An unexpected situation arose, for example, for Ms Dana, who worked for 20 years as an accountant in a small firm. Because of the financial crisis, the firm made Dana and several other employees redundant.
After leaving her job, Dana registered as a jobseeker, and since she met the conditions for entitlement to unemployment benefit, the Social Insurance Institution began paying it to her. It will, however, be paid for a maximum of six months, so Dana is thinking about what to do next. She enjoys accounting and, since it is a field in which she has extensive experience, she is considering going into bookkeeping "on her own". She has no worries about finding clients: at first she would offer her services to family, acquaintances and her husband's company.
Where she should begin and what she certainly should not forget is what we will try to present to all of you who are determined to start building the foundations of your own business.
Where and how to begin
To start with, Dana must assess her goals objectively and with a level head. She needs to ask herself three questions:
- do I have the potential to do business on a large scale?
- can I invest in my business?
- what benefits apply to me?
1. Do I have the potential to do business on a large scale?
Dana must objectively assess whether she will offer accounting services to a small circle of people, or whether she has the appetite, the room and the potential to gradually take on bookkeeping for a larger number of clients. It is precisely this decision that will be decisive when choosing the form of business.
After years of working in a small firm, Dana may have a clear goal: she wants to continue at the same pace and will do bookkeeping only for people in her circle, with her expected profit not differing greatly from her previous salary. To make such an activity legitimate, a trade licence could be enough for her. From the list of unregulated trades she selects the trade of Bookkeeping, and in this way she can legitimise her accounting activities very promptly and cheaply. A significant advantage is that, as a sole trader, in her tax return she may deduct 60% of her income as flat-rate expenses, which she does not even have to document in any way. There is, of course, a cap. Dana then pays tax only on the remaining amount.
Liability insurance
If, after an initial consideration of her business options, Dana opts to do business as a sole trader, she has the opportunity to insure herself against the risks arising from liability for damage. Insurers offer various types of business liability insurance, and in some cases these policies also cover specific professions, among them the profession of accountant.
Dana therefore contacts several providers of insurance for accountants, presents them with the approximate scope of her planned bookkeeping, on the basis of which they calculate the amount of the premium for her, and she then chooses the best offer.
Such insurance will cover damage that Dana may cause when providing accounting services and will thereby pay any fines or penalties. Most insurers offer the option of paying the premium in instalments, either half-yearly or quarterly, so for Dana as a start-up entrepreneur it need not represent too high an outlay at the very start of her business.
Doing business on a large scale
On the other hand, she may want to get her business going on a larger scale and gradually offer accounting services to several companies and individuals, later with the help of her own employees. A larger business also brings greater responsibility, and it would therefore be a great risk to offer services as a sole trader, who is liable for her obligations with all of her personal assets. Even despite the accountant's insurance, a situation may arise in which Dana takes on obligations (for example for leased premises or borrowed equipment) that she is unable to repay, and, as a sole trader, her assets will be seized.
Dana approaches her planned business responsibly and, even though she does not plan to fall into debt, does not want to put at risk the real estate she owns; therefore, in the case of large-scale bookkeeping, she chooses the option of forming a company instead of a trade licence.
2. Can I invest in my business?
In connection with the first point, an important factor is also the financial input that Dana is willing to invest and sacrifice.
Getting a company off the ground is more costly, and she must first have a certain amount of capital at her disposal. If her planned accounting activities are extensive and she wants to take part in building her own accounting firm, the most suitable option for her will be to form a limited liability company (s.r.o.): she can form it on her own without other people and can hold the position of managing director in it, with only she herself always taking part in its management. She must, however, prepare the finances for its formation, from paying the court fee and any assistance from professionals to paying up the registered capital.
When it comes to investing in her business, however, Dana need not rely solely on herself. Most banks have a rich selection of services provided to start-up entrepreneurs and can help her in several ways. Dana can opt for one of the many types of loan, without having to document the purpose of its use, and can thereby obtain funds for the start of her business: she will buy the necessary equipment such as accounting software, a computer or a printer, and possibly acquire premises.
At most banks, the condition for drawing a business loan is the opening of a business account. As with the various types of loan, banks also offer various types of business account, with their price starting at approximately EUR 7/month. Alongside the accounts, various ancillary services may also be provided to her, and specialists at the banks will offer her advice in which they present the possible risks and help her set the amount and the maturity of the payments. It is important that she compare the services at the individual banks and try to find the most advantageous offer.
3. What benefits apply to me?
Retraining allowance
Despite her many years of experience, Dana has a healthy respect for the accounting business. As a jobseeker, however, she can obtain, through the Office of Labour, Social Affairs and Family (ÚPSVAR), a retraining allowance, which she can use to refresh all her knowledge in the field, or in other areas that will come in handy in her business. She is entitled to the allowance if, in addition to meeting the condition of jobseeker status, she has not been paid an allowance for the same type of retraining in the last 5 years. She files the application for the allowance at the relevant office on the prescribed form, on the basis of which the office then decides.
She can easily find courses among the offerings of many providers on the internet, and among the individual sections she may even find a separate part, Accounting courses, which deepen knowledge in the sphere of Dana's planned business. CAUTION! If Dana finds a suitable course on the internet, she must first submit the above-mentioned application to the relevant ÚPSVAR, and only complete the course after it has been approved. The office does not pay retroactively for invoices for courses in which the participant took part without having a prior agreement in place.
Business start-up allowance
Since, even before starting her business, Dana is assessing all her options and alternatives, she knows that if she chooses to do business as a sole trader and her business lasts at least three years, she also has the option of obtaining a business start-up allowance, which may be provided to her through ÚPSVAR.
The business start-up allowance is provided by the ÚPSVAR unit in whose district she will carry on her self-employment, and to this office she is obliged to send a written application, which represents the first condition for obtaining the allowance. The second condition for obtaining the allowance is that the applicant has been a registered jobseeker for at least 3 months.
The amount of this allowance depends on the total cost of labour, the region and the unemployment rate in the given district, and in some cases it can reach more than EUR 5,000.
EU contributions
Women's entrepreneurship is also a focus of the European Social Fund, which seeks to support start-up female entrepreneurs. For the fund, women represent a special target group, since they often have difficulty reconciling employment or business with motherhood and family life.
The fund regularly allocates funds to support female entrepreneurs in the form of various projects, which are updated on its website, as well as on the website of the Ministry of Labour, Social Affairs and Family of the Slovak Republic.
Answering all three questions will help Dana decide which form of business is the most advantageous for her, as well as get her bearings among all the advantages she can make use of.
In business there is no precise procedure or formula that will guarantee a successful business and that could be applied to every case. As unique as Dana's circumstances, goals and visions are, so too are yours, to which you must tailor your business. What is clear, however, is that you need not be afraid of doing business: there are many solutions, and the right one will be found for realising your idea, on which you can build your future career as an entrepreneur.