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Most English entrepreneurs and more likely the investors have heard of the EIS - a scheme aimed at encouraging investments into trading SMEs that are considered high-risk. For those of us who have not had the chance to learn about this, we hope this post will add value. The EIS was introduced as early as 1994 to succeed the Business Expansion Scheme (BES). The main intention of the scheme - an alternate finance option for small businesses. Remember that in 1994, venture capital was probably still in their nascent stages in this part of the world. Tax Deductions Individuals who have invested and have met all eligibility requirements can claim a tax relief of 30% against his income tax liability for the year. The relief is on actual amount paid up for shares and is limited to a maximum of 1 million (UK Pounds). So the maximum relief one can enjoy is capped at 300,000 pounds. (approx USD 213,000). Capital Gains exemption The investments made under the EIS scheme will be free from taxes on capital gains when disposed off for a profit after the holding period is completed. The usual rates of capital gains tax in the UK is either 18% or 28% depending on the income bracket an individual falls into. For the specific case of disposal of shares, other reliefs apply based on what they are used for. Eligibility 1. The Holding period - Any investment made by investors under EIS has to be held for a minimum period of 3 years. The rules applicable at the time of investment continues to remain valid for the minimum holding period 2. Paid up share capital - The gov.uk webpage on EIS gives a clear explanation of this factor. Money committed will not get you an EIS approval. Money paid does. Possibly more relevant for start-ups, the company should have a bank account and the money on shares allotted has to be paid into the account for the contributions to be considered as eligible for tax deductions under the scheme. As per the mentioned webpage, this is one of the most common reasons for investments failing to qualify for the deductions. 3. Full-risk - The shares committed to and paid up by the investors should not have any preferential rights. So it's open to all the risks associated with running the business. Preferential rights include but not limited to cumulative dividends, asset-protection or shares in lieu of loans or other arrangements. 4. Commercial purpose - The investment should be in the spirit of running the business commercially. The scheme is not to be used as a tax saving mechanism by parties so that amounts parked in eligible companies are incentivized. EIS Funds A normal tax payer might think whether he can take part in the scheme. A lot of us tend to contribute money to friends or family who are starting their business. Yes this is possible as long as the company that's receiving the investment is EIS approved. There are professional companies that have formed investment vehicles called EIS funds - some even approved by the HMRC. They help individuals invest in a portfolio of companies that are under the scheme and spread the risk. Given that the investments are being made into early stage ventures, it's a safer way for individuals not used to such activities. The downside - While professional EIS fund managers are a great way to manage your investment monies, the fees charged for the service tend to be high. Know more We have touched upon a few basic details regarding the EIS here - there is more details available in the gov.uk website. From how to get a company EIS approved to details regarding how to liquidate the stake, information is available online. A good read of the same or reaching out to professionals who deal with such is a great idea to evaluate an opportunity at hand. Sources 1. Gov.uk - webpage on EIS 2. Tax briefs online #tax #EIS #introduction

We are starting a segment with entrepreneurs speaking about the things closest to their hearts - their ventures with the "My Start-Up" series. First up, is Rory Lawrence and his ventures in Bournemouth. Here is what happened.... I (Neethu) met Rory in the winter of 2015 in beautiful Bournemouth. He was the very first entrepreneur I interacted with in the region. Within a half-hour meeting, I understood Rory was an integral part of the entrepreneurial landscape here. Among other things, Rory has organised and run the Bournemouth start-up meetings for two years until 2015. I have documented a few things I discussed with Rory here, 1. Tell us a bit about your projects – WayMoby, MobyMaps and WishyList. WayMoby is the name I operate my freelance graphics and web design consultancy services under - serving mainly advertising and design firms as specialist help with digital products. MobyMaps is a pet project I was inspired to start working on after a 2-year stint travelling around South East Asia & Australia. I like to call MobyMaps 'functional art' – they are stylish world maps silkscreen printed on to large cork boards and framed with rustic wooden frames – there's nothing quite like them. It was always my aim to produce cool, affordable maps for backpackers on their return home. The demand for them have been growing amongst the luxury furniture stores here in Dorset & Hampshire. Wishylist has also been a rather long project - something I started 4 years ago when I created a prototype for my family to use - to share what we wished for Christmas each year. Our rather large family lived abroad and rarely got to see each other, it was difficult to know what to get one another. Since then my vision has expanded and my pursuit to build something bigger and better has taken me all over the world from London to Germany, Thailand, Malaysia and the Philippines (but not yet America). Currently Wishylist is a (free) app on iTunes with features that work and daily downloads. 2. What do you think of the Bournemouth start-up scene? You also organize the Bournemouth Start-ups meetup every month. How has that experience been? Bournemouth is a great place to live with a bright future, but it's not all it's cracked up to be. It definitely lacks the infrastructure and support for a tech scene to thrive. The local councils seem to believe that having 'the world’s fastest broadband' is a big incentive which isn't true – just look at the thriving tech scene in Thailand and Bali – they have some of the worst connections yet they're thriving because of low-cost of living on one hand in Thailand and access to a pool of funding in Indonesia. The trouble with Bournemouth is the lack of funding and initiatives to support tech start-ups which do not meet with traditional business models. Unfortunately, the British mind-set is not as risk-averse as US investors’ are at -hedging their investments on start-ups with great ideas. A couple of years ago I began Bournemouth start-ups with a few chaps to create a place for like minded tech entrepreneurs to meet and help each other. It had a good run until the other founders left Bournemouth in search of better support in America. The experience has taught me a lot and I've perhaps been the most fortunate from it having met so many interesting people some of them I can now call good friends. I'd still like to see the group get going again, perhaps with help from the new Silicon South taking steam. 3. What are your biggest learnings as an entrepreneur? “Never give up!” Be kind to yourself when things get tough. Meet as many people as you possible can. Take what everyone says lightly – they don't know your business, or quite what you envisage. Stick to your guns as you're probably right. But the biggest learning is probably that unless you've been through business school, you probably have to fail at starting a business before you will learn how to actually run it. The one thing I learnt the hard way is that unless you are a whiz developer, then really it's “all about the money”. I would suggest, do not give up your day job until your business is making enough money to support you. Oh! and The Lean Startup is probably the best book ever, read it and re-read it. 4. What are your expansion plans? Is Asia on the cards for you? Asia is definitely on the cards, as I mentioned I've spent a great deal of time making connections out there both for Wishylist & MobyMaps. I wouldn't mind having a more permanent base in SE Asia / Pacific! I was at a KickStart.my start-up event in Kuala Lumpur in 2014, held at the headquarters of Mindvalley, shortly after I had attended the Awesomeness Fest (A’fest) conference for entrepreneurs, in Thailand. I was working from KL for a couple of months and stayed at one of Khailee Ng's apartments (Managing Partner of the legendary 500 start-ups). I also visited Philippines at this time in search of contacts. I was at the A'fest (Awesomeness Fest) to make contacts with investors and found myself quite randomly on a plane to KL with a bunch of other entrepreneurs for 2 weeks of utter madness and business-partying. (LOL!) 5. Are you looking for funding? If so, at what range would you pitch your requirements at? Yes, funding I am in need of, specifically for WishyList. Something to the tune of £20K will help build a better prototype. To create the capabilities that’s my vision for this product, I would say an amount of £250k is required. Contact Rory at, LinkedIn - https://www.linkedin.com/in/waymoby Facebook - https://www.facebook.com/rory.lawrence Email - rory@waymoby.co.uk Notes: All the wonderful pictures in this post are sourced from Rory’s own collection #MobyMaps #article #Startups

Two business truths that are not going to reverse in the future - global mobility and the cloud. We live in a business century where people (even SME people) have to travel. We also live in an era where data on the cloud is considered safe and almost a requirement for ease of doing business. Xero is a small business accounting software that has seen exponential growth in less than a decade. To say that it offers this "mobility" to be more efficient would be an understatement - is that at the core of their success? Sharing a few thoughts here, Xero solves a problem - it makes bookkeeping and accounting an easier task than it usually is. As an Accountant, I have first-hand experience on how delightful the experience is. How about, 1. Direct bank feeds in four main markets - New Zealand, Australia, the US and the UK - you don't need to enter bank transactions line by line into an accounting software 2. A one ledger system (can support multiple logins) 3. No backups for financial data stored - they do that really well on their own 4. In the 6 years I'have used the system, it has not crashed or been "offline" 5. Constant updates and added features that again solves critical problems raised by users These are just a few of the wonderful things 300,000 users around the world love about this software. I found this video which beautifully captures why a business owner chose Xero. You can find the original video at this link. #video #xero

An “entrepreneur” is deftly described as a person who sets up a business and takes the risks associated with it for profits. When an entrepreneur sets up a startup, the first employees he hires are the most critical resources he invests in. From the employee’s perspective, working for a startup puts him in the same boat as the entrepreneur - albeit as a co-passenger, contributing to the extent of making or breaking the business. I took the plunge to work with a start-up in vibrant Singapore in 2010. Soon after I joined, the realization dawned that the magnitude and intensity of the risk you take is nowhere near that of the owner but your fates are closely tied. The Big Change Your paycheck — might be lower than the market. A lot of smart start-ups offer ESOPS or other ownership plans and in time this could be a big bumper. Being a secondary earner, I could stomach the existential risk attached with the firm at the time. This is food for thought if your salary supports the family. Your days are also highly unpredictable. The first six months were the most testing — a period of waiting to see market reactions to our venture. You also need to adapt to things that “simply had to be done”. Like an entrepreneur, you may not have much of a choice to pick and choose the kind of work you do in the beginning. I once handed out service brochures on the street hoping to find new customers — not exactly something you’d find in a job description. It brought a new found respect to the many people who do this day in and day out. You multi-task and run everything from finance to HR and operations. The founders would definitely be building the business and really wants to do nothing with operations. If you are starting up from being a senior employee elsewhere, be ready for this. Decision — making Nothing can test your decision making skills as much as having a defaulter on the other end of the phone with unending excuses for non-payment. You end up deciding on the spot whether you want to drag the payment for another quarter or take an 85% payment right away. Of-course, when your clients are other start-ups, a quarter could mean they are no longer in business. Being street-smart doesn’t come easy yet no start-up can survive without that. The environment is wonderfully autonomous –you also live with the consequences of your decisions. An open culture This is perhaps one of the true beauties of being part of an early venture. If the founding team is liberal minded (as they usually are), they want someone who calls a spade a spade. I’ve learned that when entrepreneurs look for people to work with, they usually appreciate individuals who fit into a team but have individual opinions. It will also teach you how to work closely with someone on innovative strategies and ideas. You agree to disagree and move on. There were instances where I openly objected to business decisions. Some were dropped, some others turned out to be winners and then some - mistakes. The important thing here is — we learned to respect each other’s’ guts. If you’re highly process-driven and like that in a workplace, a start-up is no place for you. Get Uncomfortable It’s an unsaid ground rule. I had to move out of my comfort zone — a lot! Attending networking events would never have been part of my job unless I made a “significant somebody” in a larger firm. Yet, I attended a lot of them while still a starting employee. I took time to embrace this unconventional work-style. Chasing people for money was embarrassing at first, but bills had to be met. Writing content for the company website — never imagined it. Wrote for around three versions of it. Do it We know it’s not a bed of roses. When money is scarce, you really question the moral correctness of the decisions you make and the projects you have let go. Holidays may have to be deferred to suit business realities. Personal life suffers and you’ll realize you’re spending a lot of time with your colleagues. Quite comparable to when you are the beacon bearer. Comparable - not the same, it would be audacious to say it’s the same as a founder. Given all that, I won’t hesitate to do it all over again — it’s been the most rewarding experience of my professional life. In the time I spent with the firm, I got a CPA, gave birth and moved countries while contributing to scaling it (upwards). On an individual level, I’ve become better at solving problems and more resilient, even developed a stomach to take a few risks — all qualities for a lifetime. This is a ride I’d suggest people take. Especially if you’re thinking of joining the entrepreneurial bang wagon. Here’s how I would define a first employee — someone who joins a venture because he believes in it, is a voracious advocate of it, sticks around to see it grow and works for more than just a paycheck. The article initially featured on Hacker Daily - Medium. Picture Credit - pexels.com #article #change #entrepreneur

Welcome to our first video blog on Transfer Pricing. We look forward to your comments. References OECD - http://www.oecd.org/ http://www.investopedia.com/terms/t/transferprice.asp #video #TransferPricing