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  • FIRST POST
    • HappyUser
    • By HappyUser 14th Jun 19, 7:12 PM
    • 263Posts
    • 14Thanks
    HappyUser
    Business account with interest rate
    • #1
    • 14th Jun 19, 7:12 PM
    Business account with interest rate 14th Jun 19 at 7:12 PM
    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?
Page 1
    • Terry Towelling
    • By Terry Towelling 14th Jun 19, 7:38 PM
    • 1,972 Posts
    • 1,665 Thanks
    Terry Towelling
    • #2
    • 14th Jun 19, 7:38 PM
    • #2
    • 14th Jun 19, 7:38 PM
    I presume there is a reason why it just sits there before you can take any. Your accountant should be able to help you.

    A short-to-medium term workaround might be to get yourself a 0% on purchases credit card with as long a promotional period as possible. You can then spend on that whilst waiting for the company cash to be released to you. You'd still have to manage the monthly minimum payments but it is a way of effectively getting a credit card provider to pay you upfront with no added costs.

    When the quarterly cash is accessible, you don't have to pay it all off the credit card either. Simply save it in an interest-bearing account and use it to manage the minimum payments on the 0% card until the promotional period ends.

    OK, it isn't a perfect solution and it doesn't actually create interest for you straight away but it might help. Obviously, it's use as a tool is subject to getting a reasonable credit limit and a long 0% period.
    • jonesMUFCforever
    • By jonesMUFCforever 14th Jun 19, 9:45 PM
    • 26,114 Posts
    • 13,281 Thanks
    jonesMUFCforever
    • #3
    • 14th Jun 19, 9:45 PM
    • #3
    • 14th Jun 19, 9:45 PM
    Could you not open a Business savings account - the rate would not be great but better than nothing?
    What goes around - comes around
    give lots and you will always receive lots
    • planteria
    • By planteria 15th Jun 19, 10:44 PM
    • 5,118 Posts
    • 1,144 Thanks
    planteria
    • #4
    • 15th Jun 19, 10:44 PM
    • #4
    • 15th Jun 19, 10:44 PM
    why do you have to wait for a quarterly payment?
    could you not take money on a monthly basis?
    interest rates are low, especially for business accounts.
    some people take a loan from their companies and save business cash in a personal account.
    • 20SmthngSver
    • By 20SmthngSver 16th Jun 19, 9:28 AM
    • 346 Posts
    • 111 Thanks
    20SmthngSver
    • #5
    • 16th Jun 19, 9:28 AM
    • #5
    • 16th Jun 19, 9:28 AM
    The only Business Current Accounts which are free are Metro Bank (first 50 transactions a month, then 50p per transaction thereafter) and Starling Bank (App based/Online based only).

    Every other bank will charge you varying amounts and rip you off. Some don't even let you use their counters for the privilege of a monthly free or transactions fees for every transaction. Santander is about the best. Steer clear of HSBC, Lloyds and Barclays, their payment plans are awful.
    • Penelopa.Pitstop
    • By Penelopa.Pitstop 16th Jun 19, 10:11 AM
    • 590 Posts
    • 216 Thanks
    Penelopa.Pitstop
    • #6
    • 16th Jun 19, 10:11 AM
    • #6
    • 16th Jun 19, 10:11 AM
    My business account pays whole 0.1% and only from 100K upwards ... and account is free. I would not count on a lot more. I pay corporation tax early to get interest from HMRC, which is higher than that on my account.

    • HappyUser
    • By HappyUser 16th Jun 19, 12:58 PM
    • 263 Posts
    • 14 Thanks
    HappyUser
    • #7
    • 16th Jun 19, 12:58 PM
    • #7
    • 16th Jun 19, 12:58 PM
    Isn't taking money out of the business account monthly considered as income while taking every quarter is dividends?
    • Terry Towelling
    • By Terry Towelling 16th Jun 19, 1:08 PM
    • 1,972 Posts
    • 1,665 Thanks
    Terry Towelling
    • #8
    • 16th Jun 19, 1:08 PM
    • #8
    • 16th Jun 19, 1:08 PM
    Isn't taking money out of the business account monthly considered as income while taking every quarter is dividends?
    Originally posted by HappyUser
    I don't run a business so I don't know but your accountant (or HMRC website) should be able to tell you.

    If taking money out quarterly is a way of avoiding income tax (or of paying less tax overall) then, presumably, that more than makes up for a little loss of interest.
    • 18cc
    • By 18cc 16th Jun 19, 4:28 PM
    • 1,837 Posts
    • 1,352 Thanks
    18cc
    • #9
    • 16th Jun 19, 4:28 PM
    • #9
    • 16th Jun 19, 4:28 PM
    No they are not the same

    a dividend is something your company declares and then has to pay to all shareholders it is a formal thing

    just moving money out of your current account and put it somewhere where it pays interest and then moving it back again is not

    you can do that as much as you want

    if you move it from the company name to an account in your name to get interest then you can just call it a loan at 0% as long as you pay it back
    • 20SmthngSver
    • By 20SmthngSver 16th Jun 19, 7:00 PM
    • 346 Posts
    • 111 Thanks
    20SmthngSver
    Better to look at business bonds, like Hampshire Trust Bank (fixed term), or Saffron Building Society (easy access).
    • Marcon
    • By Marcon 19th Jun 19, 2:35 PM
    • 1,266 Posts
    • 1,002 Thanks
    Marcon
    Isn't taking money out of the business account monthly considered as income while taking every quarter is dividends?
    Originally posted by HappyUser
    I think you'll find that helping yourself to company money is generally considered as theft. You need to pay yourself a dividend or a salary (assuming the company has been registered for PAYE).

    Loans to directors are tightly regulated, so you can't just put your paw in the till as someone else has suggested.
    • Marcon
    • By Marcon 19th Jun 19, 2:36 PM
    • 1,266 Posts
    • 1,002 Thanks
    Marcon
    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?
    Originally posted by HappyUser
    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
    • By Zanderman 19th Jun 19, 3:43 PM
    • 2,387 Posts
    • 5,278 Thanks
    Zanderman
    Open a second business account - one which carries interest - and use that as the holding account, transferring money to your current account as necessary.
    Originally posted by Marcon
    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
    • By Marcon 19th Jun 19, 4:29 PM
    • 1,266 Posts
    • 1,002 Thanks
    Marcon
    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?
    Originally posted by Zanderman
    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
    • By Brynsam 19th Jun 19, 4:30 PM
    • 2,310 Posts
    • 1,739 Thanks
    Brynsam
    I'm sure the OP has considered that - his/her point was that their current business account earns no or little interest.
    Originally posted by Zanderman
    Then keep the money somewhere else until it's needed. Pretty basic business sense.
    • Middlestitch
    • By Middlestitch 19th Jun 19, 7:34 PM
    • 1,341 Posts
    • 2,473 Thanks
    Middlestitch
    My company's income sits in my business bank account for a quarter until I can take it as personal income.
    Originally posted by HappyUser

    Why? Invest it in your company's name.
    • sal_III
    • By sal_III 19th Jun 19, 8:01 PM
    • 1,391 Posts
    • 1,341 Thanks
    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.

    Why? Invest it in your company's name.
    Originally posted by Middlestitch
    Assuming Limited company - it's tricky, for most type of investments you need a license.
    Isn't taking money out of the business account monthly considered as income while taking every quarter is dividends?
    Originally posted by HappyUser
    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
    • By Brynsam 19th Jun 19, 9:43 PM
    • 2,310 Posts
    • 1,739 Thanks
    Brynsam
    J
    Assuming Limited company - it's tricky, for most type of investments you need a license.
    Originally posted by sal_III
    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.
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