Month: May 2023

A qualified business plan is a necessary document for any business. It helps you to apply for funding or, to begin with, to make your objectives concrete. However, the business plan, or business strategy, remains the cornerstone of the organization and the first step towards a successful business, even for entrepreneurs who have been running a profitable business for years.

It takes a lot of effort and requires specialized knowledge to write a business strategy. Do you need a business strategy, but don't know where to start or don't have the time? Then the plan can be written by hiring us.

Why a business strategy is crucial

As mentioned, a business strategy is the cornerstone of any company. It is often seen as a necessary component full of numbers and a drive to secure a business financing. While it is a necessary document when applying for funding, its main purpose is to guide your goals, clarify your strategy, and encourage critical thinking in business.

If your business has been operating for some time, the business plan can be used to determine if you are still on track. Regardless of whether you need a bank loan, the business plan is therefore primarily intended for you.

The parts of the business plan:

Every business strategy has a number of fixed elements. The same parts can be found in many example business plans that you can find online.

1. Brief overview

Although it may seem strange, a good business plan always starts with a summary. Despite the fact that you can only write this part towards the end, put it first. After all, banks and investors want to know where they stand as quickly as possible. So, starting with a concise but comprehensive summary increases the likelihood that your entire business plan will be read and funding awarded by letting funders know right away if your proposal is something they're interested in.

2. The company and the entrepreneur

The first part of the business plan contains data about the owner of the business and the business itself. This essentially introduces you and your company, explains your thoughts and inspiration, and lists your company's goals. In addition, you go deeper into your mission and vision. You also include topics such as the location of your business, whether insurance or permits are required, the legal form you choose and why, etc. This part of the business plan is inward looking.

3. The market analysis and marketing strategy

Then the market for the company is mapped out. What is your target market, who are your competitors, how can you reach them and are there current trends or new breakthroughs in your industry? These are some of the outside influences that your business needs to run in the right direction. For this you can consult industry associations, banks or economic institutions such as Statistics Netherlands, because they often offer a wealth of data and figures that are crucial for your market research.

The five Ps (product, price, promotion, place and personnel), which you will discuss in detail here, are also part of the marketing strategy. Based on the findings, you make a “SWOT analysis”, a summary of the company's opportunities, threats, weaknesses and strengths. This gives you a quick insight into the areas where your business and/or your knowledge needs to be improved.

4. Financial Strategy

The financial plan, the last part of your business plan, helps you determine whether your goals are financially feasible. Of course, the numbers you provide in this section must be plausible and achievable.

The financial plan has several parts. You first make a budget for your ongoing costs, investments and liquidity. In addition, forecasts for turnover and profit are also included in this part of the business plan. This part of the business plan is often seen as the most crucial, as banks and investors are particularly interested in it. That's why a solid plan on a rock-solid foundation of numbers is essential if you need financing to start your business.

Each region in the world has its own regulatory body. Some regulations are identical while others are different. Here are some cryptocurrency regulations.

Financial Crimes Enforcement Network:

Because cryptocurrencies are money, the Financial Crimes Enforcement Network (FinCEN) requires them to be regulated. FinCEN grants licenses to crypto service providers; the network requires them to apply AML compliance standards and regularly track event and transaction data and submit reports.

SEC is the Securities and Exchange Commission:

Because the Securities and Exchange Commission (SEC) considers cryptos to be cash, securities, and cash equivalents, crypto exchanges must be registered. Individuals trading cryptocurrency must also follow SEC regulations and securities laws.

The Commodity Futures Trading Commission (CFTC):

The Commodity Futures Trading Commission (CFTC) views cryptocurrencies as commodities, similar to gold and other financial items, and has rules governing crypto transactions.

The difficulties of achieving cryptocurrency compliance

Cryptocurrency compliance, like any emerging innovation, is fraught with difficulties, including the following:

1. The available pre-existing customer behavior profiles are insufficient. Trying to predict and understand the abnormal and typical behavior of people is a huge challenge.
2. The crypto market is constantly littered with new technology and trends. As a result, there is a continuing need to update compliance requirements to reduce money laundering and the threat of scams.
3. Creating legislation that applies to all types of crypto assets is complex and time consuming. In addition, different regions have different regulatory bodies, which can be problematic due to differences in compliance regulations.

The main motivation for the development of cryptos was the desire for decentralization and anonymity in financial transactions. Governments and traditional financial institutions use restrictions and levies to control and influence how you spend your money.

Crypto-compliance attempts to mitigate the drawbacks of digital assets, but it appears that crypto-compliance undermines the fundamental purpose of cryptocurrency. As the crypto industry strives for perfection, crypto compliance seeks to monitor and influence how you use your digital assets.

The introduction of cryptocurrency is widely regarded as one of the most important changes of the twenty-first century. Its global reach and decentralized structure make it a new financial system with the potential to disrupt banking practices and give people more control over their money. However, there is a need to address a number of issues and challenges, and one method is to use cryptocurrency compliance.

Cryptocurrency was developed to address the shortcomings of the existing financial system. Cryptocurrency is not without its flaws, however, and there have been numerous reports of fraudulent transactions, crypto-cyber crime, and illegal use of digital assets. In response, governments and authorities have created cryptocurrency compliance to prevent these crimes.

Cryptocurrency compliance ensures that crypto investors and companies adhere to certain standards and regulations to keep financial fraudsters and cybercriminals at bay. These regulations and criteria vary depending on the crypto niche. However, all compliance standards aim to reduce fraud in the crypto space.

Anti-money laundering (AML), know your business (KYB), know your customer (KYC), know your transactions (KYT), taxes and customer due diligence (CDD) are all parts of cryptocurrency compliance.

Here is an overview of the three most important aspects of cryptocurrency compliance.

1. Anti-Money Laundering Regulations (AML)

AML regulations prohibit the use of custodial services and cryptocurrency exchanges for money laundering in the cryptocurrency industry. These regulations, laws, and guidelines make it difficult for cybercriminals to convert illegally acquired cryptocurrencies and assets into cash. The Financial Action Task Force (FATF) sets global standards for anti-money laundering (AML) legislation. The FATF published its Updated Cryptocurrency AML Guidance [PDF] in 2014. Most of the FATF's AML laws have subsequently been adopted by other regulatory bodies, including the European Commission and the US Financial Crimes Enforcement Network (FinCEN).

These AML laws are enforced by cryptocurrency exchanges, decentralized finance (DeFi) protocols, stablecoin issuers, and major NFT markets. They investigate, monitor and attempt to prevent any questionable transactions that may be associated with terrorist financing or money laundering.

Following are some AML regulations:

• All cryptocurrencies must use risk-based crypto KYC compliance. Individuals with a high risk profile must follow stricter crypto KYC compliance protocols, while those with a low risk profile may follow less stringent KYC protocols.
• Crypto exchanges need to keep track of their clients on a regular basis.
• Clients must not be politically exposed persons.
• Customers must be screened regularly to ensure they are not subject to international sanctions.

2. Know Your Client.

KYC requirements require centralized cryptocurrency platforms to identify and verify newly registered consumers. This allows the bitcoin institution to analyze the customer's level of risk in terms of financial and cyber crime. An exchange that does not require KYC is one of the warning signs of a shady cryptocurrency platform. Cryptocurrency institutions acquire and store personally identifiable information (PII) from users throughout the verification process. They then evaluate these to rule out hazards. Finally, these platforms validate individuals' identities against official databases that contain information on sanctioned individuals and politically exposed individuals.

Customers can access the crypto platform once they have been declared risk-free. KYC in cryptocurrency helps prevent criminal activities such as money laundering, tax evasion and the financing of terrorism.

3. Know your business (Know Your Business)

KYB is a crypto compliance structure similar to KYC. The only difference is that KYC is for individuals while KYB is for cryptocurrency companies. KYB allows crypto companies to lawfully access information about their customers and partners. During this process, information is collected about the ultimate beneficial owner (UBO) of the company, potential partners and clients are verified, and decision makers, directors, shareholders with more than 25% of the total shares and beneficiaries are all verified. Crypto companies must also check the source of income of their executives and owners, as well as whether they are politically exposed or on a sanctions list. Typically, these organizations are also required to provide a full overview of all their activities, as well as average annual and monthly sales, and other relevant legal information.

According to Swedish research, only 0,53 percent of cryptocurrency owners worldwide are willing to register their assets with their local tax authorities. But the willingness is greater in Western countries. In the Netherlands, 1,5 percent of cryptocurrency holders declare their income to the tax authorities.

24 countries were surveyed by Swedish “tax crypto platform” Divly about the tax compliance of cryptocurrency owners in 2022. With a staggering 4,09 percentage, Finnish cryptocurrency owners seem the most eager to meet their tax obligations. In Europe, Finland is followed by Norway (2,43), Sweden (1,72), Austria (2,75), Germany (2,63), the United Kingdom (2,61) and then the Netherlands.

Italy is last of the European countries with 0,26 percent. In 2022, Italians will only have to disclose their holdings of cryptocurrency if the total value exceeds 51.645 euros. With percentages of 1,62 and 1,65 respectively, the United States and neighboring Canada score relatively well.

Asian countries significantly reduce the average share. With a compliance rate of just 0,03 percent, the Philippines is ranked the lowest in the world. According to the Global Cryptocurrency Taxation Report, the Philippine tax authorities therefore levy a 35 percent tax on cryptocurrency assets, but only if the amount exceeds 4.500 euros.

Cryptocurrencies fall under box 3 capital in the Netherlands. Capital gains from trading cryptocurrencies are not taxed. On the other hand, it is taxed because it is a business activity.

Cryptocurrencies (electronic money) that have become increasingly popular since 2009 – such as Bitcoin, Ripple, Ethereum, Litecoin, IOTA and Dash – raise many questions about their accounting and tax returns. Below, as briefly as possible, what you should take into account.

The Dutch government and the European Union do not consider crypto to be legal tender. As a result, different rules apply to crypto than to common currencies such as the euro.

For individuals:

In certain situations, you must declare your income in box 1 of the income tax. That is the case if you do more than a 'regular' investor, such as 'mining'. 'mining' is validating and recording transactions on the blockchain through a computer. In case you trade crypto; then you must state the exchange rate profit in the declarations before mining. You then deduct the costs incurred from the income/revenues. You enter this information in box 1 “income from other work or profit from business”. The positive result is taxed with a maximum of 49,5% (in 2022) income tax.

Most private individuals do not trade actively but do own crypto. The possession of crypto falls into the category of 'other assets', in box 3 of the taxes. The reference date for the valuation is 01 January of the tax year. However, part of the assets in box 3 are exempt from taxes. This concerns the first 57.000 euros of the total assets. For tax partners, a tax-free capital of EUR 114.000 applies.

Finally: if an employer pays your salary in crypto, the employer must convert the value into euros at the time of payment of your salary.

For entrepreneurs:

If you are an entrepreneur for income tax purposes, or a BV, and if your services are paid for with crypto, you must convert the value of the crypto currency to the value in euros at the time the transaction takes place. You include this converted amount in the turnover. If your BV trades cryptocurrencies or engages in mining, you must report the results of both trading and mining in the profit and loss account.

Possible consequences if crypto is not declared on the tax return:

If you do not declare your crypto while you do exceed the exempt wealth threshold, the tax authorities consider this to be a deliberately incorrect declaration or tax fraud. If the tax authorities find out about this, you can be fined up to 300% of the tax you should be paying. In the worst case you could be prosecuted. The Tax and Customs Administration can call for redress up to five years after the tax return has been filed. So keep track of everything and don't forget to include your cryptocurrency in the annual tax return.

Investing is one of the best ways to lower your profits, provided you have the money, of course.

Then you will quickly end up with 3 types of investment deduction:

• KIA, small-scale investment deduction: applies to all forms of business. This concerns investments of between € 2.401 and € 323.544. The tax authorities use a table for this. See: Small-scale investment deduction 2023 (belastingdienst.nl)
• MIA, environmental investment deduction: only applies to entrepreneurs (zzp/ sole proprietorship/ general partnership). Only new business assets are eligible. In addition, it must concern environmental investments. To find out which business assets qualify for the MIA, you can visit the Environmental list.
• EIA, energy investment deduction: here also only applies to entrepreneurs (zzp/ sole proprietorship/ general partnership). Only new business assets are eligible. In addition, it must concern energy investments. For the EIA you can use the Energy list .

With the MIA and EIA, the percentages may differ per year. In addition, a threshold and ceiling amount also apply. Before you apply the MIA or EIA, you will first have to make the investment report to RVO.nl. This notification must take place within 3 months after entering into the investment obligation.

If a business asset qualifies for both the MIA and the EIA, you will have to choose which of the two you want to apply. It is not allowed to use both.

Do you have any further questions about your situation? Please feel free to contact us via the contact form.

Buy a motorcycle at the business? Yes you can, but be careful.

You must demonstrate business use of your motorcycle; so it must be well defensible. Of course, the tax authorities do not want to contribute to your hobby!

An explanation for business use may lie in the fact that you can reach customers faster because you are less bothered by traffic jams. But are you, for example, a handyman as a profession then a business usage is not easily defensible. How do you transport your tools for example?

Unlike a company car, you do not have to report the private use of a company motorcycle to the tax authorities. There is no addition for a motorcycle.

If you classify the purchase of your motorcycle as business use, then the purchase and use costs are recognized as expenses in your company. A correction must then be made for the actual private use. For this you need to keep track of how many private kilometers and how many total kilometers you drive with the motorcycle on an annual basis. The ratio between private and total kilometers is the ratio for the part of the costs and VAT that must be corrected. Costs and VAT of private kilometers are therefore not eligible for deduction. The ratio of the costs and the VAT related to the business use of the motorcycle are then deductible in your company.