Being a business owner comes with a long list of responsibilities and things to think about that extend far beyond the day-to-day operations of the business. Tax implications, insurance coverage, estate planning, are just a few of the issues that all business owners should be aware of and thinking about to maintain a healthy and successful business.
If you’re a business owner, here are a just a few of the things to think about and plan around:
Personal Financial Goals: There are a lot of variables that come with running a business, especially when it comes to financials. As a business owner, you’re responsible for handling all expenses – expected and unexpected – and this could impact what your income is each month. Subsequently, you may need to adjust personal expenses and be over-prepared with your emergency fund to ensure you can handle any business or personal expenses that exceed your budget.
Investment Goals: Personal investments should align with the fact that you’re a business owner. That could mean re-evaluating the risks or the diversification of your investments to protect your goals.
Insurance: Have you thought about your life and disability insurance coverage as it relates to being a business owner? What about key-person insurance to cover other business owners or commercial liability insurance to provide protection to your business for a variety of claims? Ensure your plan has the appropriate coverage for any business-related risks you may experience.
Succession of Your Business: If you are within 10 years of retirement or transitioning to a different career path, it’s time to start planning for how you’ll exit your business. Whether a succession plan, sale or disposition, all require ample time and planning for a successful exit.
Business Expense Deductions: Business expenses and personal expenses need to be allocated separately and for tax exemption purposes, it’s vital that anything you’re allocating as a business expense falls within an ordinary and necessary expense for your specific line of business.
Depreciation: If you have large business expenses, there should be a strategy around accelerating depreciation or using traditional depreciation because it impacts your personal tax rate.
Benefits: If you have a spouse, look into if you can access benefits through their employment instead of seeking them through your own business. Keep savings or tax deductions in mind when making your decision. As a business owner, offering group benefits such as health insurance or a retirement plan to your employees can also be of tremendous value and should be considered.
Business Entity Choice: S corporation, partnership, sole proprietorship. These are just a few of the choices for how to classify your business and each has different tax implications, liabilities and flexibility. If you haven’t already done so, it’s time to evaluate if the business structure you selected offers the most benefits for your personal financial situation.
If you’re a business owner and seeking financial advice to help in decision making for you, your business, and your employees, we can set up a complimentary virtual phone call or meeting to discuss further. You can do this by emailing us directly at firstname.lastname@example.org, or visit us on our website at https://www.rtdfinancial.com to learn more.