You’ve worked hard and built up a cash surplus in your business – and the banks give you virtually no interest on it … so what are your options?
Firstly, well done! Not every business is fortunate enough to be well run and have cash savings. But just like every other part of your business you need to be aware of your options and consider what is best for the company. So this is a brief run through of some of the options available to you.
- Keep your cash as cash!
If you have plans to use it within your business in the next few months then this is the obvious choice. Also, you always need to keep some cash available. However, if your business is generating cash then you probably don’t need to keep all of it as readily-accessible cash.
- Pay big dividends
You’ve worked hard for the money, so pay the profits out! Of course, paying big dividends will also lead to big tax bills, so it is worth while thinking about your other options.
- Your company can repurchase some of its shares
A repurchase of shares is not always applicable, but if you can meet the HMRC criteria your company can pay you out a chunk of money as a capital gain.
- Pay loans to the directors
This is only ever a temporary thing – because loans need to be paid back! And because HMRC will tax the directors and the company on the loan.
- Invest in your business
Most businesses have things they can invest in, from equipment and marketing to buildings and people, or even in buying another business. What are your options for growing and expanding?
- Invest in property
Your company can invest in property, either business property or residential property. Quite often this is done via a second company and there are reasons why you structure it like this.
- Invest in pension contributions
Only a small proportion of people have great pensions, so putting more cash into your pension scheme is often a good idea. Also, putting cash into a pension could be the beginnings of a plan for your pension to buy commercial property.
- Invest in other assets
Your company can invest in other assets – like stocks and shares, or gold. In other words your company could be an extension of your personal wealth planning.
Of course there is often more to think about – and whilst using the money in a positive way is important, so are the consequences of such a decision. So before you take any action get professional advice: contact us today to discuss your options.