Self Employed Business Owner

All business owners have aspects of their operations that are the same regardless of the nature of their business.  They all have to generate revenue (sell), get their name out there (advertise), identify and distinguish themselves to prospective clients (branding and marketing), and maintain a place of business (either physical or virtual).  These activities are primarily the responsibility of the business owner and are, rightly so,  the focus of the majority of their time and energy.  There are other critical functions that we feel should NOT detract from the business owner's time and energy and are better handled by a team of experienced professionals all working off the same "script" (i.e. the business owner's personal financial plan).  Three areas we focus on are:

One -Developing a personal financial planning strategy that identifies and distinguishes personal financial goals (and by extension the assets and liabilities associated with those goals) from those of the business.  This is accomplished by engaging the services of a financial advisor who provides comprehensive financial planning services.

Financial Planning Association (FPA) Brochure -  Financial Planning and Your Small Business

Two - Integrate the valuation of the business into the overall financial planning process to estimate a realistic asset base that can be used to supplement the personal assets that are accumulated in support of retirement.  This frequently requires the financial advisor to enlist the services of specialists trained in the complex discipline of not just valuing businesses but also bringing together willing buyers and sellers of businesses.  This work may also require tax, legal, as well as business planning experts working together with the financial advisor often several years in advance of the actual transfer of the business to the next owner. The end result is a clearly defined exit strategy for the business owner.

Small Business Administration - Selling Your Business      Transfer Ownership

Three - Implement a fully integrated tax planning strategy that recognizes the benefits in the tax code afforded to sole proprietor business owners.  Especially  important are the areas of tax qualified and tax advantaged retirement savings programs and the tax treatment of health, disability and long term care insurance related expenses to the business owner.  This work may require the services of a licensed tax professional to provide the expertise and advice needed to  help make informed choices about what types of retirement saving vehicles and insurance solutions to use in their business. Examples include:

401k Plans for the Self Employed Business Owner  - Solo 401Ks

Tax Advantaged Retirement Plans  - SEP IRA   

Defined Benefit Plans (i.e. pension plans) for the Self Employed Business Owner

Section 105 Health Care Plans -IRS Pub 969  

American Association for Long Term Care Insurance Consumer Information Center.  Web Portal for Long Term Care Insurance for Business Owners

National Association of Insurance Commissioners web portal for information resources tailored to small business owners.  Includes workers comp, Property and Casualty, Commercial Auto, Disability, and insurance for home based businesses. 

 

By working together with a financial advisor, independent business owners can address these three areas of financial planning and develop a sound strategy to improve their chances of a successful run and orderly transfer of their business at the right time.

To set up an appointment on the phone or in person with me to discuss working with a financial advisor and see how we can be of service to you call 757.401.4558 or email me at mrbarclift@wradvisors.com .

Waddell & Reed does not provide legal or tax advice.

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