any ways to earn iinterest on company bank acc?

Fulham_Mark

I always seem to have £60k balance in my biz acct.

It earns no interest at HSBC. but is a good reserve fund.

Rather than pay myself some and pay 51% in tax and ni, are there some ways to earn interest even fixed term?

many thanks.

chalkie99

If this is profit from your business activities then tax is due one way or another anyway, regardless of whether you "draw it off" or not

Are you a sole trader or a Limited company?

paulwf

My advice is if you need any stock or consumables invest in that as much as possible. We're in a fairly unusual situation at the moment with a high inflation rate and low interest rate. Where possible I'm buying enough stuff to tide me over for anything up to 3 years, a lot of my suppliers are imposing quarterly price increases and I'd say the inflation rate for a lot of goods I buy is more like 10-20% rather than the stated 4-5%.

Anyway, HSBC should give you a dedicated financial advisor who can help. Drawing some off in pensions and life assurance might be worth looking at but its not my strong point so I'll keep quiet on that area

mgroves

paulwf wrote: »

My advice is if you need any stock or consumables invest in that as much as possible. We're in a fairly unusual situation at the moment with a high inflation rate and low interest rate. Where possible I'm buying enough stuff to tide me over for anything up to 3 years, a lot of my suppliers are imposing quarterly price increases and I'd say the inflation rate for a lot of goods I buy is more like 10-20% rather than the stated 4-5%.

Anyway, HSBC should give you a dedicated financial advisor who can help. Drawing some off in pensions and life assurance might be worth looking at but its not my strong point so I'll keep quiet on that area

I'm assuming the money is profit, rather than simply revenue, else the question of tax wouldn't arise.

Not sure that stock or consumables make sense as an investment, myself. They are a hedge against inflation (perhaps), but unless their intrinsic value is going to rise, they are not an investment. On the contrary, there are several reasons why you wouldn't want to have excess stock or consumables:

• Stock typically depreciates in real terms; slowly if conditions are good, but it can sustain damage, become obsolete, or drop in price (either itself, or competitive products), in which case it will depreciate fast.
• You no longer have choice - once you have bought the stock, you can't change your mind and buy something else to fulfil an unexpected order, or whatever.
• Holding stock costs real money - insurance (or risk), storage, handling, etc.

That money is the return on your investment - if you re-invest it in the business (by keeping it there), it must make a good real return in its own right. If you're a sole trader, you will have to pay tax on the money at your own marginal tax rate, regardless of what you do with it. If you're a limited company, the company has to pay company tax, and then you can draw the remainder as dividends and pay tax at a dividend rates (generally will work out lower than your personal tax rate). Or you can leave the money in the company, and the company can invest it, and again, any returns will get taxed twice (once when they are made, once when they are drawn).

paulwf

I understand your point of view mgroves I guess it depends what type of business you have.

To give an example a lot of basic office supplies I consume...and probably will for quite some time...seem to have gone up 20% since last year. I might as well stock up now especially as there are quantity rates.

OTOH when I used to work in the cycle industry any stock over 12 months old rapidly devalued in resale price so you wouldn't want to stockpile then.

David42

For long term cash there is a new 6 month notice account account on the market paying 3.5%, guaranteed to be 3% above base rate, and it accepts business customers.

Link to the account here
http://www.securetrustbank.com/savings-accounts/183-day-notice-tracker-account

Link to a couple of threads discussing the account and the risks here
https://forums.moneysavingexpert.com/discussion/3276996

David

Fulham_Mark

thanks guys. I posted the question and then had an opportunity to take a cheap holiday so disappeared for a week.

The bank account looks interesting. The money is all post-tax profits. The company would pay tax on the interest I presume but that would be better than 0.01% interest in the HSBC biz account.

Denzel09uk

Currently where I work we do an overnight sweep into a deposit account which earns us interest. Not sure if this would interest you.