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aternio has a great deal of international experience and it is fantastic we can share this with other PrimeGlobal members on a regular basis. aternio is now teaming up with Kreskado.
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Tax Shift: alleviation of your payroll starting from 2016!
The Federal Government recently adopted a series of decisions in its bid to reduce employer's tax and social security contributions over labour, referred to as the so-called tax shift.
The tax shift accord contains a number of specific measures in favour of new employers and SMEs in general intended to result in a significant alleviation of the employers' payroll bill starting from 2016.
Below we will explain the the principal measures that are of direct interest to employers, indicating what is new and what stayed unchanged.
I. What is new for hirings starting from 1 January 2016?
The initial hirings reduction is slashed in two ways:
- (nearly) full exemption for the first hiring, unlimited in duration.
- exemption for six hirings instead of the previous five;
As from 1/1/2016, ‘new’ employers can get as good as total exemption from employer's contributions when hiring their first employee. If the first employee is hired between 1 January 2016 and 31 December 2020, it qualifies for the “new”, more extensive exemption:
- the sum of the basic contributions and wage moderation is fully exempt (32.4% on 1 January 2016);
- the exemption is applied in each quarter throughout the full duration of the employment.
Please note that the first hiring is not completely “free” and that some contributions continue to be due,( p.e. fringe contributions, …).
For the second to sixth employees, greater reductions in employers' social security contributions are to be awarded:
- the exemption is a lump sum depending on the sequential order of the employee;
- the exemption applies in a maximum number of quarters during a limited application period.
No new procedures are introduced. What is certainly new about this is that, from now on a reduction is awarded for the sixth recruitment to boot. The second to fifth hirings are “upgraded” to a more favourable exemption.
II. What about hirings prior to 1 January 2016?
Parliament also wants to include 2015’s hirings (and only them) in the slashed reduction. As a result, the situation of some employers seems to have become especially complex. The crucial factor is the date of hiring of the employees qualifying for the right to the reduction.
For hirings up till 31 December 2014 (limited to five), the situation remains relatively simple. The attendant reduction is used up under the previous conditions.
Employers who already had the benefit of social security/tax reductions before 2016 for their first recruitment, will also qualify for the new reduced contributions/taxes for employees who joined their business in 2015, albeit for the remaining number of quarters they were still entitled to prior to 1/1/2016.
These measures are still in the draft phase and may yet undergo further amendment. Changes in social security contributions and social security reductions, fiscal measures, as well as possible secondary effects are insufficiently clear at this stage. We advise you to contact your professional service provider regarding this complex matter.
Am I elegible for certain subsidies and tax measures?
When you start a business, there will usually be a period when you’re investing lots of time, effort and money before you start making a profit.
Be aware in that case that you might be able to get help from a government-backed support scheme or subsidy if you need for example some initial funding to test or develop your business idea or to start-up your business.
Both Regional and Federal authorities offer support via direct subsidies and tax measures.
Tax reductions belong to the core business of the Federal Authorities (p.e. notional interest deduction and investment deduction).
The Regional Authorities and their Agencies support new and existing companies by means of subsidies and they also can provide risk capital.
You can also appeal on som private investors/ business organisations which offer these kind of services and risk capital.
On the one hand they try to encourage innovation through financial support, networking and by facilitating international cooperation.
On the other hand they might offer financing solutions to certain companies under certain conditions. They are willing to cover a company’s entire development cycle, from its earliest inception to its growth and internationalization, depending on the situation, nature or purpose of company in question.
There are many subsidies/financing solutions for different kind of (start-up) companies. To be eligible you must first find out which government/agency/organisation is responsible. Furthermore detailed application forms and financial information must be completed and discussed with these them. All these subsidies and fincancing solutions have also conditions and consequences in the further life of your company We advice you to contact specialists to help you make the right decision.
Which reflexions do I need to make before starting my business?
Setting up your own business can be an exciting time. Before you start, save yourself time and money by being aware of what's involved in running a business.
Operating a business needs also management skills, industry expertise, technical skills, finance and of course a long-term vision to grow and succeed.
It is also important to think about how you might protect your future business in times of crisis or change. Smart business owners prepare for potential risks and unexpected events in future, such as selling, acquisitions, retiring, business continuity and exit-events.
Before you chose your business structure and type, you should ask yourself a number of these non-exhaustive questions in order to refine your project:
- Analyse your business environment (Who are your competitors, what services do they provide, who are your potential customers, what are the potential trends in your field of activities, how might your industry evolve?);
- Market your idea (what products and services will you offer, what pricing policy will you adopt, where will your products be available, how will you promote them, how will you manage orders and deliveries, how will you manage complaints?);
- Organise your company (who will manage your company, where will it be based, are you going to recruit staff?);
- Identify the access conditions for the profession you wish to practice. Do you need to apply for specific permits or licences?
- Finance your project (what investment do you need, what will you charge, what is the minimum margin you need in order to cover your costs, what are my fixed costs, what type of financing will you choose: external or own funds?)
After the fine-tuning of your project you still have to fulfill the main business start-up steps:
- Choose a legal status: sole proprietorship or company (and type)?
- Opening a current account with a bank or other financial institution
- Articles of incorporation (notarised deed or private deed)
- To prove some basic management skills to a ‘business counter’ (guichet d’entreprises/ondernemingsloket)
- Deposit articles of incorporation with one of the FPS Finance’s registration offices.
- VAT registration
- Registering with a social security fund
- Request a licence/permit if necessary
- Insurance issues
- Register with The Crossroads Bank for Enterprises (BCE/KBO)
Is a financial plan a business plan?
One of the legal obligations when establishing a private company with limited liability consists of drawing up a financial plan that justifies the capital for the company and provides an estimate of needs and revenue. In short, this preliminary plan must state the means the founders of the company have foreseen in order to guarantee the company's financial viability during the first two years of operation.
The founders may be held personally liable for the company's obligations in case of bankruptcy during the three years following the foundation due to insufficient funding during the first two years of the company's existence.
However, this legal obligated financial plan is not the same as a business plan. A real business plan is much more then a financial plan.
A business plan is the formal blueprint of the financial and operational objectives for the company's near future and it forecasts how to reach those goals. Furthermore, it usually contains information about the company, the management and the organization; the mission and vision; the products or services; a market and competition analysis; a swot-analysis; the strategy and an executive summary describing the elements of the business.
So one can say that the financial plan is a part of the business plan.
Some entrepeneurs believe that passion, optimism and good ideas are enough to build a successful company, however make no mistake: professional investors, such as venture capitalists, are going to require a business plan.