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You probably have an idea in your head about what the black market is. That idea might have come courtesy of some action movie in which a shipment of illegal samurai swords leads to multiple car chases. In reality, the black market can be a much more every day occurrence and something businesses might not even realise they are coming into contact with.

It can be as simple as paying the carpenter in cash for a new front door, if your carpenter decides not to record and pay tax on that transaction. So if the black market really is all around us, what do businesses need to know about it?

A black market, also known as a shadow economy or underground economy, is a market where goods and services are traded illegally. The key point to understand is that the transaction is illegal, not necessarily the goods or services being traded.

Remember our carpenter, there’s nothing inherently illegal about supplying front doors but the transaction is illegal because it wasn’t recorded properly as part of the accounting process and as such it won’t be submitted to Revenue.

Why does the black market exist? Well, aside from the exchange of goods and services that are illegal or contraband, it is used to trade goods and services while avoiding taxes and price caps as well as other regulations which can decrease profits. For example, a carpenter who doesn’t record that he has sold and fitted a new front door might get away with not paying the VAT to Revenue. This means that he can keep more of the money received from the sale for himself or his business.

It’s important for businesses to note that because black market transactions are illegal they are seldom recorded. Therefore, they are not part of the accounting process or the formal economy. This means that the legal protection you expect to accompany standard transactions doesn’t necessarily apply. The primary reason for this is documents of record, or lack thereof. As our earnest carpenter didn’t record the transaction because he didn’t want to pay VAT, we didn’t get a receipt from him. Therefore, proving that the transaction actually happened with him could be more difficult than expected.

That’s not a good place to be if the hinges come off two weeks after the door has been installed. Always insist on a receipt for a sale, and an invoice if applicable.

Another area of business which contributes to the black market is employment and human resources. Whenever a business employs someone, there are certain obligations that they must meet. There’s a lot of paperwork to produce and taxes related to employment to account for and pay. If a business does not meet these legal and financial obligations, that employment could be contributing to the black market.

There are many theoretical debates regarding the black market and what place it has in our economy. However, the simple fact is that transactions that take place as part of the black market are illegal, and partaking in these can put your business in harms way from a legal standpoint. Here at Big Red Cloud we always support doing business the right way, that’s why we provide accounting software.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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