Business Owners

Financial Planning for Business Owners

As a business owner you have learned to do many things for yourself but you have also learned to call in the experts to help you with the critical aspects of your business. Financial planning for your family and your business can be the most important decisions you will make.

  • Tax planning
  • Risk management
  • Investment planning
  • Retirement planning
  • Estate planning

So, for each of these areas business ownership plans and personal planning must be cohesive.

Business owners are able to receive income in very tax efficient ways. With proper tax planning you can choose the timing and method of receiving income. Depending on your circumstances it may make sense to defer income or receive a portion in dividends to reduce your personal tax burden. If your spouse is actively involved you may choose to split income equally for tax benefits. Other family members may contribute to the success of the organization and can also draw an income.

Risk management for individuals usually involves planning for the possibility of early death, disability, illness or infirmity, and liability or loss or damage to property. As a business owner you also have to consider business interruption, death or disability of a partner or key employee and loss of business property and lawsuits. You may require specialized insurance coverage beyond what you would hold for yourself and your family.

Proper investment planning may challenge your thinking about plowing all your funds back into your business. Yes this is where you have the most control but that one basket still holds all your eggs. To offset the concentrated risk you need to expand and diversify your personal portfolio.

Retirement planning for many business owners is simply non-existent. They never actually plan to retire because they love what they do. Some consider their business as the only source of capital needed to fund their retirement. If you share their thinking, think again. In reality, as a business owner you need more retirement planning instead of less. You need to prepare for the time when you can no longer work or choose to stop working. There may come a time when the business can no longer fully provide for your financial needs. The big benefit of business ownership is that you have many tax-advantaged methods to save for retirement.

Estate planning for business owners can have a huge benefit – especially if the business grows and becomes a valuable asset. Simple wills or family trusts may not be adequate for the transfer of your business. More elaborate financial strategies may be needed to ensure business continuity after death and to reduce the estate taxes assessed for the business. It will also provide liquidity for your heirs to pay those taxes. You may even consider reorganizing the business to create different types of ownership for family members, and to make full use of tax laws in valuing the business for purposes of gift and estate taxes.

To maximize the return on the life-long effort you put into your business you are prudent to get professional, expert advice from a Certified Financial Planner with extensive experience in working with businesses of all sizes and type.

Contact us for a no-cost, no-obligation initial consultation.