3 Biggest Issues for Small Business in 2026, and How to Fix Them

As we get settled into the new year, it's important to pay attention to the big financial issues facing local businesses in 2026. I'm sure everyone is fed up of hearing about the big issues politicians' drone on about, but today we will cut through the jargon and explain in real terms the three biggest problems I see so far for local small businesses in 2026, and more importantly; what you can do about them.

Rising Wage Costs

Anyone who has even one person on their payroll doesn't need me to remind them that it's becoming increasingly more difficult to make that wage transfer each week. This year, some key changes are placing even more pressure on employers across the country. The minimum wage is now €14.15 per hour. With Employers PRSI included, this takes the total minimum cost for a 40-hour week for the employer to €629.68. In addition, for most cases employers will also need to contribute 1.5% of net pay (€7.47 here), to the auto enrolment pension. Even after doing so, they still need to explain to the employee why the same amount is coming out of their pay packet as well.

The best way I've found to manage this is a weekly transfer to keep your wage bill accurate. As you know, more often than not you can find the payroll for this week. Some weeks you don't even know how you managed it, but everyone gets paid. It's only when the monthly PAYE bill from Revenue arrives that the issues really start. I feel the best way around this is to make a small transfer each week, either to a deposit account or directly to Revenue for the PAYE owed on that week. Simply run a report and work out what the total taxes are for a given week, and straight after you've made the wage payments to the staff, make that transfer of the tax as well. That way, there are no surprises at month end when the brown, harped, envelopes start popping through the door.

Revenue Impatience

Something which has been slowly deteriorating towards the end of 2025 is Revenue's patience. Back when the Covid-19 pandemic arrived, Revenue were forced to 'loosen the reigns' so to speak on things like filing deadlines, compliance interventions, and debt collection. This was a necessary measure at the time; however, many business owners have gotten used to this new relaxed way of managing their affairs. Revenue have been trying to gently nudge people back to the level of compliance previously expected, but their patience has worn thin. From what I am seeing, they are clamping down on everything in a big way. In 2026 I expect there to be a very low tolerance for sloppiness, especially late filing, with VAT estimates being raised straight away, and issued to the sheriff for collection plus interest. Having everything filed accurately and on time has never been more important.

To avoid the sheriff turning up at your door looking to collect on a liability which Revenue literally made up, getting everything filed on time is essential. In terms of VAT returns, I find that breaking the bookkeeping work down into daily or weekly segments is the best way to stay on top of it. Leave things any longer and putting together all your invoices becomes a task no one feels like facing. If you can get your bookkeeping up to date on a weekly basis, it's very straightforward at the end of the VAT period to pull it together and make the return. Even if your accountant prepares your VAT for you, it's still worthwhile discussing an ongoing plan with them to have your information in on a weekly basis. In addition, if you do have trouble putting together the money once a liability is computed, it's always best for you or your agent to make contact with Revenue and explain the situation. Even though they are clamping down, they can be surprisingly understanding when you've got everything filed on time, up to date, and a have good track record.

Profit Margin Squeeze

A continuing trend over the last few years, most small businesses are experiencing a squeeze on their margins from all angles. Across the board, costs have been steadily rising; however, I'm sure you know the feeling of trying to raise your prices when "Johnny down the road can do it for half that". This pressure from customers to keep prices down inevitably leads to small businesses being left no choice but take all cost increases straight from their own pocket. This approach is usually fine temporarily, and when things have a chance to level out you can get your margins back on track. The issue is that over the last number of years nothing seems to be levelling out. The pull between rising costs and customer willingness to pay has just gotten steadily worse, and having compounded for about 5 years now, prices need to take a significant jump to make any difference, which makes the problem worse. The longer it's put off, the more the problem snowballs, and the only person suffering is you, the business owner.

It probably sounds overly simplistic to say the solution would be increase sales and decrease costs, but in essence, that's what needs to happen here. Even though it sounds simple, the way of doing it which I've found works best is very counter intuitive; get rid of some of your customers. I understand it sounds ridiculous, but you only need to increase you sales relative to costs, so if you could remove the least profitable customers or products, it would also allow you to remove the costs associated with them. When this is done, yes, your turnover will be lower, but your margin will be much higher which is the most important thing. The easiest way to start this is with a list of your customers. Go down through them and put an X beside those which cause you the most headaches. Basically, the customer who when their name pops up on your phone, you simply roll your eyes and wonder if you really need to answer them. That's your starting point, from there you can delve into more detail, but usually it doesn't change much after that. It's the clients who take the most of your time, never pay on time, and give out all the time, which need to go. If you'd like a more detailed template for how to go about this exercise in a more scientific way, click here.

Sometimes being aware of an issue is the first step to solving it. Thank you for taking the time to read, and I hope it has been of value. Watch out for next week's post, where we take a closer look at managing employees, and a Revenue deadline you may not have heard of. If you'd like to get in touch with any questions, or to learn more about fixing some of the problems we mentioned above, please do not hesitate to leave a comment, or reach out to us at info@jesinnott.ie.

Be advised that the information provided in this blog post is for general informational purposes only and does not constitute legal or tax advice. While we strive to ensure the accuracy and completeness of the content, it should not be relied upon as a substitute for advice tailored to your specific situation. We are happy to provide this should you require assistance on any of the matters outlined above.