Incorporation , Cashflow, and Making Money

Now more than ever in these turbulent cash flow times, one must consider the option of incorporating your business - whether you are an Associate or a Principal.

Why Incorporate?

In these challenging economic times, cash is king. Banks are slow in lending money, and spending is generally lower on a consumer front, all leading to cash flow problems in practice. It is always cash flow problems that eventually lead to faiing businesses and bankruptcy, therefore the need to manage cash flow is the backbone of any successful practice.

If i look back at the incorporations we have carried out since 2006, clients that incorporated have managed to streamline the administration of their businesses, save significant tax, but most importantly improve cash flow considerably.

The positive cash flow has enabled them to continue expanding their businesses where necessary, even in these lean times, but also allowed them to utilise this cash to invest wisely in other areas of their lives, such as cheap property and shares etc.

Princpal or Associate, if you have not already, i would strongly suggest you consider incorporation as a cash flow strategy. Take a look at the following video where i highlight the key steps you should consider in incorporating.

No Video? Click Here

So if I was a Principal Dentist....

who has built up significant goodwill over the last few years, I would do the following:

1. Get an incorporation feasibility study done

2. If this proves to be beneficial to you, go through the process of incorporation, which includes selling your existing business to a new company at market value. Make sure you get someone who has had many approved Dental valuations by HMRC (like us!) to do this for you.

3. Draw down the director's loan account of the company over a period of a few years in combination with utlising your personal allowance and the basic rate dividend band each year. This will ensure you pay zero or minimal tax over a period of time.

4. Use the cash saved in either your business expansion (as you cannot sit still) or diversify your portfolio by investing into other strategies....such as those ideas below to make more money. Don't just let it sit in a bank account earning a measly 2% return. Use the cash wisely to grow your asset base and ultimately your wealth.

And if I was an Associate Dentist....

I would either get download Samera's DIY Associate Accounts Guide and prepare my own annual accounts and self assessment tax return, OR get Samera to help you out here if you want a Professional to do the work for you.

Either way, i would then also get in touch with Samera and discuss incorporation with us, it will save you tax and improve your cash flow position significantly. Just take a look here of an example which highlights the potential tax savings per annum.

Master your Wealth Course - London Stock Exchange - 19th June 2009

With the tax you save, and the improved cash flow, your next step is to then consider how do you grow your wealth. Simple really, you need to take 100% responsibility of your own wealth.

Our next "Master your Wealth" course is on the 19th June and i am excited to be holding it at the London Stock Exchange - the epicentre of the UK financial markets. if you want to learn how to grow your wealth, but not by necessarily working harder then you need to come to this event....the tools and techniques will show you how to take control of your own financial future allowing you to choose how you live your life. For further information and booking click here.

Remember, if you take action then you will get the results you desire. Procrastinate, then it will never come.

Enjoy the sunshine!

Arun