12 December 2012

Financial Planning Ideas for Business Owners - 1

These ideas generally apply to limited companies...

Invest Excess Cash on Deposit
An easy one to start with...If you have cash on deposit and you find that a proportion of it is never needed for running the business, higher returns may be available by investing it.
Profit Extraction from the Business
With the current limits on both pension contributions and pension benefits, an alternative might be to pay a large dividend and pay the proceeds into an EIS scheme and obtain Income Tax relief.
If pension contributions are feasible and the Minimum Income Requirement is met at the point of retirement, Flexible Drawdown may be used to obtain some of the pension value as a lump sum. If income is not immediately required, an EIS investment can provide Income Tax relief.
Cheaper Life Insurance - Relevant Life Policies
The business pays the premiums as a business expense, but the benefits are for the individual (or their family). This provides an alternative to pension-based death-in-service benefits where there might be limits on pension contributions, or there are too few people in the pension scheme to make this possible, for example.
Be Prepared for Auto-Enrolment Pensions
Even if your “Staging Date” is some way off, thinking ahead is vitally important - budgetting for the compulsory contributions, selecting a pension scheme, etc..
more to come...

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