Business account with interest rate

Marcon

HappyUser wrote: »

Hello


My company's income sits in my business bank account for a quarter until I can take it as personal income.


This results in money lost as it doesn't have any interest rate.


Is there any solution?

Open a second business account - one which carries interest - and use that as the holding account, transferring money to your current account as necessary.

Zanderman

Marcon wrote: »

Open a second business account - one which carries interest - and use that as the holding account, transferring money to your current account as necessary.

I'm sure the OP has considered that - his/her point was that their current business account earns no or little interest.

If another business account does then I assume they would transfer the whole lot to that account. No need for it to be a second one, especially as business accounts normally carry fees, so a second one would probably cost money, not earn it.

Can you actually suggest a suitable interest-earning business account?

Marcon

Zanderman wrote: »

I'm sure the OP has considered that - his/her point was that their current business account earns no or little interest.

If another business account does then I assume they would transfer the whole lot to that account. No need for it to be a second one, especially as business accounts normally carry fees, so a second one would probably cost money, not earn it.

Can you actually suggest a suitable interest-earning business account?

Certainly. I have two business accounts with Santander, one a current account and one a business savings account. There are no charges associated with the latter and all payments from clients are made to the savings account. I make transfers to top up the current account when necessary.

Brynsam

Zanderman wrote: »

I'm sure the OP has considered that - his/her point was that their current business account earns no or little interest.

Then keep the money somewhere else until it's needed. Pretty basic business sense.

Middlestitch

HappyUser wrote: »

My company's income sits in my business bank account for a quarter until I can take it as personal income.

Why? Invest it in your company's name.

sal_III

Just get a flex business savings account - Virgin and Aldermore offer 1.0%
Keep enough money in the current account to cover for 1-2m outgoings and shift everything else in the saving account. When CT/VAT is due just extract the required amount back to the current account and pay them.

Middlestitch wrote: »

Why? Invest it in your company's name.

Assuming Limited company - it's tricky, for most type of investments you need a license.

HappyUser wrote: »

Isn't taking money out of the business account monthly considered as income while taking every quarter is dividends?

The frequency is irrelevant to the type of payment legally. In the unlikely scenario that your company gets audited by HMRC, taking dividends in equal monthly chunks is bound to raise questions.

There are 3 ways to take money out of the company to your personal account:
- Salary/PAYE - comes out of company pre-tax profit. PAYE data needs to be submitted in advance to HMRC
- Dividends - come out of company post-tax profit. As they don't incur NI, this is how most business owners pay themselves. Usually distributed several times of year or at any interval the Director(s) decide to distribute them. Most likely OP is talking about that.
- Director loan - comes out of the company cash/reserves - can be drawn at any time, but must be repaid, no interest is payable back to the company if below £5k and must not be held for longer then 9m and there other rules.

Brynsam

sal_III wrote: »

J
Assuming Limited company - it's tricky, for most type of investments you need a license.

No - you only need a licence to accept money for investment by your limited company. If you want to invest funds from your company, you need to check the Articles of Association permit the type of investment you have in mind and that the investment house accepts company (as opposed to personal) investments.