Investing Company Profits/Savings Investing Company Profits/Savings
Page 1 of 2 12 LastLast
Posts 1 to 10 of 13
  1. #1

    Default Investing Company Profits/Savings

    Apologies if I'm reposting something that has been answered many times before. It's my first post here.

    I've been contracting for around 9 months now and have started to build up a nice buffer in my company account. My question is, what is the best thing to do with the profits. My bank offers savings accounts with pretty much non-existant interest rates. I would have though trying to put this money to work would be the right thing to do.

    I'm not adverse to a little risk either, like investing in a fund/tracker/stocks (I do this personally already). But.....I'm not if that's possible for a LTD company, or if it is, where to start.

    Any advice from others would be greatly appreciated.

  2. #2

    Still gathering requirements...


    Join Date
    Jul 2015
    Posts
    39

    Default

    This has been discussed quite a bit.

    https://www.google.co.uk/search?q=si...ng+ltd+company

    Yes, it is possible. You can get Ltd company accounts from Selftrade, Interactive Investor, TD Direct, HL to name a few.

    You will pay corporation tax on investment profits, although you do get an indexation allowance. If you build up large amounts of money in the company then you eventually face the problem of getting it out.

    It is preferable to get as much money out as you can. Salary and dividends up to the higher rate tax, maximum contribution into a SIPP. Maybe have a warchest in the Ltd company that would cover you for a year or two, but keep that in cash or short term bonds unless you really want to invest it. You can find high(er) interest savings accounts but you will have to shop around.

  3. #3

    Double Godlike!

    stek's Avatar
    Join Date
    Oct 2009
    Location
    East of Eden
    Posts
    11,501

    Default

    Bear in mind this 'buffer' would likely belong to the tax man as you haven't paid any CT yet.

    Best to build up a buffer for your war chest and accrued CT/VAT rather that risk blowing money that isn't yours at this early stage.

  4. #4

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    39,465

    Default

    Quote Originally Posted by stek View Post
    Bear in mind this 'buffer' would likely belong to the tax man as you haven't paid any CT yet.

    Best to build up a buffer for your war chest and accrued CT/VAT rather that risk blowing money that isn't yours at this early stage.
    This. Get yourself a 6 to 12 month warchest above and beyond your tax liabilities and then start thinking what to do with the excess.

    Look for high interest accounts before investing. Aldermore for example.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  5. #5

    More time posting than coding


    Join Date
    Jun 2015
    Posts
    257

    Default

    As others have stated, be sure to have your liabilities covered and a war chest that covers a resonable amount of time.

    Beyond that I'd generally argue investing a surplus is a good idea. The first thing you can do is open up a SIPP and invest that. Then obviously invest extra money in the Ltd. I'd suggest you go with the boring slow and steady index funds, beyond that you're obviously aware of the risk.

  6. #6

    Default

    Thanks a lot guys! All makes very good sense. I hadn't really give enough though about the need to eventually get the money out of the company or making full use of my SIPP allowance.

    One more question if I may: You mention building up a warchest of 12-24 months first, which sounds very sensible. Do you mean 12-24 months of normal living expenses (i.e. the amount I transfer from the LTD company to my personal account each month), or a larger number (i.e. closer to what I bill my clients each month).

  7. #7

    Fingers like lightning


    Join Date
    Aug 2015
    Posts
    991

    Default

    Some (including myself) put some spare company quids into RateSetter (peer to peer lending). There is a tiny tiny risk, but it only ties my money up for a month at a time and I have no problem getting the equivalent of 3.7% annual return. You can get a higher rate if you are happy tying your money up for longer.

  8. #8

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    39,465

    Default

    Quote Originally Posted by welshdragon82 View Post
    Thanks a lot guys! All makes very good sense. I hadn't really give enough though about the need to eventually get the money out of the company or making full use of my SIPP allowance.

    One more question if I may: You mention building up a warchest of 12-24 months first, which sounds very sensible. Do you mean 12-24 months of normal living expenses (i.e. the amount I transfer from the LTD company to my personal account each month), or a larger number (i.e. closer to what I bill my clients each month).
    Why would your warchest be related to what you bill you client though?? What you need to live on personally and what your company bills the client are two different things. Very basic concept of contracting you must learn quickly

    The question you should be asking is is your 6 month warchest the absolute minimum you need to survive for 6 months or is it at the level you'd enjoy if you were still in a gig.... If that makes sense.
    Last edited by northernladuk; 6th December 2015 at 22:59.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  9. #9

    Nervous Newbie


    Join Date
    Jul 2010
    Posts
    16

    Default

    Quote Originally Posted by chopper View Post
    Some (including myself) put some spare company quids into RateSetter (peer to peer lending). There is a tiny tiny risk, but it only ties my money up for a month at a time and I have no problem getting the equivalent of 3.7% annual return. You can get a higher rate if you are happy tying your money up for longer.
    Can I open an account in the company name with RateSetter (I use them personally but their FAQs say

    Who can invest with RateSetter?

    To invest with RateSetter you must:

    - have a UK bank account, and
    - be at least 18 years of age.

    We will also need to be able to confirm your identity. We can usually do this automatically, but occasionally we will have to confirm details with you directly.

  10. #10

    Godlike


    Join Date
    Jul 2005
    Location
    Somerset
    Posts
    5,451

    Default

    I would expect that a company needs some sort of consumer credit licence to engage in peer to peer lending. The added compliance requirements may make it difficult to find anybody to take corporate money in modest amounts.

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •