What to do with a modest cash surplus?

[lawtoni]

Hi,

Could anyone please give me and advice about what to do.

I am the sole shareholder of a one man band ltd company.

I have (depending on the time of year) between 10- 40,000 of cash in the bank. Some of it profits, some reserved for corp tax and VAT. I therefore need good access to most of it.
My question is what can I do with that money other than leave it in my company savings account generating almost no interest at all?

Do you have any advice about what you do with this money in your own companies? I am thinking a relatively low risk share portfolio? Any other suggestions very welcome.

I realise I'm not talking about big bucks here but it would be nice to make it work for me a bit.

Many thanks in advance

[Podie]

Premium savings bonds?

[Rollin]

Mine goes in an account to offset mortgage.

[northandy]

I'm sure Eric will be along sometime to offer advice, but my basic understanding is that you need to be sure whatever you do is covered in your trade detail of the business, as obviously any additional income would need to be included in your accounts if your using the company funds.

[lawtoni]

northandy said:

I'm sure Eric will be along sometime to offer advice, but my basic understanding is that you need to be sure whatever you do is covered in your trade detail of the business, as obviously any additional income would need to be included in your accounts if your using the company funds.

Wow so what ever I do with the money has to be in the same field that the company operates in?

So share portfolio or property are no no s?

many thanks

[Muffsy]

lawtoni said:

Hi,

Could anyone please give me and advice about what to do.

I am the sole shareholder of a one man band ltd company.

I have (depending on the time of year) between 10- 40,000 of cash in the bank. Some of it profits, some reserved for corp tax and VAT. I therefore need good access to most of it.
My question is what can I do with that money other than leave it in my company savings account generating almost no interest at all?

Do you have any advice about what you do with this money in your own companies? I am thinking a relatively low risk share portfolio? Any other suggestions very welcome.

I realise I'm not talking about big bucks here but it would be nice to make it work for me a bit.

Many thanks in advance

Stick the lot on Brazil to Win the World Cup...

[ColinM50]

lawtoni said:

Wow so what ever I do with the money has to be in the same field that the company operates in?

So share portfolio or property are no no s?

many thanks

But you can amend the Mem and Arts quite easily at a Borad meeting surely? then do whatever you want with the money?

How about trading in classic cars, or fine art or wine a la fergie?

[HoHoHo]

My understanding is you have to be very careful using Ltd company funds for your own gain.

You can't for example use them to offset your mortgage.

If you were a 'Sole Trader' the rules are totally different as it's actually 'your' money.

Eric will confirm I'm sure.

[HoHoHo]

My understanding is you have to be very careful using Ltd company funds for your own gain.

You can't for example use them to offset your mortgage.

If you were a 'Sole Trader' the rules are totally different as it's actually 'your' money.

Eric will confirm I'm sure.

[northandy]

lawtoni said:

Wow so what ever I do with the money has to be in the same field that the company operates in?

So share portfolio or property are no no s?

many thanks

Not necessarily, but you need to tread carefully, get proper advice first.

Say your a plumber, and obviously your main line of business is that, which you make a nice profit doing so, but you decide to invest all the companies spare cash in shares in xyz which go bust. Which then forces you to lay off all your staff and go bust yourself as cashflow is compromised Companies house may take the view that as a director you should have acted in the interests of the business, of which investing wasn't doing that.

I know that's not what your suggesting, but definitely take to your accountant first.

[lawtoni]

northandy said:

lawtoni said:

Wow so what ever I do with the money has to be in the same field that the company operates in?

So share portfolio or property are no no s?

many thanks

Not necessarily, but you need to tread carefully, get proper advice first.

Say your a plumber, and obviously your main line of business is that, which you make a nice profit doing so, but you decide to invest all the companies spare cash in shares in xyz which go bust. Which then forces you to lay off all your staff and go bust yourself as cashflow is compromised Companies house may take the view that as a director you should have acted in the interests of the business, of which investing wasn't doing that.

I know that's not what your suggesting, but definitely take to your accountant first.

Many thanks for this. I'm surprised tho, I thought this was standard treasury activity? Eg I'm sure british airways have investments and shares in non aerospace companies.

You've convince me to get further accountancy advice tho, so many thanks for your advice

[northandy]

lawtoni said:

Many thanks for this. I'm surprised tho, I thought this was standard treasury activity? Eg I'm sure british airways have investments and shares in non aerospace companies.

You've convince me to get further accountancy advice tho, so many thanks for your advice

It will be that their shareholders are aware and are happy (and have probably approved it).

It may be in your case there's no issue, but worth checking first.

[JHeardy]

Hi,
i'm in a similar situation to the Op and unsure of the best thing to do, we currently bank with the Co op and have done so for the last 6 years since we started up
We used to put so money to one side for in their "Guaranteed investment fund" at least i think thats what it was called, we could choose between 3-6-12 months Etc and that worked for us as we could still acess it if need be in an emergency.
Now though its tied up with no access till the end of the term which i'm not keen on.

Any suggestions would be appreciated
Jason

[RBOnline]

lawtoni said:

Hi,

Could anyone please give me and advice about what to do.

I am the sole shareholder of a one man band ltd company.

I have (depending on the time of year) between 10- 40,000 of cash in the bank. Some of it profits, some reserved for corp tax and VAT. I therefore need good access to most of it.
My question is what can I do with that money other than leave it in my company savings account generating almost no interest at all?

Do you have any advice about what you do with this money in your own companies? I am thinking a relatively low risk share portfolio? Any other suggestions very welcome.

I realise I'm not talking about big bucks here but it would be nice to make it work for me a bit.

Many thanks in advance

The money doesn't belong to you, it belongs to the Company.

It's always nice to do things yourself, but if you're not clued up in a particular area, consult a professional. Legal and/or financial.

[lawtoni]

[quote=RBOnline]

The money doesn't belong to you, it belongs to the Company.


okay work for the company!

[RBOnline]

lawtoni]BOnline said:

The money doesn't belong to you, it belongs to the Company.


okay work for the company!

I appreciate that you are the sole shareholder and presumably the Director. But in a legal sense the money belongs to the Company.

[lawtoni]

RBOnline said:

lawtoni]BOnline said:

The money doesn't belong to you, it belongs to the Company.


okay work for the company!

I appreciate that you are the sole shareholder and presumably the Director. But in a legal sense the money belongs to the Company.

Yes, but I wanted to make clear that I want the best return for the company. I could take more out as dividends but I would like to invest back in the company in a year or so, so I won't.
Ido understand your point tho

[maffski]

Can you not just take it as a directors loan, then pay it back in when you need to/before you have to declare it or pay interest?

Then it is, for a short while, your money - so you can use it in an offset / savings account / short term bond.

Although, being new PH - isn't the answer an electric company car?

[Fotic]

northandy said:

Not necessarily, but you need to tread carefully, get proper advice first.

Say your a plumber, and obviously your main line of business is that, which you make a nice profit doing so, but you decide to invest all the companies spare cash in shares in xyz which go bust. Which then forces you to lay off all your staff and go bust yourself as cashflow is compromised Companies house may take the view that as a director you should have acted in the interests of the business, of which investing wasn't doing that.

I know that's not what your suggesting, but definitely take to your accountant first.

I'm absolutely fascinated by this reply and implore you to tell is what Comanpies House would do in this scenario and how you know this.

[0000]

My accountant seemed to think as long as I kept in mind it was company money I could do as I see fit for the company (100% shareholder, only employee). The example we used was that I could create a share dealing account in the company name and invest through that with any profits being returned to the company account.

I'm not an accountant, there's probably a whole load of small print and gaps in what I remember, but that's what I took from our conversation. I haven't actually bothered doing it yet because my time seems better invested in what the company does, but as the numbers rise I'm more tempted.