If you are in the fortunate position of owning a company that has excess cash (money that’s not required for the general day-to-day costs of operating), you may be looking for inspiration on what to do with this. In this post, company formation agent 1st Formations look at the different ways you can spend this surplus money.
1. Save it for a rainy day
Let’s start at the obvious place. You could leave the money in the company’s bank account, where it can earn interest and remain immediately accessible as and when you need it.
As the last few years have demonstrated, in business, you never know what’s around the corner. You may have to move office. There could be a major change in your industry. A key member of your team may leave for pastures new. Whatever it may be, having a sum of money tucked away could help your business navigate any tricky periods.
2. Use it for dividend payments
Having some extra cash in the bank is a good opportunity to reward any shareholders (whose shares come with dividend rights) for their investment in the company.
Whilst most companies will pay out dividends on a regular basis (quarterly, every 6 months, or yearly for example), you are free to distribute dividends whenever you may find that there is some surplus income available.
3. Make life easier for yourself
As a business owner, you’re probably spinning a lot of plates. Customer services in the morning, human resources in the afternoon. A bit of accounting here and some marketing there.
Why not lighten your load by taking on a new employee or third-party, who can take on a particularly time-consuming (or thoroughly unenjoyable) task? By employing a specialist, not only are you making things simpler for yourself, but you’re also helping the business improve in a specific area.
4. Put it into stocks and shares (or bonds)
If you’re partial to some risk-taking, you could boost your income by investing your surplus cash into stocks and shares. Of course, we only recommend doing this if it’s an area you are knowledgeable in, or are willing to pay for professional advice.
On the other hand, if you are risk-averse, you should consider investing your limited company’s excess cash into bonds, generally seen as a safer option when compared to stocks and shares.
5. Grow your business
If business growth is still on your agenda, what better way to invest than to put the money back into the company?
You could employ more people to increase reach across your industry, buy that latest piece of machinery that will improve productivity, commission a top agency to re-do your website, move to better premises, or take better care of your employees by paying for a well-being programme.
As you can see, there are a wealth of options available to you.
6. Use it to do some good
Have you evaluated your business’s carbon footprint yet? If you haven’t, having some excess cash provides the perfect opportunity for you to recognise your impact on the environment and work towards offsetting this.
If environmental causes are something that you’re already actively working on, why not give the money to a charity that you and your team are passionate about, or is relevant to your industry?
Thanks for reading.
So, there you have it, 6 things your limited company can do with its surplus cash. We hope you have found this post helpful.
1st Formations are the UK’s top-rated company formation agent and have helped form over 1 million UK companies. They’re the perfect starting point if you’re looking to register a company.
