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Guidance

Investing as a business

Investing as a business

Interested in making a business investment? Here are some things to think about.

If you’re in a position to, investing as a business can help ensure your long-term stability. Your business investments may include a mixture of physical assets, savings and growth vehicles.

As a business owner, you already own a significant investment – your business.  This means that it’s worth thinking about how much risk you want to take on outside of your business – in case one or the other gives you extra financial pressure.

Invest in your resources

Investing in physical assets, such as equipment, may be where you see the most immediate return. Upgrading a key piece of equipment may help you to produce more and increase your profitability. It may also provide you with an asset you can sell if you need to, and while its value is likely to depreciate, it may be more stable compared to other investment types.

Similarly, investing in your employees by helping them to upskill, such as funding higher learning, could help you see a return through increased employee output. Upgrading your working environment may also help you to keep your employees happy and engaged.

When you invest in your own resources, there may be tax benefits you’re eligible for. Your accountant can help confirm this for you.

Build up your savings

If you find yourself with money to invest, consider directing it to an emergency savings account so that you can handle any unexpected expenses. This will keep your asset ‘liquid’, which means you’ll be able to access it immediately if you need to.

Investing in term deposits and funds

Lower risk investments, including term deposits, can help you to grow your money over time. The interest rate is fixed for the term you select, but you might pay fees for an early withdrawal and there could be tax considerations.

Invest in yourself

Considering your future and retirement early might help you set yourself up for life after business. This may involve making a succession plan or putting extra money into your retirement fund. You might consider discussing your plans and options with your accountant or a financial planner.

Invest in other businesses

You may find yourself in a position to invest in other businesses. Typically, you can do this in two ways: by purchasing equity or debt. This may help you to own more of your supply chain, if you buy within your industry, or to diversify, if you go outside.

Your tax and legal implications for investing as a business will change depending on your business structure. This is why it’s a good idea to talk to your accountant or financial planner before making any investments.

Remember the risks

Keep in mind that there are risks involved with investing and it’s important to understand these before you make any decisions. Get advice to find out whether investing is the right step for your business to take.

Next up: Succession planning for your business

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.