Guest post by Ben Hiorns
There is no downside to being flush with cash you that don’t need but it can be easy to fritter away if you’re not sure what to do with it. Proper management of surplus cash can help spur future growth for companies but what exactly can and should be done with that money?
There are hundreds of wealth management firms in London and across the country that can help you to deal with your extraneous cash but, meanwhile, here is some useful advice.
Invest in shares and stocks
If your company is looking for additional income then investing your cash surplus in stocks and shares can be a very wise move as long as you know where to invest and how much. It could be seen as a risk but as long as you‘re only investing surplus money that your business can afford to move then it’s often a risk worth taking. Note that you might also be better off investing personal, as that way you’ll receive at £12,000 annual tax exemption.
Pay it in dividends
If you distribute your surplus cash as dividends then not only is the first £2,000 tax-free but there are taxed at a lower rate in general. However, if your business income exceeds £32,000 then additional tax might need to be paid on the dividends, so it’s worth doing your research before going this route. Remember also that dividends can only be paid on profits.
If you’re a limited company that currently doesn’t have a pension plan for its employees then your surplus could go towards starting a pension plan that will motivate our workers and keep them on board for longer. Pension contributions are National Insurance free and your business should be able to claim Corporation Tax relief on them too, so that’s another benefit to consider.
Build interest on it
If there is enough of it, you could gain a significant amount of capital by simply investing your surplus into a high-interest bank account or company bond. Note, however, that this means you won’t be able to withdraw the money until the specified period has passed unless you want to suffer early withdrawal penalties. Many banks allow for more flexible dates, however, that can range anywhere from 30 days to a year. Generally speaking, the longer the period of time, the bigger the reward.
Give it away!
Finally, giving to charity is not only good for the soul but can significantly affect your brand’s reputation. Not only that, but it could be considered as a tax-deductible expense! Whoever said charity had to begin at home, right? Or you could do absolutely nothing with it we suppose. But what kind of a business plan would that be?
For more wealth management advice, look here