Insurance World

Taxation has been woven into the fabric of our society since the first city states flourished in Ancient Sumer. Whilst salaried workers can often do nothing about their tax liabilities, business owners can exercise choice in the way they extract wealth to minimise their tax liabilities.

What follows is a summary of a fantastic 2,500 word pdf with graphs that expands upon the issues outlined mentioned below. Visit our website for this and much more.

Director's loan

A director could use a loan to extract wealth from the business and either repay it in full or may be able to use multiple loans & repayments to build up a balance over time without tax. However, if its not done correctly 25% of tax may be due on the outstanding loan balance. Also, if the director's loan is written off, it'll be taxable as dividend income and is likely to attract class 1 NI, so isn't very efficient to write off.

Salary vs dividends

Salary costs more in tax than using dividends, mainly as dividends don't involve national insurance contributions. This is true at all levels, but especially between the £30k - £50k profit level for proportion of profits spent on tax.

It may also be possible to use different share classes to pay dividends in different ratios to the actual shareholdings. Although need to consider if shares will need voting/capital rights, e.g. to shift income to spouse.

To get the full tax benefits for either salary or dividends there are a number of key points to note. These include paying salary within 9 months of the year end and ensuring adequate paperwork is in place to support the salary. Dividends require a sufficient level of profits to avoid being illegal and require board resolution and minutes.

Salary and dividend strategies should be reviewed prior to the company's year end and also before the tax year end of 5 April, to perform tax planning and to get the right paperwork in place in time.

Management fees / overseas

Rather than using wages or dividends it may possible for the owners to charge management fees to another loss making UK company.

If the owners are domiciled overseas they may also be able to shift income by paying management fees to an overseas company in a low tax jurisdiction.

Care needs to be taken to ensure the fees are justifiable and that any overseas company is managed and controlled overseas and be able to provide HMRC with supporting evidence such as email/call logs & passport stamps.

Capital route

Rather than extracting too much wealth in the short term, the profits could be re-invested in the business with the aim of increasing its value in the long term to make a bigger profit on exit. Capital gains tax of 10% would be lower than either salary or dividends for the first £10m of capital gains in a lifetime if the criteria for Entrepreneurs Relief are met. It also needs a genuine disposal transaction with a commercial justification.

Other points

A director could also use benefits such as medical insurance or company cars to extract wealth. This could potentially save on employee's NI compared to salary, but need to check the calculations for the tax efficiency of a particular benefit due to differences in how they're calculated.

Pensions are a complicated area and there are many other investment considerations, but from a tax perspective, pensions are highly tax efficient as a director could obtain tax relief at the full marginal rate on contributions up to £50k.

The above discussion has simplified things to enable comparisons. However, it should be noted that profit is not the same as cash and a company could make lots of profit but be cash poor. So a company should keep sufficient cash in the business to fulfil its working capital requirements and a contingency should also be kept for a "rainy day".

Disclaimer

The above is not intended to constitute legal, financial, tax or other advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. We shall accept no responsibility for any errors, omissions or misleading statements in the above, or for any loss which may arise from reliance on materials contained in the above.

Mohammed is a business advisor and tax expert who has worked with everyone from startups to AIM Listed plcs to multinational £150m+ businesses in a variety of sectors from manufacturing to online gaming.

MAH, Chartered Accountants focus on providing a quality service that not only achieves compliance with financial laws and regulations, but also explores opportunities for growth, tax savings and keeping the business healthy.

Visit our website http://www.mah.uk.com/ for full details and a 2,500 word pdf with graphs that expands upon the summary outlined mentioned below.

View the original article here

ByManuel G Hernandez

It is a misconception that a salary earner does not have the potential to be financially stable compared to an entrepreneur. While the latter certainly has the advantage of earning more, an employee can still build wealth on a salary if he practices smart . While he may take longer to accumulate assets, over time his consistent efforts will pay off.

Below are some suggestions on building wealth slowly but surely:

Follow the ten-percent rule of thumb. Set aside ten percent of your paycheck and forget you ever had that amount. Put it in the bank and keep your ATM card "out of sight, out of mind." This way, you will not be tempted to draw from that account when your local department store holds its bi-annual super sales.

Choose your financial institution well. Do your research on which bank gives the best possible interest for your money. One of the practices of wealth creation is looking into the different account types and choosing the best one for your growing nest egg. Be aware of the fees they charge.

Choose a debit over a credit card. A debit card forces you to be a responsible shopper, whereas a credit card gives you a false sense of financial leeway.

Learn to live within your means. The goal is to live within your income and still be able to set aside that magic ten percent. Live simply now so you may enjoy financial freedom later. And later is always better than never!

Cancel all credit cards you did not apply for. Financial institutions and retail establishments take the liberty of sending pre-approved, ready-to-activate credit cards to people who didn't even ask for them in the first place. While they may appear at first to be heaven-sent, be smart enough to see through their marketing ploy. It will only destroy your wealth creation plans. Cancel the cards and don't forget to cut them up.

Politely refuse people who ask for change. There are people who have the habit of asking for a dollar or two when their lunch money falls short. Lending them a dollar may not seem like much, but if their practice is habitual, those seemingly small amounts will add up. Before you know it, you have given that person almost twenty dollars in a span of one month. Those twenty dollars could have gone to your savings account or paying your phone bill. So, the next time someone asks for spare change, politely but firmly tell him that you just have enough to last yourself for the day.

Consult a reputable financial advisor. When you have saved enough money to diversify your assets, get some financial consulting. Your consultant may advise you on pension and insurance plans, as well as investments such as stocks or mutual funds. Always remember to weigh the risks and not be blinded by get-rich-quick schemes.

Good luck in your wealth creation endeavor and remember that consistency is key to your success and financial freedom. You have the power to change your life for the better!

Manuel Hernandez shares smart tips on wealth creation featuring interviews of well-known life coaches. Listen, learn and lead the life you have always wanted!

Article Source:http://EzineArticles.com/?expert

ByAmy Mia

Most of us spend our lives hoping to get rich by any means, whether it's getting to the top of our career or winning the lottery. It isn't necessarily difficult to achieve wealth, but keeping the money is a whole different story! The truth is, it doesn't have to be a spin on a roulette wheel as to whether you can achieve wealth for life. It is perfectly within your control.

When you think about the word wealth, you may think about piles of money or an enormous bank balance. However that is not wealth; that is being rich. Wealth is about having money available consistently, and using it wisely. If you do this then you are not running the risk of losing all your money and will have wealth for life.

Saving

You may not realize it, but a meager 10% of what you earn could give you wealth for life. By putting 10% of your income into a high interest savings account, you will gain a huge sum of money. For example, if you earn $30,000 per year, you will be putting away $3000 every year and after 5 years you will have a total of $15,000. You can be multiply this by two if your spouse does the same thing, and there's interest on top of it all!

Budget

This may not seem like the most desirable strategy, but it is essential for achieving wealth for life. Even lottery winners have become bankrupt because they haven't managed their finances properly. It doesn't matter how much you earn you need to have a set budget. Find things you do not necessarily need and cut back your spending. If you have any debts you should be putting aside a proportion of your budget to paying them off!

Spending

We are all guilty of living beyond our means once in a while. However if you make a habit of over spending on unnecessary items you will be hindering your ability to save and increase your debt. We all want the little luxuries in life, but by making minor sacrifices you will reap the rewards later on. There are ways of getting what you want for less, for example using coupons or shopping in the sale. If there is something particularly special that you want the get a jar and save up for it! Likewise save all the petty change you have until you have enough to cash in at the bank.

Making shrewd business deals and financial investments can attain wealth for life. However you have to have the money in the first place to afford to take these opportunities. Before you can take any big steps to achieving wealth for life you need to make small changes to your lifestyle. As the years go by you may feel the temptation to take riskier investments to increase your wealth, however it is essential to take calculated risks and always to stick to your original plan.

Do you want to be WEALTHY NOW?! If so download a true Rags to Riches story and learn how to double your money every week with little to no risk. Click the link below to learn HOW you will begin compounding your capital towards your first Million Dollars at the easy corporate money program. http://www.thenetmillionaire.com/

Article Source:http://EzineArticles.com/?expert

ByAmy Mia

If you could be wealthy, would you want to that wealth to be short term or would you want wealth for life. Many people don't know the difference between richness and wealth. It's very simple. Rich is for the moment; wealth lasts a lifetime.

When it comes to passive income, the opportunity for wealth is very prevalent. Some of the wealthiest people in the world gained their financial status by simply investing a small amount of time into various passive income opportunities. As long as those endeavors are creating revenue, they will never have to worry about cash flow. There are many passive income ideas that can lead you to attaining wealth for life.

Property Investments

Having the chance to own real estate and turn it into profit is something that should never be passed up on. This is one of the passive income ideas that will always last because people will always need some place to live. There are always houses on the market for sale; new, old or foreclosed. There are many way to go about using real estate to create revenue.

The best way to start out is to buy property to use as rental properties. You are guaranteed an income every month, in an amount that you set. The more property you rent, the more income you can count on. The income that you receive can then be used to purchase other homes, which you can then choose to rent or sell. Real estate is a sure fire way to have wealth for life.

Financial Investments

Wealth for life can also be gained by using your money to make investments in stocks and bonds, mutual funds and other areas of the financial industry. Seeking advice from a financial and building an investment strategy, making investments of the right type can have your money growing in no time. Of course, when it comes to investing there is always the risk of loss. Yet, if you invest with the aid of a financial professional, your loss will most likely never be more than your gains.

You have the opportunity to benefit from dividends that are paid out to you on a quarterly basis with some investments or to let the money grow and withdraw from it when you want to. Some investment options do have to mature before you can sell or withdraw from them.

Although there are many passive income ideas that can be used to generate a decent amount of income, these two are by far the best choices for people who have money to invest. In this case, a small financial investment stands to return to you 100 fold. You will collect these monies as long as you own you properties or stock investments.

In conclusion, you have to understand that wealth for life means the complete opposite of being rich. Rich means that you can afford all of the material things that you want at this very moment in time but that you can be broke tomorrow. Being wealthy means that you can afford the things you need and want but will never have to worry about being financially destitute. So, which one will you choose and how will you go about gaining it?

Are you for a way to create a steady stream of passive income! If so download a true Rags to Riches story and learn how to double your money every week with little to no risk. Click the link below to learn HOW you will begin compounding your capital towards your first Million Dollars at the easy corporate money program. http://www.thenetmillionaire.com/

Article Source:http://EzineArticles.com/?expert

ByHerbert L Brown

Being wealthy is not enough on this ever-so-struggling world. Yes, everyone strives to earn more, but earning more is not enough, not every business is stable, even stable firms tends to slip-off every once in a while, so it is really not enough to earn more.

Funds today might not reach tomorrow if the company lacks money management, the process of monitoring the flow of money earned by the company, managing it to cut spending and still keep on earning, giving out huge profits in the future.

Big earners are often big spenders, but to prevent big losses, good decision making is the key and there are techniques, ideologies that were introduced by Warren Buffett that might help companies to earn more while keeping their funds safe. The first technique is decreasing money spent over social needs. Some social needs that are usually part of the budgeting system of the company must be lessened.

Second technique, is to avoid expenses that have no appeal from investors and everyone else. Any expense that might not cause any huge recognition for the company should be avoided, because it won't do any good if no one will be interested about it.

The third technique is to proceed and pick the most cost-effective alternatives, it means to have different courses of actions (COAs) in any planned strategies, choose the most productive yet cost-effective course of action and maximize the company's effectiveness.

The fourth technique is to focus expenses on more appealing product or service. It means that any primary product or services rendered by the company, which gives them more leverage should be improved and perfected because it is the primary source of profit by the company, therefore expenses for the development of the said product or service is worth it.

The final ideology by Warren Buffett is to predict and foresee any miscalculations of the company in order to track any faults or success that may lead to the downfall or upgrade of the company. This simply means to foresee and plan any expected expenses with the standard of living value system, upon using plus/minus/nil canon to better keep a track of it.

Upon all of these strategies and techniques about money management, it all sums up to keep track on how the company spends its earnings and avoid any unnecessary expenses. Focus on what the company is really good at, whether it is a service or a primary product, the company should maximize its profits by developing their most interesting product or services. By less expense laid on least interesting projects and adding them to the primary source of their income, the company should save more, thus, saving more funds for future use, and the success of the money management of the company, and any person that benefits from the company.

The bottom line is that in order to manage any individual's wealth, it is important to manage the individual's source of income first, targeting the individual's business. By making the business profitable, so does many benefiting from it, managing wealth is not that hard of a task, it's just a matter of ideology, strategizing, planning and budgeting.

Stop feeling sick over money. Learn the real truth to slashing your spending and saving your dollars to create financial independence -- no matter how much you make. To finally see your money add up and enjoy the stress-free life you deserve, Go Here-