Reserve Account


J

JaffaB

All,

I have built up a fair stack of cash in my small Business current
account, so was thinking of transferring a chunk to a reserve account,
on the basis that I could earn a higher percentage than my regular
current account.

My questions are, can I just do this, or is there anything to be wary
of in terms of financial regulations/law (so I don't get stung for tax
or trying to hide cash away), and is the reserve account the best
option. I don't expect that I would need to touch the cash until
Spring next year, but of course, you never know.

Many thanks in advance.
 
Ad

Advertisements

T

Troy Steadman

All,

I have built up a fair stack of cash in my small Business current
account, so was thinking of transferring a chunk to a reserve account,
on the basis that I could earn a higher percentage than my regular
current account.

My questions are, can I just do this, or is there anything to be wary
of in terms of financial regulations/law (so I don't get stung for tax
or trying to hide cash away), and is the reserve account the best
option. I don't expect that I would need to touch the cash until
Spring next year, but of course, you never know.

Many thanks in advance.
If your small business is a Ltd Company then the money belongs to the
company. You would open a Business Reserve Account for the company and
transfer the money across with no repercussions. When the company pays
you by Salary or Dividend the tax system can kick in.

If as seems more likely you are a Sole Trader, then you and the
business are one and the same. You are taxed on your Profits not on
your Drawings. You can draw money out of the Business Bank Account
whenever you like without tax implications.

Most Sole Traders have a business bank account because it makes it
*much* easier to identify business transactions, but the money is
yours to spend.
 
Ad

Advertisements

J

JaffaB

If your small business is a Ltd Company then the money belongs to the
company. You would open a Business Reserve Account for the company and
transfer the money across with no repercussions. When the company pays
you by Salary or Dividend the tax system can kick in.

If as seems more likely you are a Sole Trader, then you and the
business are one and the same. You are taxed on your Profits not on
your Drawings. You can draw money out of the Business Bank Account
whenever you like without tax implications.

Most Sole Traders have a business bank account because it makes it
*much* easier to identify business transactions, but the money is
yours to spend.
Hi. No its a limited Co with a handful of emplyees. Thank you for
the information. My accountant is on holiday, otherwise I would have
run it past him. I will check out the rates and open a reserve
account later in the week.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top