Did you have a great year, quarter, or even a particularly great month? Unsure what to do about a surplus of cash from your business? Well, you could always keep it in the bank… or you could put it to use. Consider investing any excess cash from your business. Not only will this help you reduce your tax liability, but you’ll also generate additional income while doing so. If you’re interested in learning more about investing as a business owner, read on.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
An overview of investing as a business owner
Technically called corporate investing, investing as a business owner simply means that you are investing with the profits or a surplus of cash from your company. Instead of letting it sit in an account or drawing it as income, you’re putting your money to work. You can also use it as a way to withdraw additional money from your business tax-efficiently since it’s not intended to be used as income.
Often, business owners will opt to earn their income as a salary or through dividends. But you don’t want to take too much out of your business if you want to avoid an exorbitant tax bill. At the same time, letting your money just sit in a savings account earning little interest isn’t ideal either.
To break the stalemate, you can withdraw some money and strategically invest it.
The benefits of corporate investing
Ever since corporation tax started dropping, corporate investing has become an even more appealing option.
It’s a great way to turn your profit into an even bigger pot of money without any additional work. Plus, any decent portfolio will be diversified, so your investments will securely provide you with additional revenue streams.
Of course, as with all investing, there is risk involved. The good news is that even modest investments or those that are traditionally more secure are great options as any kind of investing will be beneficial.
Is investing right for you?
If you know that you’ll need access to cash in the near future to support steady cash flow, then investing might not be the right choice right now. If you’re just starting out or have a seasonal business, then having quick access to cash might be the best plan for you. If you’re considering using an excess and reinvesting in your business in some way, then investing won’t be right for you just yet.
Should I seek professional advice before investing?
If you’re new to the world of corporate investing, we highly recommend seeking professional guidance to help you along your journey.
Investing for business owners can get pretty complicated, so the best way to ensure you’re making the best, most tax-efficient investments is to work with an expert.
Independent financial advisers can answer any questions you may have, help you understand what your attitude toward risk is, and build you a customised investment plan.
If you’re interested in letting your company’s profits work even harder for you, get in contact with the experts at Dental & Medical Financial Services today.