Investing idle cash is an opportunity small businesses shouldn’t miss out on. Why let your cash sit in a standard business account earning little to no interest, when low-risk investment alternatives are out there?
Here, we’ve collected the most common questions our Business Account holders ask us and answered them:
- How do I set up a Business Account?
- What makes InvestEngine’s Business Accounts different?
- What would I use a Business Account for?
- How much of my business cash should I invest?
- What do the investment returns from my InvestEngine Business Account consist of?
1. How do I set up a Business Account?
For a DIY portfolio
- Click on the green Get started button on the InvestEngine website
- Choose ‘Business’ and enter your details to make an account
- Create a new portfolio, select DIY and browse our range of ETFs
- Select the ETFs you want to invest in
- Set weights for each ETF in your portfolio. These target weights (which you can adjust at any time) are a key feature of our DIY service, helping you manage your portfolio and maintain your investment strategy.
- Start investing!
For a Managed portfolio
- Click on the green Get started button on the InvestEngine website
- Choose ‘Business’ and enter your details to make an account
- Create a new portfolio, select Managed and answer our quick questionnaire
- We’ll assign you a portfolio that suits your business’ financial goals
- Start investing!
If you want to automate your regular investing, set up a Savings Plan for easy weekly, fortnightly or monthly top-ups.
2. What makes InvestEngine’s Business Accounts different
Our Business Accounts are very different from a standard business account. The key thing to know is that this is not a bank account, but an investment account. You won’t spend or transfer funds from it (you can withdraw easily however) – it is designed for investing.
Here’s how we differ:
- Invest your cash. The biggest difference is that our Business Accounts invest in the stock market, from low-risk bond ETFs and Money Market Funds to equities, offering the potential to earn more on your cash reserves.
- They’re easy to set up. Unlike some other business accounts, you can have an InvestEngine portfolio up and running in a matter of days.
- You can automate your investments. Our platform’s Savings Plans feature allows you to invest on a weekly, biweekly or monthly basis, fully automatically.
- Easy access to your cash. We don’t charge exit fees and you can withdraw without giving us notice. It typically takes just 4-5 business days to withdraw.
- We’re low-cost. Our DIY investment portfolios are completely commission-free, while our professionally Managed accounts charge just 0.25% a year.
- We offer ETF investing. Exchange-traded funds (ETFs) are simple and unbeatable for choice – invest in the biggest companies of today or the themes of tomorrow.
You can find out more about how our Business Accounts differ here.
3. What would I use a Business Account for?
There are two primary use cases for InvestEngine’s Business Accounts. These are:
Utilising your VAT and Corporation Tax. Business owners typically put tax money aside ahead of time, ready to pay when the time comes. VAT is typically paid once a quarter, while corporation tax is typically paid once a year. During these periods, this money is idle and business bank accounts pay little interest. Instead, you can put the money to work in a low-risk Money Market Fund or Bond ETF, for example, and aim for returns on the cash.
Long-term investments for business owners. Rather than paying out business profits in the form of dividends – and being subject to dividend tax – business owners can invest business profits pre-tax and use the investments later in their life. Situations will differ from person to person but many people have little income after retirement, so their dividends will most likely be taxed at a different (often lower) rate.
4. How much of my business cash should I invest?
The InvestEngine Business Account has a minimum investment level of £100. It is aimed at limited companies (including contractors) and partnerships that have surplus cash in their business.
Most businesses need to retain an amount of cash for their day-to-day needs and liabilities like tax and VAT. But they may also be accumulating surplus or spare cash which is earning little or no return. This surplus could be referred to as the cash reserves or retained profits of your business.
How much you want to invest in the InvestEngine Business Account is down to you and your business circumstances – InvestEngine is not authorised to give financial advice. If you need advice we would suggest contacting an independent financial adviser (IFA) or a finance professional like an accountant.
5. What do the investment returns from my InvestEngine Business Account consist of?
Your InvestEngine Business Account invests in a range of exchange traded funds (ETFs) that are listed and traded on the London Stock Exchange. These ETFs invest in shares, bonds and alternative assets such as gold.
Your investment returns could variously consist of dividend income, interest income and capital gains/losses.
The ETFs in your portfolio are domiciled (based, in legal terms) in Luxembourg or Ireland. This means that the income you receive is categorised as “overseas dividends” or “overseas interest” — even where the ETF is invested in UK shares or bonds.
You can create custom reports in your online account, including a Consolidated Tax Certificate (CTC) which will report on the income categorisation and we also provide Capital Gains Tax Reports.
See here for how to: create custom reports in your InvestEngine online account.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.