What to do with funds held in business account

[dmo]

Hi all,

I've been contracting for a year now andim conscious that the money I've been earning rough my contract held in the business account (I have a Ltd co) is rapidly depreciating due to inflation. I had a look around and most business accounts pay nothing to something very nominal - significantly less than your usual consumer accounts.

What do you wise folks do with the cash that builds up? I'm not keen on blowing it on a new car anytime soon, and would much rather have it at maintain a decent amount of growth during the current climate.

Suggestions / strategies welcome.. Thanks!

[Wanderer]

What do you wise folks do with the cash that builds up? I'm not keen on blowing it on a new car anytime soon, and would much rather have it at maintain a decent amount of growth during the current climate.

It's been talked about a few times here, do a search for Directors Loan.

If you have a flexible mortgage you might be able to take out a director's loan to pay off part of the mortgage.

DON'T take a loan if you are the sort of person who is "no good with money" and inclined to blow it all on beer and hookers. It's a LOAN and it must be paid back at the correct time or you end up in a pile of difficulty and hit with a big tax charge. Also get formal advice from your accountant on how you are going to operate the loan before you do it.

[dmo]

It's been talked about a few times here, do a search for Directors Loan.

If you have a flexible mortgage you might be able to take out a director's loan to pay off part of the mortgage.

DON'T take a loan if you are the sort of person who is "no good with money" and inclined to blow it all on beer and hookers. It's a LOAN and it must be paid back at the correct time or you end up in a pile of difficulty and hit with a big tax charge. Also get formal advice from your accountant on how you are going to operate the loan before you do it.

Thanks on the advice. Sadly Minot yet on the property ladder, so not able to invest it in brick and mortar. Will be a while until I reach that stage.

I was under the assumption that there were good funds or ways to allow businesses to grow their current cash. I also thought my accountant isn't allowed to advise me on this kind of info as they're not investment managers

[rambaugh]

Thanks on the advice. Sadly Minot yet on the property ladder, so not able to invest it in brick and mortar. Will be a while until I reach that stage.

I was under the assumption that there were good funds or ways to allow businesses to grow their current cash. I also thought my accountant isn't allowed to advise me on this kind of info as they're not investment managers

If you're just taking about investing company funds to try and keep up with inflation then the best place to start is business deposit accounts. There are several of these offered by high street banks / building societies.

The rate of return on these accounts are average at best...most will not even beat inflation if past figures are anything to go by. However, they are relatively safe, i.e. if you keep funds invested below FSCS limits - currently £85K.

[dmo]

If you're just taking about investing company funds to try and keep up with inflation then the best place to start is business deposit accounts. There are several of these offered by high street banks / building societies.

The rate of return on these accounts are average at best...most will not even beat inflation if past figures are anything to go by. However, they are relatively safe, i.e. if you keep funds invested below FSCS limits - currently £85K.

Spot on, that's pretty much what I was getting at. I always used to think companies had access to better returns on their current accounts, I guess.. Thinking bout it.. The low rates encourage you to invest the cash in the company and create some real economic value.

I feel like I've lost out on 2 years of interest against inflation so far. Getting kinda desperate as I find myself in a reasonably decent place yet unable to grow my money the same way others do... And I've no clue what everyone else are doing that I'm not! Guess that's part of the game

[northernladuk]

Technically it is not YOUR money. A subtle but impotrtant fact that many people fall foul of. forget this fact and you could end up paying a lot more tax if you choose a wrong option.

Remember any profit on your investments will be taxed.

Remember before locking your money away make sure you are using it most effectively. Do you have a pension for example? If not look into it.

What about your warchest? You could do with between say 3 and 6 months cash at bank just in case you hit extended bench time which many people do.

This kind of question is asked by most new contractors but there are not many valid options. Most schemes people come up with are just not viable due to BIK or returns not worth it so we are all open to ideas.

[cojak]

I feel like I've lost out on 2 years of interest against inflation so far. Getting kinda desperate as I find myself in a reasonably decent place yet unable to grow my money the same way others do... And I've no clue what everyone else are doing that I'm not! Guess that's part of the game

Not spending it in the 1st place is my guess...

[Hex]

Some savings accounts here: https://www.shawbrook.co.uk/business...ccount-issue-2

DYOR