While many people choose to invest as individuals, business owners have another option: corporate investing. Essentially, it involves investing your company’s money, rather than simply leaving it sitting in your bank account or withdrawing it as a salary.
Here, we explain the advantages and disadvantages of corporate investing, as well as some of the options for those thinking about going down this route.
The advantages of corporate investing
With corporation tax having fallen in recent years, corporate investment has become more popular – although taxation levels depend on the type of business you own.
In addition, investing in strongly performing investment types could see your business’ revenue increase. This means a greater amount of money to reinvest back into your business.
For some, corporate investing is preferred to a savings account, as they may have the potential to grow their funds more than the interest they gain with savings.
The disadvantages of corporate investing
The major disadvantage of corporate investing is the same as with any investment type: as well as going up, your investments have the potential to go down. This could mean that you could lose some – or, in extreme cases, all – of the money that you invest. This is why it is so important to consider the level of risk that you’re willing to take before you proceed.
What’s more, some businesses – especially those planning on making investments in their company, or who believe they could have cashflow problems – may not wish to tie their money up in investments, where it can’t be accessed as easily as in a bank or savings account.
Which investment vehicles can I choose?
There are various ways you can invest your company’s funds. Some of the options you could consider are commodities, trusts, pensions, funds, government bonds and individual stocks.
As with any investment type, the vehicle(s) you choose will depend on what level of risk you want to take, how accessible you want your money to be, the level of return you want and whether you’re happy to leave your funds in one place or move them around regularly.
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