Using personal cash to fund a limited contractor enterprise may not be the best course of action,umbrella company members have been warned.
Responding to a reader’s question on Contractor UK, Consumer Credit Counselling Service (CCCS) debt advisor Geoff Waugh claimed that some limited company owners will think it is acceptable to use their own money in their business, as they expect it to only be a short-term solution.
“The problem, however, is that a lot of our clients always think it’s a short-term problem they have, but our evidence is that too often it’s not, and the business may need to cease trading,” he continued.
Mr Waugh added that worst case scenario could see the individual’s bank close both their business and personal accounts if their company is in difficulty, which would dry up all the cash available to the owner.
In addition, the expert revealed that the CCCS receives a high volume of calls from contractors considering this course of action and claimed that this “unfortunately” looks set to continue in the future.
Last month, a CCCS spokesman stressed the importance of maintaining separate finances for business and personal spending.
