose control of your cash flow, all the hard work and dedication you’ve put into your start-up could go to waste! Get that budget sorted, stick to it, and you’ll be a-okay.

3. Keep an eye on what you spend

Any entrepreneur will tell you that when you’re launching a start-up, you’ll have expenses coming at you from all over the place. To help you get (and stay) organised, you should definitely consider using reliable cloud accounting software to keep your books and payroll in order. To take things to the next level and get exactly the guidance your start-up needs, we can help with this thanks to our experience in offering financial advice for all businesses, big and small.

4. Pinch those pennies (well, cents)

You don’t need to go full Scrooge here, but being frugal is key if you want your start-up to blossom into a big, beautiful company. Try to keep expenses to a minimum and prioritise those parts of your start-up that really need the capital; the priority should be building your client base and creating the right conditions for steady, sustained growth. Forget about snazzy offices and nights out on the company card for now – those rewards come a little later! It’ll be more than worth it and you’ll be able to bask in your success in peace.

5. Stay optimistic (but be realistic)

Having a positive mindset is so important when you’re getting a business off the ground! Being able to envision the success of your start-up is essential, but the smart entrepreneur is always prepared for the worst case scenario. Business, like life, is unpredictable, so don’t do anything too drastic like quitting your 9-to-5 right off the bat. Make sure you’ve got enough money in reserve to cover you professionally and personally, and keep it locked away in a savings account.

6. Time is money

This well-known business tip might be a bit of a cliche, but it’s oh-so-true. To make sure your start-up is sustainable in the long-run and makes business sense, you need to account for every second of your time and make sure you’re putting in the hours your start-up needs. And while we’re on the topic of your time– don’t forget to pay yourself a wage! We’re not saying you need to take home a massive salary early on in the game, but domake sure you pay yourself enough to make it all worthwhile and allow focus on your budding business. Financial problems are a major stressor, and we all know that stress makes it difficult to stay focused. Give yourself enough room to breathe and enjoy the fruits of your labour!

7. Grants!

Everybody loves an extra cash injection, right? There are loads of grants available for start-ups like yours to get a running start, so you should definitely get solid advice on what EU or national funding schemes your budding business can tap into! If you’re not sure which opportunities you’re eligible for, talk to one of our expert advisors to help you find out.

Are you launching a start-up in Malta? Get in touch with our advisory team and we’ll help you every step of the way!