[poll] What do you do with company funds?

[d000hg]

I haven't got round to any kind of investment with company funds, the money just sits there until I take a dividend which might then be invested personally, except I have moved funds to a "Money Manager" account paying .2% rather than 0% . Considering company accounts hold a fair whack of money I wonder if I should change that, or should take money out sooner to invest personally.

What do you do?

[pmeswani]

I haven't got round to any kind of investment with company funds, the money just sits there until I take a dividend which might then be invested personally, except I have moved funds to a "Money Manager" account paying .2% rather than 0% . Considering company accounts hold a fair whack of money I wonder if I should change that, or should take money out sooner to invest personally.

What do you do?

If you have an offset mortgate, you could transfer it to your mortgate account to reduce your interest payments and return it to your business before the month is out.

Personally, I would take a Directors Loan and use the money for what I require at the time. I get better interest rates from my personal account than from the business accounts.

[northernladuk]

If you have an offset mortgate, you could transfer it to your mortgate account to reduce your interest payments and return it to your business before the month is out.

Personally, I would take a Directors Loan and use the money for what I require at the time. I get better interest rates from my personal account than from the business accounts.

I really need to look in to this. There is so much conflicting information. You can take the 5K loan and do what you want with it but I remember in a couple of different threads discussions about taking it all and dumping it in your mortgage and then putting it back via an approved method that won't hit you for BIK or something but we never seemed to get to the bottom of how this was done or if it is allowable/worthwhile. Either that or get a mortgage linked to your business bank or something. Can't remember the details, no one seems to have done it though which is the warning flag for me.

[pmeswani]

I really need to look in to this. There is so much conflicting information. You can take the 5K loan and do what you want with it but I remember in a couple of different threads discussions about taking it all and dumping it in your mortgage and then putting it back via an approved method that won't hit you for BIK or something but we never seemed to get to the bottom of how this was done or if it is allowable/worthwhile. Either that or get a mortgage linked to your business bank or something. Can't remember the details, no one seems to have done it though which is the warning flag for me.

I don't know the approved way of doing it, but I am sure there is a way of doing it. If I understand it correctly, as long as you put it back into the business within a month, it shouldn't be a problem in terms of BIK. However, you would need to get clarification from your accountant to make sure that is ok.

[d000hg]

Personally, I would take a Directors Loan and use the money for what I require at the time. I get better interest rates from my personal account than from the business accounts.

Why as a DL rather than dividends?

I don't have vast fortunes in company accounts, somewhere in the £10-100k range, but that could still generate anything up to £1-2k in a good personal saving account compared to £50 in a business account, certainly worth having.

Does this fall into an area you can ask a contractor-focused accountant to advise you on, or is that outside the scope of your £70/month

[pmeswani]

Why as a DL rather than dividends?

I don't have vast fortunes in company accounts, somewhere in the £10-100k range, but that could still generate anything up to £1-2k in a good personal saving account compared to £50 in a business account, certainly worth having.

Does this fall into an area you can ask a contractor-focused accountant to advise you on, or is that outside the scope of your £70/month

If you want to transfer £70 pcm to my business bank account, I can provide a IANAA advice for you.

Without knowing your circumstances, taking a Directors Loan may be the most efficient way of taking the money out of your business without paying Higher Rate Tax.

If you are out of contract, then you can take a Divi and do what you please, but you may want to speak to your Accountant about the best way to take it out without paying too much tax.

But if it is spare cash and you have taken out the maximum amount of dividends and salary without going into the Higher Rate threshold, then a DL would be best.... Shirely.

So, how would you like to make your payment?

[MrRobin]

One question I've been thinking about too. I don't have squillions in the company account, but there is a fair whack (5 figures) , and is growing monthly. I have traditionally just taken the amount of divs that gets me to just below the higher tax threshold (about £33k) and that's enough to live on comfortably, and the long term plan is to keep building up and close down the company one day and take the leftover minus 10% CGT with the entrepreneurial relief.

[d000hg]

So you're basically treating the Ltd as a pension, since presumably we're talking £100k+ and a fair few years before you close it?

[MrRobin]

So you're basically treating the Ltd as a pension, since presumably we're talking £100k+ and a fair few years before you close it?

Potentially, yes.

Or could be a self funded 'golden handshake' if I ever take a permie position.

Or could be a war chest for harder times.

Or could be a fund for a plan B if I ever think of something viable

The way I see it, I don't really need the money myself right now so this is the most tax efficient way of not spending it.

[MarillionFan]

I just take out as much as is there(minus 21% for CT) and I leave the VAT and then stick it against my offset