Business Savings & Investments
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Business Savings & Investments
Successful companies build healthy, profitable balance sheets, so the directors and partners need to decide what they want to do with the accumulated assets.
- Use the capital to invest further in the business?
- Use some of the capital to enhance the directors’ pensions?
- What are the tax implications for the company of a deposit account versus a company investment?
Company pension option:
One of the most attractive, tax efficient ways for company directors to extract profits from the company and turn them into personal wealth is to transfer these profits into a company pension.
Company Investment Option:
Often companies build large cash reserves, and this is retained in a company deposit account which is a good option for short term financial goals such as company cash flow etc. However, if interest rates don’t keep pace with inflation this hard-earned money is in fact losing value. As a result, over the long term, deposit accounts can actually be harming a company’s income generation.
Investing, on the other hand, aims to build wealth and gives you the opportunity to achieve growth and a potential higher return over time than you might get from a deposit account.
