Seven ways to get surplus cash in your business bank account working hard for you

Jul 01, 2021

Tony Byrne, managing director of Wealth & Tax Management.

All hail the ‘magnificent seven’ routes to managing your business cash most efficiently. Tony Byrne, managing director of Wealth & Tax Management, explains.

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I am surprised by how often I come across successful business owners whose businesses have a considerable amount of money on deposit earning zero or near zero rates of interest.

So here are seven ways to get surplus cash in your business bank account working hard for you.

  1. Maximise your employer pension contributions.

The maximum pension contribution is £40,000 a year (£80,000 for a couple) and unused relief for the previous three tax years can be carried forward to the current year.

  1. Invest surplus cash in a proper investment.

By which I do not mean a bank account.  Put money into a proper investment that invests in assets that will grow in value such as shares and property.

  1. Extract money from your business tax efficiently.

In a recent article, I explained how to withdraw cash from your business very tax efficiently by taking income mainly as dividends and re-investing into Venture Capital Trusts, Enterprise Investment Schemes (EIS) and Seed EIS schemes.

  1. Buy a top competitor and/or supplier.

Learn from the best.  This is what Amazon does.  Reduce competition and/or reduce the cost of suppliers.

  1. Buy your own business premises.

This can be done with or without your pension scheme but undoubtedly it is far more tax efficient to use your pension scheme.  Just work out how much you pay in rent annually and calculate how much you have paid over the years in rent. You may well find that it would have been cheaper to have bought your business premises instead.

  1. Invest in your business.

Need new plant and machinery, need more research and development or new IT equipment?  What are you waiting for?  The best companies in the world spend the most on investing in their own businesses such as Google and Amazon.  Little wonder they lead the world.

  1. Invest in your staff.

Your staff are your greatest asset, not your customers!  Invest in great staff, train them well, pay them above-average salaries and give them the top benefits, working conditions and employment terms and conditions.  They will then serve your customers really well.

If you are interested in discussing how to get your business cash working hard for you, why not benefit from a one-hour Discovery Meeting either at our offices or by a video conference call at our expense worth £270 to each of the first three readers who contact us before 31 July 2021? You know it makes sense.

We offer a great cup of coffee too – but, unfortunately, not a virtual one.

Ring us on 01908 523740 or for free on 0800 980 4516 or email wealth@wealthandtax.co.uk.

The contents of this article are for information purposes only and do not constitute individual advice. The value of your investments can fall as well as rise and is not guaranteed. All information is based on our current understanding of taxation, legislation and regulations in the current tax year.  Any levels and bases of and reliefs from taxation are subject to change.  

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