Dr James, 0s:

How can we invest all of that money that's building up within our limited company and ensure this is done tax efficiently? This applies to both associates and principals, because obviously, whenever that money is not invested well, it's just continuously depreciating via inflation and in most situations, normally it's stranded effectively in the limited companies due to the tax implications of taking it out. So how can we invest within the limited company and do this properly? Well, that's the whole point of today's podcast. I'm going to be joined by expert, independent financial advisors to the dental community, Mr Anick Sharma and Luke Hurley. We're going to be talking about how you can set up in terms of account structure and company structure, how you can invest within your limited company, what assets are available to you and what your options are and, third, what platforms will permit you to be able to invest in your selected asset choice, unique to your circumstances. All of these questions and more are going to be covered today on the Dentists Who Invest podcast. I'm also super excited today to announce a brand new feature for the Dentists Who Invest platform and that is free, verifiable CPD to all UK dentists who have enjoyed this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the Dentists Who Invest website. You'll be able to complete a short questionnaire and, once passed, you fill in your reflections and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. So, to talk about how to invest in a company, I've got two very esteemed guests with me this evening Mr Luke Hurley and Mr Anick Sharma, both independent financial advisors, and we are all here today to listen and learn. Anick, I believe you're going to be kicking things off. Cheers, James.

Anick, 1m 54s:

I suppose the first thing to consider is is now the right time to invest? It can be really easy to think I want a higher return with all my money. It's important to make sure the fundamentals are in place and ensure that investing is right course of action. If we end up cutting ourselves a bit too thin, the money might be for working capital. We need to ask ourselves are we leaving ourselves short in an emergency? Or what about if we end up dipping into our tax money? Investing is for the long term. I'm sure you've all heard it before, but it's so important. The uncertainty of outcome is massive in the early years and that's essentially what risk is If we find ourselves minus 10% down in year one. Yeah, it's not nice, but it's actually a relatively common outcome statistically. And all of a sudden we lock a load of losses in because we need to rinse some sort of portfolio for tax money. Really important to ensure we have the contingency reserve Beyond that. You may have not thought about it. But what's the end goal for a company? Does investing make sense if you're going to wind it up in the not so distant future? And if the company is going to be an investment vehicle? How are we going to structure that if it's going to be wound up? So these are the sort of things that should be considered before we go down this journey. It is important to realise as well alternatives are available, and we will cover investing within the company itself and options there. But what about pension contributions? So their corporation tax deductible and it removes the concentration risk from the entity balance sheet by getting money into your own personal balance sheet. So that's a really powerful tool for tax efficiency and, where relevant as well, bringing spouses in using tax bands via shares and allowances can be a useful tool of getting money out of the company into our personal hands quite tax efficiently.

Luke, 3m 42s:

Luke's going to have a bit of a chat about corporate structures quite tax efficiently and Luke's going to have a bit of a chat about corporate structures. Yeah, thanks, alec. Really I just wanted to. I don't want to stray too far into the realms of what your accountant should be discussing with you, but typically, when when clients are investing money through a limited company structure, we see that structure follow the same sort of pattern. So for most, that really is the do you invest the money that's in your trading company? Whether you're running a practice through a trading company or you're an associate and you've incorporated your earnings and therefore you're running a company to channel your income, the big first question is should you invest the money in that company or should you set up a separate limited company that is solely dedicated to investment? And that should be the starting discussion that you have with your accountant around. If this is the path you want to pursue, then what's going to be the best option for you? Most people, I would say you know it's different for everybody, but most people want to separate things, so they want to keep the investment side of things separate to the trading side of things. So clearly, the type of business or the type of limited company that's running a dental practice compared to, you know, say, a personal limited company where you're channeling your earnings is. They're very different animals, but the same kind of principles I think do apply. You're not really going. If you're running a practice you don't really want to put a load of personal investments on the balance sheet. It's clearly going to require a fair bit of unwinding if you want to exit at some point in the future. So that doesn't tend to make much sense. You may also want to limit your sort of exposure to risk. So obviously at a trading company there's possibly the risk of a claim or anything else. If you've got a separate company where your assets are invested in a separate limited company, you give yourself some level of protection on that front. It depends really on what you're investing into and what your longer term strategy is. I mean, for example, if you're investing into into the property as an asset class most and you want to leverage, you want to take out a mortgage, most mortgage lenders will want that separation. They want you to set up what we would refer to as an SPV special purpose vehicle, which really is just a fancy way of saying it's a limited company with a with a set purpose by investing company with a set purpose, ie investing. If you're an associate and you've got some cash in your limited company and you're likely to be working and channeling your income through there for the next 10 years, then it might be a slightly different discussion to have. If you want to set up a stocks and shares portfolio and you don't want to run into the extra costs of running another company, then OK, have a chat with your accountant. But what we tend to see is that separation and keeping things neat and tidy. Obviously, the more limited companies that you run, the more accountancy fees that you will incur. So if you are separating it out, how do you go about doing that? I think there's different routes and there's different paths. Two of the main ones that I tend to see are the intercompany loan. So, again, speak to your accountant on this to see what's most suitable. But that's really where your trading company let's say it's got the same shareholders lends money to your investment company. So an intercompany loan between the two companies. The investment company then takes that as the money to invest, whether that be putting down deposit and property or investing in other asset classes, which we'll talk about later. The other option that we sometimes see and again there's implications for going down this path is where you have a holding company. So you might have three companies whereby you've got your holding company that owns the shares in your trading company and it also owns the shares in your investment company and the profits from your trading company can be pushed up into a holding company and then effectively channeled back down into your investment company in quite a tax efficient manner. But there are longer term implications of setting yourself up in that way and you certainly want to speak to your accountant about the implications that have in relation to things like business assets but disposal relief and others. So they're the two main structures but again, what's right for you will depend on your individual circumstances. I would say you may have heard the phrase family investment company. A family investment company is one of the tools that some people will consider when they're looking at mitigating inheritance tax long term. If you're interested in that, we do intend to bring out some content further down the line where we look at family investment companies as an estate planning tool or as an inheritance tax mitigation tool for transitioning wealth to future generations. We're not going to cover that today. That's a beast of a topic in its own right, but that is worthy of consideration and considering how the company the property company that you're setting up or the investment company that you're setting up features as part of your long-term estate planning strategy, inheritance tax planning strategy. So certainly sort of keep an eye out for announcements on that front.

Dr James, 9m 20s:

So just to recap, look just on what you were saying, because I think the very first question is that most people are asking is okay, the money's rolling up in the limited company, we're basically either going to be an associate or we're going to be a principal. If we're an associate or principal, it's going to be a trading company. It's just whether obviously the difference would be for a principal is that generally you'd have the practice within there. So what you're referring to is basically, whenever it comes to getting that money into the money in the limited company, into some sort of investment, well, really, we want to either look at a separate company or a holding company.

Luke, 9m 51s:

the majority of the time the majority of the time you're going to have a separate company, um, for for most people that makes the most sense to to keep the two things segregated um, and and it you know it has a clear division then. So for most people that the, the examples that we we see, see, you know on a regular basis that that is what's happened, the, uh, the companies have been separated, and that does tend to make the most sense, um yeah, brilliant.

Dr James, 10m 17s:

That's the very first question answered, which is basically how we should structure things. And then I suppose the follow-on to that is to think to ourselves right, okay, what options are available to us in terms of assets? Should we go down the route of property? Should we go down the route of stocks, or maybe something else entirely? There's just one other point.

Luke, 10m 35s:

I will just raise on the company structure, which is just again to flag a discussion with your accountant around the qualification of a company if it's done within a trading company and how that would impact on your qualification for business asset disposal relief but also business relief which is related to inheritance tax. So just bear that in mind as well when you come to make that decision. But yeah, I think, Anick, you're going to now talk about from a high level the sorts of assets that you could consider.

Anick, 11m 6s:

Yeah. So this question gets asked a lot what can I invest in? Essentially, you can put anything on the balance sheet. Now a common question or a common query is what about investing in property? Now? I think it's really important, even from a personal finance perspective. We consider the fundamentals, and it's similar within a company too. So there are some issues with properties predominantly diversification. It's so specific to an area and incredibly concentrated. That means it can be very difficult to liquidate it. You can't just sell off a wall or a roof. If you need to get some money out, for whatever reason. It might be Higher transaction costs, potential tenants issues depending on the type of property it is, tax situation and legislation changes make property generally quite a difficult asset to invest in. Generally Now, without expert knowledge beforehand, such as you might have a trade or someone who can add genuine value and create equity it is difficult to justify property. Now don't get me wrong. Looking back, property is very cyclical amazing capital appreciation when we look at the time, with leveraged returns, it can work for us very well. The difficulty here, though, is for most people who don't have that specialist knowledge, the chances are you could be setting yourself up for failure and having something that's not very well diversified, liquid or really low cost it is. It's hard, and that's where the second component can come into it the stock market or some sort of asset class mix between stocks and bonds or cash. Now, having that balance in play means we are diversified and we can go across tens of thousands of companies all across the world. We're not directly concentrated to a single property. Wherever you might be, it's easy enough to sell off the portfolio Within a couple of days. The cash can land within the company accounts and you can distribute it and do what you want with it, and generally, the costs to investing have come down massively. It's something to keep an eye on. We want to keep transaction costs within the investment process low, which essentially means more returns delivered to you without taking on any more investment risk. Yeah, in terms of the process, though, I think we've got some points on this too.

Luke, 13m 40s:

Yeah, just from an observational perspective, in terms of on the property side, I would say it makes no. For me, it makes no sense setting up a limited company to go and buy a single property to justify the cost of running the company and everything with that. If you're going down the property road, you really should be committing to a sizable property portfolio and it's something that you really want to pursue, and that's that's generally been my experience of that. Um, on the other side, the stock market side, you know you're you're investing in in stocks and shares. Um, I think it's. It's a similar pathway, a similar journey really to to how you're going to invest your own money. Um, if, if a client comes to me and wants to invest, regardless of whether it's through a limited company or in their personal name, we would follow a set pattern. The first question is what are you investing for, what's your time horizon, what's the goal, what do you need this money to achieve, how long can you leave the money and, therefore, what level of volatility can you endure in the investment without jeopardising the achievement of the goal? The investment goal, really, and time horizon determines the capacity for volatility that you've got in your portfolio. That you've got in your portfolio. It determines the level of returns that you can expect, ultimately based on the asset mix that you put together. So really I want to know what the goal is, I want to know what the short, medium, long-term plans are for that money before deciding on what is going to be the most appropriate asset mix. So your asset mix is simply the division or the asset allocation of your portfolio, split between the asset classes. For most people, if they're not investing in property, that's equities, ie shares and bonds, and most traditional portfolios would tend to focus on those two main traditional asset classes to give the returns. But the growth assets, the returns they need, but also the defensive assets, which are bonds. And so the mix of your asset, the asset mix in your portfolio, is going to determine what you can expect from it and also what level of volatility you should sort of be prepared for. Once you've decided on your asset mix, you're then going to go and decide what funds you're going to use to deliver that asset mix. So funds being collective investments, that means I mean you might go and don't get me wrong you might go and pick direct stocks, but I would tend to say for most people. That's not appropriate unless they've got significant amounts of time to dedicate to upskilling and also then to sort of monitoring their portfolios. The majority of people that we meet, you know a collective fund is going to be the most, or funds is going to be the most suitable option for them. You're going to go out, do your research, work out what funds you want to use to deliver the asset mix. That could be a single fund. It could be a mixture of funds where you're going to go out, do your research, work out what funds you want to use to deliver the asset mix. That could be a single fund. It could be a mixture of funds where you're going to get exposure to your desired asset classes Once you've decided on those funds and again, that could be active funds, passive funds that's a conversation for another time there are thousands of funds to choose from, literally thousands. Once you've decided on the funds that you want to hold in your portfolio and you've done your research, you've picked what you want to invest into. You're going to then decide what type of account you're going to use to hold those funds. Now, for a company, that's slightly different to a personal investment journey. There are no ISAs for limited companies. I often get asked that you can't invest in an ISA in your company's name, but you can invest into a general investment account which is just an unwrapped. There's no tax benefit to it, it's just an investment account really, without a tax wrapper around it. You can't invest in the company's name a pension but, as Annex said earlier, you can pay into your personal or employer pension separately. But that's a different strategy entirely. But in terms of what's going in the company's name, it can't be an ISR, it can't be a pension, it can be an investment bond. So that's just a different type of tax wrapper. And you can have onshore investment bonds. You can have offshore investment bonds slightly different tax treatment across the board in terms of those options. Whether you go down the general investment account route with an OIC, which is just a type of fund, or you go down the investment bond route, the taxation implications of that vary and it's worth getting advice on that as to what's going to be the best option for you. But generally speaking, if you invest through a general investment account, if you invest into a fund that ultimately is invested in the stock market, then typically you'll find that dividends are going to be tax-free as they're paid throughout the course of that investment and then, when you come to encash the investment, you will pay corporation tax on the growth or on the gain at the point of sale. If you go down the investment bond route, it's slightly different depending on what accounting regime is being applied and I won't go into that now. But in terms of how the tax on the, on the gain, whether it's done as you go and put through the profit and loss, or whether it's done on encashment, um that that varies, um. But an investment bond is a is not income producing, so there's no sort of tax on income as as you, as you leave the money invested. So what I would say on that clearly the account choice is is quite key and it's it's not straightforward and it's it's worth. I'm getting advice on that as to what's going to be the most suitable option for you and for your limited company. But once you've decided on which account you want to use, you're then really going to decide on what provider or what platform you're going to to to use to to access your chosen account, which, um you know, your choice of platform, whether it be through a limited company or or personally, it really boils down to fees and functionality. What are they going to charge you for the privilege of using their platform and what level of functionality are they going to offer you, and if the level of functionality you need is really driven by what your underlying investment strategy is? So that tends to be the two main criteria. I would also add to that mix financial stability. I see a lot of people investing in new startup platforms, and that might be OK. There are some protections in place for personal investments and for some smaller companies, but you just need to be a little bit careful of putting lots of money with a company that's just set up and isn't even making a profit. I would be quite cautious about doing that. For me, if I'm selecting a platform, I want to know that they're at least making money and they're not going to go bust anytime soon. Although your money should be in a separate nominee account, there are clearly implications of having money invested through a company that goes into administration, so be wary of that. And that's kind of the investment journey really. It's, of course, decide what the investment goal is, decide what your investment time horizon is, decide what level of volatility you want, what level of returns you're seeking. That's going to drive forward into making an asset mix decision or an asset allocation decision. How are you going to split your money between the asset classes? Once you've decided that, you're then going to decide what funds or what vehicles you're going to use to deliver the strategy from an asset perspective. Once you decide what funds you want to hold, you're going to decide which type of account to hold them in. Again, that will be registered in the company's name, and then, once you've decided what type of account that you're going to use, what kind of wrapper you're going to use, then decide what provider is going to enable you to achieve all of the all of those steps amazing.

Dr James, 21m 35s:

Well, listen, I mean, that is a very good high level exploration of what our options are, and I think it's just about having a protocol and it's like, okay, cool, we got the money in a company. That's why most people are on this webinar and they want to know what to do with it. What's our first move? And the first move is to, well, basically think about structure and probably very likely involve an accountant as well, and then what? What comes after that? Well, actually, what's actually wrapped into that as well is to understand your investment choice as well, because that might change how things are structured. So there's no kind of black and white here. There's a lot of how can we say this? Things to consider, and it might be. Well, it's a good indication of why it might be the case to potentially get some input from a professional, especially on this one. Guys, we're going to have the opportunity to ask questions in just a moment, which we are coming up to, but before we do that, Luke Anick, anything you'd like to say? Just to wrap up.

Luke, 22m 29s:

Well, I think we've covered a lot of the high level points. I think that the main questions I get asked is is there a better return? If you're coming at this from the perspective of, is there something I can be doing with my tax money, like Annick said, the answer really no. You shouldn't be investing your tax money. Any money that you know you need access to within the next few years should not be invested. You can't really take the volatility that is natural when you come to invest your money. So that's the first question, you know is it right to invest the money in the first place or do you need that for other purposes? And then, as we said, sort of work out what your overall structure is going to be in terms of are you going to split out the companies? Are you going to open a separate limited company? Make sure you get that set up correctly. If you are, as I said, we'll do a separate piece of content on the inheritance tax play that is, family investment companies, for a different point. But once you've decided on your structure, then you're going to kind of, from a high level perspective, what are you investing into? Are you going to be? Are you just going down the property road, for example? Are you going to have a mix? Are you going to have a stocks and shares portfolio?

Anick, 23m 34s:

if it's the stocks and shares portfolio, then it's going to follow that kind of pattern that I've just that, I've just gone through, I think it's important to realize that there's no magic silver bullet and it's not a standardized, one size fits all approach and it's it gets thrown around a lot, but it really is so individual to you, your circumstances, what the business is doing, and having that clarity is it should be sought before making any of these big changing decisions. And you don't want to get down the line and think, oh, I should have taken some time just to plan it a bit. And it doesn't always have to be all or nothing approach. For some people it might be a mix of pension contributions and investing in the stock market again. It just comes back to doing what's right for you as a person you know what?

Dr James, 24m 24s:

we're gonna go and throw the mic out to the audience just one second. But here's a big one that people always ask me and it pertains to what you were saying just a second ago. Look about money in a limited company that really there's some sort of short-term spending goal for so, money that we need within the time frame of two years and that could be for tax or that could be for a wedding or whatever right. Is there any way that anybody can get some sort of return on that money?

Luke, 24m 50s:

you can still shop around for savings accounts ultimately. So we, the way we tend to frame it, is if you know you need the money within, say, the next five years it it's a short term goal Then you need to really keep the money in an accessible sort of savings vehicle of some sort. I mean you can obviously go into like a fixed term account if you know you don't need it for a year, in which case you can get a better interest rate, but you don't have to keep it set in the current account. You can go and get a savings account and interest rates are certainly a lot better than they used to be. You know, the last 10 years we've had pretty low interest or, beyond that, pretty low interest rates. So shop around for the right level of interest. The risk there obviously is, if inflation is is higher than the rate of interest that you're getting on the money, then people are concerned because they're losing, you know, know, ultimately reducing their wealth in real terms, and so bear that in mind. But if, if you know I mean, for example, last last week, had a chat, really, really nice guy, um an associate, he's got money in his limited company, um that he, he wants a better return on, but his ambition within the next few years is to is to set up a practice. Um, he doesn't know whether that's a squat or whether that's to buy a practice. Should he then be investing that money and taking on the risks that are inherent through stock market investing? No, because he could jeopardize the goal. You could see a temporary market decline. We deliberately call them temporary market declines rather than crashes, because there's always a recovery. We just don't know how long the recovery is going to take. So if you know you need the money short term and let's say we have a drop in the markets and it takes three, four, five years to recover, well, you're going to be pretty unhappy because you can't achieve the real goal, which is to buy the practice or whatever it might be. So that's why we tend to say is it right to invest this money?

Anick, 26m 49s:

Can you take on board the level of the commitment to put this money and set it aside and not have to hold it for the more narrow the spread of uncertainty becomes or the spread of returns becomes. So it's so important to have an investment for the long term. Managing that cash balance is important too, and it can be quite a bit of a balancing act and we don't want it too high for the reasons you mentioned, by inflation as well, or contingency or whatever it might be, buying practice etc. When we think about cash and the purpose of it in the portfolio, it should be the return of it rather than the return on it, and we just want it safely in case of whatever it is we might need it for.

Dr James, 27m 30s:

And it's worth mentioning that there are certain platforms out there that allow you to compare between fixed term saving accounts, which we won't name drop on this webinar this evening. That's not what we're here to do, but it's worth knowing that those do exist and they are out there. Just one thing that I would like to chuck in, and I don't know why this doesn't get talked about more often. I feel like when people go down the investment road, we're very fixated on investing on financial assets, and those can be stocks, those can be bonds, those can be property, whatever. It's worth knowing as well that actually investing in your clinical skills is tax deductible, too for the most part, the vast majority of the time. It is Obviously just gonna caveat that with speak to your accountant, of course, on that one, which can help you increase your cashflow too, and I feel like a lot of us you know a lot of us would get really excited about a property or a commercial property that give us a 10% yield every single year. Investing in certain clinical abilities can give you much more in terms of a yield and a return on your money than that, so it's just worth mentioning Just another thing to consider, actually, which I don't feel gets enough airtime. Interestingly, right, guys, let's throw the mic out to the audience. Let's have some fun. Guys, feel free to ask any question under the sun that you might have whenever it comes to investing in your limited company, but also, in a broader sense, investing in finance as well, because we do have the ability to harness Luke and Anick knowledge on this webinar this evening, which is super cool and certainly not an opportunity to be overlooked. I'm looking at my phone right now. I'm being really rude because someone sent me a question via email earlier which I'm just scrolling to get up on my screen. Okay, I've got it right here. So this individual I'm going to presume they want to be anonymous, because they emailed me personally and I said that I'd give them the opportunity to have their question announced first on the webinar, because they went out of their way to do that and actually this is going to be relevant and pertinent to a lot of people that are here tonight as well. This question reads looking forward to tomorrow's webinar. I'd be curious to know if it was possible. We kind of answered this, but let's cover it again. I'd be curious to know if it's possible to trade open bracket stocks and crypto.

Luke, 29m 32s:

close brackets using my dental limited company. I mean short answer. Yes, you can invest in anything pretty much within reason. You can hold anything on the company balance sheet. You can invest in crypto. I know there are ways of doing that. It's not my forte and it's not something as regulated advisors that we can advise on as such, but it certainly is possible and yes you can trade in direct stocks Interesting, and just worth noting that obviously it pertains to the structure.

Dr James, 30m 13s:

I think the very first thing to touch on is the structure that we talked about just a second ago. It's very rarely the case that it's a good idea to do that in your trading company, of course, so just worth knowing. Anything to add, Anick.

Anick, 30m 24s:

No, not in terms of crypto or direct stocks. I suppose I'd question to what end would you want to trade in direct stocks, as Luke mentioned before, unless you're willing to dedicate a ridiculous amount of time, energy, effort and attention versus, say, a collective investment? Um, that time could be spent I don't know upskilling time with friends, family, etc. Because it's it's not an easy task.

Dr James, 30m 50s:

So, yeah, I would question why yeah, and actually, just to add to that, as someone who's personally been down that road and then almost just went full circle and went back to what I knew, I actually can fully relate to what you guys are saying. I think that it's one of those things people get excited about because they see a lot of people posting their wins on social media whenever it comes to that world, but I wonder how many of that is actually true and valid. Hey, of course, listen, but listen, I don't mean to be dismissive of it, because I feel like sometimes a lot of people are very dismissive. It is possible, but it does just take so much time and effort. You just really have to question whether or not it's worth it. And actually that's interesting because that question that we just asked answers the question that's in the chat from Robert Souza. Hi, all wonder if we can use a money limited company to invest in Bitcoin and other crypto. Yeah, absolutely Okay. So we've covered that one, which is brilliant. Robert, please do let us know if you're happy with that answer. If there's anything more that you want us to cover in a little bit more detail, we'll be happy to circle back to it. And just whilst I was talking just there. We've got a question. It's just popped in the chat. Let me just go ahead and open this up so I can see it. Hi James, do you have a suggestion for a platform to use to invest in limited company funds, to invest in stocks and shares? I've seen InvestEngine. Maybe one to use, but I am not too sure.

Luke, 32m 9s:

Yeah, sadly, because we're regulated by the FCA, we can't stray into talking about specific providers, because there are very strict rules around financial promotions. Um. So, yes, there are platforms out there that you can use to invest in your company name, but you'll have to kind of do your own research on that and we can't be seen to endorse a platform just on that as well.

Anick, 32m 35s:

Luke mentioned it before but really do your due diligence if you're going down that road. Some platforms will hold client assets on their balance sheet, whereas some won't, and it's really important to make sure it's at least ring-fenced elsewhere.

Luke, 32m 48s:

Just on that, the company that I think you just read out, James, is an example. If you were to put their name into Google and Google what the state of their finances is, um, just well, just do it in terms of what I was saying earlier about financial stability. Um, you know, do you want a company that is hemorrhaging money?

Anick, 33m 15s:

I think also sorryik, it's also worth having a look. Many companies will say they are FSCS or financial service compensation scheme protected, but they'll advertise the badge. But when you go on the FSCS website and input that platform or bank's details, they're not actually covered by it. So be careful there as well.

Dr James, 33m 36s:

Yeah, the more I've been in the game of investing, the less excited I get by platforms claiming to have no trading fees. You know I won't name names, but that is something that usually goes along with not having been around that long and maybe not being as above board about certain things as it could be. But, like I say, not naming any names, I think one thing to mention on the investment platforms front that people don't often realize is that your platform options are that much more limited when you're trading as a limited company as well. Right, Luke, it's not just like there's literally hundreds of ones. You can do it in a person you can go with when it's in your personal name, but that's not the case with a limited company, correct? It's a lot narrower.

Luke, 34m 22s:

I think there's been abuse of it in the past and I think some of the providers that were offering it as a facility closed it, so there's definitely been a tightening in terms of the number of providers that are willing to open up limited company investment accounts.

Dr James, 34m 39s:

Awesome, good stuff, right. We've got another question in the chat. Just before we come to that, I see someone's actually popped a question on the live recording on the Facebook group as well, so let me just go ahead and read that one out, because I think it just got in there first. Okay, cool, we've got Shabnam alley. Shout out. Shabnam alley thoughts on money market funds for short-term goals. I think shabnam joined a little later, but that pertains to what we were saying earlier about short-term goals for the cash right and how. That's generally not a good idea to tie things up anything more that you guys want to add to that I guess it comes.

Anick, 35m 19s:

It comes back to it depends what your goal is, what your short-term goal is. Money market funds can be a tool, um, as can high interest savings account. All these accounts are tools in your armory. It depends on the goal, depends on what your tax money is likely to be, what the contingency amount is. It should be viewed quite agnostically. It just depends on the situation and if you need it.

Dr James, 35m 46s:

Essentially, One more question from Shabnam. Sorry if this has already been covered, but if one has a limited company providing a particular service, ie dental or similar, can the profit in the company been put in a gia and invested, or does that become an investing company rather than a dental services company?

Luke, 36m 7s:

kind of what we started with, wasn't it? It's, it can be. Whether that's the right choice for you, uh, speak to your accountant about it, um, because it can have implications now to to jeopardize the trading status of a company. You have to have quite a significant amount of money invested if it's if it's done through the trading company. So I would say that, um and I do see plenty of people that do invest, retain profit in their trading company, particularly if they're, let's say, they're an associate and they've got retained profit, um, and, and you know, that's, that's, that's the vehicle, and they're happy to do that, then fine, and so the answer is yes, but it's also quickly followed by speak to your accountant as to what's going to be the best structure for you another question in the chats do we have to open a new trading slash investment account within the limited company to pay into a SIP?

Anick, 36m 58s:

Yeah, it's a really good question. So pensions you can't hold a pension within the company itself, but you can open your own SIP and then, within the company, make an employer pension contribution straight into your personal SIP. So that essentially means money from the company is going into your personal account. But it's all corporation tax deductible and it goes back to what I was saying before about removing that concentrated risk from the business and moving money from the business balance sheet to your personal balance sheet two separate strategies, aren't they?

Luke, 37m 33s:

it's either, um, you, you can, if you've got money, surplus money, in the company, is there scope to do employer pension contributions tax deductible move that, as annex says, into your own personal balance sheet? Um, there's, there's a, there's a tax benefit to that to the company. Or, if it's kept in in the company as retained profit, it really is a play of. You don't want it to sit in cash doing very little and therefore you just want to invest it for growth. Um, and that's, yeah, very much. Go through that process of deciding what's going to be the best strategy for you. Or, in fairness, um, you could. One of the first things you want to consider is can you get that money out of the company? Uh, in a in another tax efficient way? Um, you know, is there a, is there a spouse that isn't making the most of their tax allowances, for example? That you can potentially look to do some tax planning with um, in coordination with your accountant? Um, so, yeah, it's. That is that first initial stage of. Is investing in the limited company's name the best option for me right now?

Dr James, 38m 33s:

yes or no, um, and if not, yeah, go down the um, go down the other options that question has just generated an idea in my head which I think it could be quite fun to talk about tonight and just take a quick segue away from the questions in the chat just to add to what we've just been speaking on. Let's talk about sass. I think that could be fun because that doesn't really get a lot of air time, for dentists does it, and it can make sense. So maybe now is a good idea to explain a little bit about a sass and also maybe just to think to yourselves okay, when can it be a good idea, when not a good idea?

Luke, 39m 6s:

just some high level parameters when a sass is is a type is a type of pension? It doesn't. There's quite a complex subject. It's the same principle. If you're going to fund a SAS from your limited company as a contribution, it's the same principles as whether it's a SIP or a SAS. There are added complications with a SAS and you should really seek expert guidance With that. It's not the same as dealing with a SIP which has sort of stricter regulation. With a SAS you're running your own pension scheme effectively and for some people there are benefits to that in terms of some of the flexibilities you can have as a business owner. But it's just. You know, it's a personal decision as to whether that's the right route to go down or not. Um, I would be careful before anybody runs into setting up a sass.

Anick, 39m 59s:

Is my honest opinion yeah, they can get so complicated so fast and you can rack up so many fees. It can be useful for commercial property because it can be bought and leased back to the business and you can do it that way and there are rules around loans back to the business. But, as Luke says, I'd put the brakes on before going headfirst into a SaaS because there are so many things to consider.

Dr James, 40m 25s:

Good to know, right, then let's see next question. Sorry.

Luke, 40m 29s:

James, just on that. I have seen plenty of people set up SaaS with the intentions of well, they've been sold it as a great tact play and then, when it comes to the reality of running the actual thing and the costs incurred, it doesn't pan out and then they look to try and sort of reverse out of it. So it's something if you're going into really go into it prepared and speak to get plenty of professional advice from an accountant and from a professional on the um pension side of things. Um, before you sort of go down that path, because this is the.

Dr James, 41m 1s:

This is the interesting thing about sass. You see, certain people market it like it is the biggest untold secret to wealth that people just don't know about. Do you know what I mean? Like there's certain people who like trumpet it, uh, as you know, some sort of secret sauce to you know, I've seen what I've seen riches, uh, and then the. That's kind of like their marketing message and I think it can work in some situations. But, as you say, what's not so clear sometimes is how the fees can just really rack up on you with time. But listen, that's not to say that it can't make sense for some people. I'm absolutely not saying that. I'm saying that it is. It's the classic example of something that is oversold, right as an account.

Anick, 41m 42s:

I think as well. A SaaS is a tool in our armory. The bigger picture is what do you want to do with that money? Or what does your ideal life look like? And once you define that, you can turn around and say does a sass help me get there quicker than x, y or z? And if the answer is yes, then yeah, absolutely, let's consider it. But until we take time to define what perfect looks like, what the next phase of life looks like, it's difficult to say use a sass, because it is just a tool at the end of the day and for me, a lot of the time, unfortunately, um, people over complicate for profit, and what I mean by that is a lot of people that will be.

Luke, 42m 19s:

You'll see, sass very popular amongst certain groups. Um, because a lot of people that are talking about sass and helping people with sass aren't regulated. You don't necessarily have to be in certain scenarios and therefore just be very careful in that area. It's, yeah, there's, it's. It can be quite a uh, a dangerous area to be, to be operating in.

Dr James, 42m 41s:

There's a few, um, characters operating in that space, that's it yeah, water, so say that, all right, cool anyway, moving on next question. Sorry if I missed this previously. I'm just reading these out as they come by the way, so potentially we've covered some of this stuff, but maybe we can add a few more things in question from James david, sorry if I missed this previously answered. So as an associate, I'm wanting to invest company profits in s and ss, for example. I'm gonna guess that means stocks and shares, or maybe you mean your stocks and shares ISA specifically, I'm going to guess that you mean the asset. Is it normal that separate investment companies set up for holding company investment and trading or just investing through the initial trading company?

Luke, 43m 29s:

Yeah, it comes from what we said. There's no necessarily right or wrong answer to that. It's what's what's best for you, based on what the company is, what you're looking to achieve with the company, what the long term picture is for the company and whether it makes sense. And what the company is. Is it as we said? Is it, is it just a vehicle that you're channeling your, your income through, or is there actually a business set in there? Come through, or is there actually a business set in there? And so there's lots of considerations. Um, speak to your accountant as to whether it's going to be better to split the two out or not next question, robert.

Dr James, 44m 3s:

Hi guys, thanks for the reply. One of you guys know how would it work to invest in crypto? Would it need to be through a platform like paypal, slash, revolute or any other centralized exchange and keep the assets on those platforms? Or can we buy the crypto assets on an exchange decentralized and then move them to a cold wallet? So this exact situation. I've seen this come up a few times, robert. So again, very first thing I do is talk to your accountant so you can actually set up a limited company trading account on certain crypto platforms that are out there. Again, your options become that much more restricted in terms of which platforms you can use. It is possible and I don't know how this is done and you might just want to fact check this, but I have someone who I know quite well who did this. Apparently, he got at some situation where, basically, he had the investment account in his own personal name. The crypto account was in his own personal name, but his accountant gave him some sort of documentation that meant that he could take the money out of his limited company, invest it on his limited company's behalf and then return it to the limited company. I really don't know the ins and outs of it, but I know the two guys quite well, so it's not just he said, she said something like that. That's possible. Listen. What I'm saying is it might be possible, it might be a good idea to ask an accountant. I actually know that accountant and I know him quite well. In fact, he's my accountant. So if you wanted to reach out after this, I'd be happy to introduce you to him. I know that it's possible, but I don't know the specifics of it. But I know that it can be done, so please do let me know, robert, if that's helped. On that particular question, you can set up the limited company trading account. Whenever it comes to crypto. It's quite difficult because certain platforms out there won't let you have a personal account and a limited company account. So if you've already got a personal account set up with them, they won't let you have a limited company one simultaneously, which makes things a little more tricky or a little more difficult. But, yes, it can be done and you can put it on a cold wallet. You can put it wherever you want. Basically, it's just that it's on the limited company's balance sheet. So please do let me know if that helped, robert, or if there's any more questions on that one. Next question what is a holding company and trade? Oh, hang on, what is holding company and trading company have different shareholders? Okay, sorry, yeah, sorry, that was uh. They've just clarified down here, sorry. What if holding company and trading company and investment company have different shareholders? So I think what that question means is let's say you have an investment company and let's say you've got your dental associate company over here, okay, and you're bringing I'm guessing, by the way, so please do correct me on this one if I've got this wrong to the individual who sent this question in Say you've got your trading company, you've got your investment company. Let's say your trading company is all yours but you pull the money over to the investing company and that's held 50-50 with someone else. How would that change things? How would that change things? How would that make.

Luke, 47m 14s:

Well, this might seem like from my side. It changes In terms of if you come with an investment company you want to invest the money. Obviously that's unchanged. The tax efficiency of your structure is, to be honest, is a question for your accountant.

Dr James, 47m 30s:

Yeah, I think there's a lot of variables there. Maybe if you could give us a specific instance to the person you asked that question, we could say with a little bit more specificity, because it really depends on what companies are involved and who owns what, and everything along those lines there's shareholders can certainly have an impact on intercompany loans, um, but, as I said, you need to run that through your accountant as to what's going to be the most efficient, and it's not really in scope for us yeah, if you're happy to give us a little bit more a specific situation, maybe we can go into a little bit more detail, but obviously just caveat and all our responses for the fact that we're not accountants, unfortunately, but we could potentially help. Yes, anyway, okay, cool, right, well, listen, that's the fact that we're not. We're not accountants, uh, unfortunately, but we could potentially help. Yes, anyway, okay, cool, right, well, listen, that's obviously. There's quite a few questions that are just flooded in there, which is super good and super useful.

Anick, 48m 22s:

I'm interested to know as well oh, okay, investment company shareholder would be a family member so, as I start to get into rounds with a family investment company and depending on different share classes, I guess it depends on how it's set up and if it's alphabet shares and whatnot, if it is starting to go down the realms of family investment companies. As Luke mentioned before, we have a whole load of stuff coming about this, but one thing that is really important when going down this route is specialist tax advice.

Dr James, 48m 56s:

um so yeah, cool, good to know. I hope that helped to the person you answered that. Ask that question. Uh, next question to see here would hmrcc movement of money from limited company to the investment company is taxable. Depends, doesn't.

Luke, 49m 11s:

It depends how it's done both of the, if it's set up correctly with solid guidance from from, uh, from your accountant the holding company route, which is where you pass up, you know, opco or trading company um pays a dividend to holding company and then back down into property company. And also the intercompany loan route um, that's not, uh, you know, that's. That's not going to subject you to an immediate tax charge. No, in short, if it's set up correctly with the help of an accountant, yes, it can be mitigated with the right setup.

Anick, 49m 45s:

Anything, anything, anything, dad no, they covered it there perfectly excellent, okay, cool.

Dr James, 49m 51s:

Well, I mean, I think the biggest thing, the biggest reason why I guess people will come to a webinar like this, is just to figure out okay, we've got all this money in the limited company and it's effectively stranded there for the reasons that we said, and how can one get it out. So we've obviously went into detail about that, how that can be done high level this evening. Naturally, there's going to be more specificity to it for the reasons that we've covered before. It obviously depends on the individual, depends what their goals are, depends what level of risk they're comfortable with, depends what assets they would prefer to invest in. There's really a whole host of questions there and things that need to be answered in order to get clarity on that. With regards to the webinar that we've provided this evening, like I say, hopefully that's given everybody a really high level idea of what is out there for them to be able to think to themselves right, okay, what can I do? Because the big thing to remember is obviously, all this money is building up in the company and what is true, and what will always be true in likelihood, is that it's getting constantly gnawed away at by inflation. If I'm really serious about ensuring that the tally of my hard work over the years, the cash remuneration for all my hard work over the years, is not being constantly eroded and taken from me, and I think that's a really nice note. To round up on, Luke or Anick, have you guys got anything you'd like to say in conclusion?

Luke, 51m 27s:

No, I think that was a good, as you say, high-level overview and hopefully some of the key questions answered. But it's important that everybody goes into the process really defining what they're looking to achieve before sort of committing down the investment path.

Dr James, 51m 47s:

And I think, Anick, anything you want to say to wrap up.

Anick, 51m 51s:

As Luke says, it's so important to define what you want and not to fly straight into something. This is something we do help people with and for some it might be of interest, but essentially we charge a fixed fee. We don't charge percentages, financial planning first and initial meeting at our cost. So if anyone has any other questions or would like to reach out, I don't hesitate to give us a shout.