EIS stands for Enterprise Investment Scheme. The purpose of these investments is to encourage investment in small businesses that are in the process of growth. It helps such companies get necessary funds, and the investors get a tax rebate in return. However, to get the tax advantage, the investment has to qualify for it. Both investors and businesses should do it in a fair manner to gain all the benefits that it can bring.
Experienced investors always prefer investing the EIS shares to encourage young organizations to grow and get tax benefits. However, the perks are not limited to this. It also increases employment opportunities and eventually benefits the national economy.
Let us dig deeper and discuss all the benefits of these shares:-
Shareholding And Growth
Companies or investors who have the funds and the will to support budding ideas become shareholding partners in the business. If the investment is accurate, it adds up to the market reputation and credibility of the company, eventually helping it get more professional recognition.
There are countless ideas that need financial support to boom! All budding entrepreneurs with unique ideas can only grow if investors believe in their vision. It is true that not every idea is promising. However, sometimes, there are companies that can actually bring a change in society. Thus EIS help these ideas get direction and ensure that they get enough funds to bring their vision into reality.
As far as profits are concerned, both investors and the business get monetary benefit from this scheme. Investors are in a double profit situation. They get tax benefits if the investment qualifies for it. An investor can enjoy as high as 30% income tax relief on their tax bill by investing under this scheme. Moreover, if the business becomes successful, they get the perks of being a shareholder. At the same time, the business owner with the idea gets funds to flourish and make his company a known name in the market.
It is needless to mention that any new business starting in the market open gates for employment opportunities. People from different professional backgrounds and skills get a chance to get employed in the company, which help reduce unemployment in the country. That is the prime reason the government started EIS shares scheme to encourage investors for putting their money in it.
The list of advantages one can get from these shares are countless. However, there are risks involved in this investment. Thus, one has to be careful in choosing the idea for investment and ensure that their chances of failure are negligible. Moreover, the sole purpose of investment should not be a tax benefit. It is a side benefit, which investors get only if the investment qualifies. Hence, a calculative investment into these shares is fruitful and can benefit society on the whole.