By Noel Murphy

If you personally own a commercial property and are renting it to

your company, with the recent decline in property values and interest rates it may be in your interest to consider transferring it to the company together with any related bank borrowings thereon. From my experience this may result in significant savings for you and your company.

An example will give you an indication how this can be done.

Tom is the owner of a company (HCO) which is part of a group which holds a trading company and has a positive net worth. Tom also has significant personal borrowings on a building he acquired at the height of the property boom which borrowings now exceed the value of the property. The current value of the property is significantly less than the acquisition cost. Tom's current repayments of principal and interest to the bank mean that he has to draw significant rent from the trading company to fund the bank repayments at a time when bank interest rates are very low. Consequently Tom has a significant annual income tax bill on his profit rent for which he does not have sufficient personal resources to pay.

It is proposed that Tom restructures his bank debt to allow for a more tax efficient repayment of same. The restructuring will occur in the following order:

1. Tom will incorporate a company (Newco) and himself and his wife will be directors of this company.

2. Newco will purchase shares in HCO from Tom and at the same time Newco will purchase the building held by Tom.

3. Using the proceeds of the sale of shares and building Tom will repay his existing debt to the bank.

4. To repay the bank debt funds will be provided to Newco from the trading company over time.

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 By Seamus Parfrey  

West Point, the famed U.S. military educational academy, has distilled the problem solving process into a beautifully simple process with seven guidelines to stay rational.

This process is drilled into the military so that in times of extreme stress they have a proven process they can rely on.

You must:

1)      Recognise and Define the Problem.

2)      Gather Facts and Make Assumptions.

3)      Define End States and Establish Criteria.

4)      Develop Possible Solutions.

5)      Analyse and Compare Possible Solutions.

6)      Select and Implement Solution.

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 By Seamus Parfrey  

Warning signs can be useful to avoid business failure provided you act on them without delay.

The following are some warning signs you might come across:

• It's getting increasingly more difficult to pay creditors.

• Legal action has been threatened.

• You are regularly "fire-fighting" cash problems.

• You are falling behind with payments to the Collector General.

• You are not controlling your expenses.

• Your sales are decreasing.

• Your customers are not paying you on time and late payment issues are increasing.

• You are having to give large discounts just to get paid promptly.

• You are continuing to deal with loss making customers.

• Your credit control policy is not-existent.

• You are always at your overdraft limit.

• The bank insist on personal guarantees or want to increase personal guarantees.

• The bank are decreasing the overdraft and refusing to provide a loan/extend credit.

• Your bank is getting concerned and pressuring you for information and action.

• You and your management team are not performing well either individually or collectively.

• Your business planning is poor or non-existent.

• Staff meetings are not held regularly.

• The books and records are not up to date and you have limited or no up to date financial or operating information.

• Your obligatory returns are outstanding and you are paying interest and penalties.

• Your product/service quality is deteriorating.

• Your staff are leaving.

• You are not keeping up to date with market changes.

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• P30 monthly return and payment for May 2014