The Basics of the EIS: What is it and What are its Benefits To Your Business?

Enterprise Investment Scheme (EIS) has rose to fame quickly to fame. What is this and why has it become so popular? EIS is basically a type of investment scheme with very promising tax reliefs. It provides a very efficient way to invest in the new share of the small business. This is known and widely used by the government of United Kingdom for their entrepreneurs who need enough capital to develop their product and services or to strengthen their marketing strategies. This system is purposely designed to give capitals for the rising or starting companies of the country. These companies are believed to grow as UKs successful enterprises, which is why an EIS fund from LBA encourages investors to invest in a variety of small, high-risk trading companies.Social-Enterprise-Flow-Chart-Graphic

 

How could you access Enterprise Investment Schemes (EIS)?

Those who are granted with this tax relief are only those who invest in the shares of a minor/small, company who have approximately the number of 250 employees or less. In addition to this, take note that when we say small companies, it means that its maximum gross assets before the investment should not be more than £15 million. Another criterion for the granting of EIS is, the company applying for should be an unlisted company. Meaning to say, the company should not be identified as part of the major stock market. They are an exception to the Enterprise Investment Schemes (EIS) because they are very risky to deal with.

 

What are the Upsides of the EIS?

The EIS has an astonishing tax benefits. Which is why so many entrepreneurs are applying for this. The tax benefits of this investment scheme are the following:

  • There is a total of 30% upfront Income Tax relief for those investors who invest for a period of 3 years and more. This is only applicable also, to a maximum investment of £1 million and a minimum of £500 worth of shares per annum. More than the said amount stated is not applicable. The good thing about this is that, this tax break could be carried back to the preceding tax year.
  • Another surprising benefit of Enterprise Investment Scheme is the 100% Inheritance Tax relief on the condition of having the investment to at least 2 years at the period of death.
  • Unlike the other investment scheme, EIS has capital gains tax rearrangement or exemption for the life of the said investment. However, this is only applicable if the shares are disposed of after three years.
  • Enterprise Investment Scheme is also a tax-free growth.
  • EIS gives the companies the opportunity to develop and grow through the funding of the investors. As for the investors, EIS is less risky especially when the investors spread their investments to other companies.
  • What makes this scheme even more attractive is, EIS provides tax relief from investment losses.

Now, if you are planning to invest in EIS companies, then it is best recommended for you to study and research about its disadvantages also. The above-mentioned upsides are very enticing but again, you have to think critically and know the risks too.

 

 

 

 

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When Should You Hire A Financial Advisor For Your Business

Sometimes hiring a financial advisor for your company can seem like an alien concept. This is because most people have too much pride and think that when it comes to their company’s finances they can handle it. In some cases they might be right however the finance industry is a lot more difficult than it may seem. There are a lot of issues that can affect the running of your day-to-day business and if you don’t navigate the financial field correctly you may even end up facing sanctions. But what issues can come up if you don’t seek the help of an expert like Pragmatic Compliance?finance

Investments

Running a business can be tricky especially when it comes to seeking investments for funding. Investors want to know what they are getting into and they expect a clear business plan and how you are going to get them a return on their investment. After all investors don’t just choose to give money away for free.

Pension Schemes

A pension scheme is a responsibility that a business owner has to their workers. Each worker pays into their pension scheme and the fixed amount to pay on a monthly or yearly base is matched by the employer. This is so that when an employer retires they still have an income. They can choose to receive a certain amount as a lump sum or just a fixed amount per week, alternatively you can take a loan out on your pension to invest, consultancy companies including Productive Pensions have consultants on hand to give you the facts.

Budget

A business cannot run on anything. It needs resources to function, and resources can be anything from stationary to computers and equipment. But these things cost money. A businessman needs to budget accordingly to make sure that they do not go bankrupt due to overspending.

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