Ltd Company - Make my cash grow
Discussion
Hi all,
I run a LTD company which operates two holiday rentals.
I generate quite a bit of profit and take no income. I use the profit to pay back the loan faster as I can make unlimted payments.
However I do keep some cash aside in my account to cover any sort of disaster or a slump in business etc. However the cash is just sitting there earning nothing. Is there such a thing as a business bank savings account which I can transfer it to and hold there but not having to account for it per se. Yes I'd pay tax on the interest income, but something is better than nothing.
Any smart ideas?
I run a LTD company which operates two holiday rentals.
I generate quite a bit of profit and take no income. I use the profit to pay back the loan faster as I can make unlimted payments.
However I do keep some cash aside in my account to cover any sort of disaster or a slump in business etc. However the cash is just sitting there earning nothing. Is there such a thing as a business bank savings account which I can transfer it to and hold there but not having to account for it per se. Yes I'd pay tax on the interest income, but something is better than nothing.
Any smart ideas?
How do you bank with currently?
My ltd company uses Cater Allen for business banking, and they operate a business saving account that runs alongside the normal 'reserve
' banking account. I can move monies between the 2 as needed, so keep the surplus funds in the saving account and keep enough of an operating float in the main account.
I would have thought that other banks that do business banking would offer similar services?
My ltd company uses Cater Allen for business banking, and they operate a business saving account that runs alongside the normal 'reserve
' banking account. I can move monies between the 2 as needed, so keep the surplus funds in the saving account and keep enough of an operating float in the main account.
I would have thought that other banks that do business banking would offer similar services?
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
Roman Rhodes said:
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
How come no tax and don’t you need to be careful about not crossing lines which HMRC May start viewing the company as an investment vehicle?Roman Rhodes said:
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
How do you pay no tax?Alpinestars said:
Roman Rhodes said:
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
How do you pay no tax?EddieSteadyGo said:
Alpinestars said:
Roman Rhodes said:
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
How do you pay no tax?trickywoo said:
Roman Rhodes said:
Depending on your attitude to risk you could buy some shares in high yielding blue chip FTSE companies (e.g. Shell). You could generate 4% fairly easily with no tax to pay. If the world ends you have lost your cash though. If it doesn’t they can be readily sold if/when you need the cash.
How come no tax and don’t you need to be careful about not crossing lines which HMRC May start viewing the company as an investment vehicle?craig511 said:
I generate quite a bit of profit and take no income. I use the profit to pay back the loan faster as I can make unlimited payments.
Can you make any payment holidays on the mortgage if disaster strikes?If so - you could just pay more off and reduce the amount you keep aside for rainy days...
Bank wont allow holidays etc.
My company regardless of what business it does has fixed costs. To let me sleep well at night I keep a years worth of "fixed" costs in cash to ensure should anything bad happen the company can at least tick over for a year by itself.
Anything over this amount goes back to paying the loan off.
So shares huh, need to check that out. I looked at easy access but 0.5% is poo.
My company regardless of what business it does has fixed costs. To let me sleep well at night I keep a years worth of "fixed" costs in cash to ensure should anything bad happen the company can at least tick over for a year by itself.
Anything over this amount goes back to paying the loan off.
So shares huh, need to check that out. I looked at easy access but 0.5% is poo.
craig511 said:
My company regardless of what business it does has fixed costs. To let me sleep well at night I keep a years worth of "fixed" costs in cash to ensure should anything bad happen the company can at least tick over for a year by itself.
So shares huh, need to check that out. I looked at easy access but 0.5% is poo.
If you want to sleep well at night with a year's worth of fixed costs readily available then I strongly recommend NOT investing in equities (shares).So shares huh, need to check that out. I looked at easy access but 0.5% is poo.
We are now 10 years into a bull market so lots of investors only remember shares simply plodding upwards.
I have invested through two bubbles and it is NOT an easy night of sleep when you are trying to navigate a bear market.
Even in a relatively benign market it can be scary. The SXXP (Europe's 600 largest stock index) dropped from 403 to 363 (-10%) between January and March this year. Would you be happy underwater by that much vs your fixed costs?
Across the whole of 2015 it was down about 20%.
Risk-free returns (e.g. the 0.5% above) are low for a reason!!
And even if you did trade like Gekko then you are going to have to pay some tax, which will limit your return... and trading costs of course...
trowelhead said:
How do you buy shares with company funds then?
I've been trying to find a ltd co share dealing account for a while with no luck.
Interactive Investor have the option of a company trading account.I've been trying to find a ltd co share dealing account for a while with no luck.
https://www.ii.co.uk/ii-accounts/other-accounts/
trowelhead said:
How do you buy shares with company funds then?
I've been trying to find a ltd co share dealing account for a while with no luck.
Interesting re the dividends being non taxable.
Assuming capital gains is paid at corp tax rates when the shares are sold?
There’s these things called stockbrokers...I've been trying to find a ltd co share dealing account for a while with no luck.
Interesting re the dividends being non taxable.
Assuming capital gains is paid at corp tax rates when the shares are sold?
Correct - Corp tax on any gains.
As I highlighted in my first post - this is not a risk free option so if peace of mind is objective number one then avoid. Don’t have to only invest on the UK stock exchange - anywhere with the right tax treaties will do.
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