Why financial planning for a business owner is the key to a successful business

One of the hallmarks of success in the American dream is owning and operating your own business. However, no one becomes a business owner overnight. Starting and operating a business requires a lot of careful planning and dedication. It also requires you to have a sound financial plan, both for your personal and business finances, to help you make smart financial decisions and continue operating until you are ready to retire.

Without a business financial plan, your business is less likely to remain afloat during difficult seasons. And without a personal financial plan to make sure you are paying yourself enough and that you have a contingency plan in place for when you are ready to retire, you risk postponing your personal financial goals for the sake of your business. 

We have your best interest in mind and want your business to succeed, so we want to highlight what you need to know about financial planning and why you should consider partnering with a ProVise CERTIFIED FINANCIAL PLANNER to help your business manage its finances.

Financial planning helps you take advantage of tax savings

In 2017, the IRS enacted the Tax Cuts and Jobs Act. This act provides substantial tax benefits for small business owners who in many cases can deduct up to 20% of their business income. 

Additionally, you can create tax advantages for yourself by investing in retirement accounts, profit-sharing plans and other tax-saving vehicles that might be applicable to your particular circumstances. 

Financial planning helps you make sure you pay yourself enough

Paying yourself as a business owner can be hard to figure out. How much do you pay yourself? How often should you pay yourself? 

Financial planning can help you sort out the answers to these questions. A financial planner can help you determine a fair salary that will balance tax requirements with financial needs . A financial planner can also help advise you about drawing business profits or to pay yourself with a salary as if you were an employee. Both options have benefits that vary depending on your unique circumstances.

Financial planning helps you navigate risks

Owning and operating a small business comes with many risks. For starters, you probably took a big financial risk in opening the business. You may be at further financial risk if your business fails to generate enough income for a period of time.

Other risks small businesses face include:

• Liability
• Regulations
• Illness and injury
• Property damage
• Cybersecurity threats
• Fraud

Responsible planning can potentially help you prevent the circumstances that lead to many of these risks. However, not every risk can be prevented with careful planning. Unexpected events can happen that make times more difficult, such as the COVID-19 pandemic. Having a financial plan for all of the risks that could affect your business can help you make more informed decisions in the event that you do face unpreventable risks.

Manage your business finances with the assistance of a ProVise CFP®

Managing every aspect of your business’s financial decisions without a plan is like trying to bake a cake without using a recipe. Sure, you might have an idea of what ingredients you need or an estimate of how much time it takes to bake, but guessing and estimating are not going to produce a good cake. This strategy might produce a mess. Without a clear strategy for your business’s finances, you might end up with a similar result.

Most large businesses have a Chief Financial Officer (CFO) who manages their financial affairs. However, small businesses or self-run businesses do not have the luxury of the expertise and guidance a CFO can provide. Fortunately, they do have access to a ProVise CFP® who brings a wealth of experience in dealing with business owners. By looking at both the business and personal side, we can help design a financial plan to help you achieve your goals.

We take the time to get to know you, your current financial circumstances, your goals, and the beliefs that drive you so we can help you make decisions that work best for you. Using what we learn, we can draft a written plan for you at a fiduciary standard of care. 

All of our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about our PFO program or do you have other questions about financial planning? Contact ProVise today to schedule a complimentary consultation.