An Introduction to Wealth Management for Small Business Owners

In the US, there are over 30 million small businesses, and they account for nearly half of the workforce in the country. Yet just 40 percent of small businesses earn a profit while at some point 30 percent start to lose money. Protecting your small business requires a wealth strategy.

As a small business owner, the financial decisions you make can impact your personal life and those you care about. It’s good to be informed about how you can grow your wealth and secure your future no matter what size business you have. Having a plan can help you reach your goals and protect your small business. We have gathered everything you need to know to manage your wealth as a small business owner, from tax planning to retirement.

Tax planning

As a small business owner, it’s vital to have a tax plan so that you don’t have to pay too much and you’re taking advantage of all the tax credits available. Tax laws and regulations can change. However, as a busy small business owner, it can be overly time consuming to stay on top of the changes. Consult with a tax expert to stay on top of any changes that will impact you and ensure that you utilize all the tax deductions you are entitled to.

It’s also important to anticipate any tax payments you’ll need to make at the end of each year and save for them. For example, set aside some money each quarter or make monthly installment payments so that when tax time comes, you’ll be ahead of the game. Having a tax plan allows you to optimize the benefits available to small business owners and get ahead on tax expenses. Any savings you can gain can be invested in your business.

Succession planning

Do you have plans for who will take over the business if you’re no longer able to run in? It’s hard to predict the future, and having a succession plan is crucial for your small business. Talk with a specialist about creating a plan that protects you, your business, and your loved ones in case of your death or a serious illness. Consider the continuity of your business or what circumstances would allow others to sell your business. For maximum protection, it’s good to get your plans in writing to avoid any legal hang-ups that would hinder things in case you are incapacitated.

Protection from legal expenses

Small business owners need to be clear about the risks they take. Having a strategy can prevent loss from potential legal issues. When you run a business, things can happen, and you may find yourself facing legal expenses to protect yourself and your business. With a wealth strategy in place, you’ll be able to plan for these scenarios and only take risks that you can afford to take. Having the advice of a professional wealth manager is vital to help you make the right decisions for your small business.

Personal wealth and business liability

Many small business owners have substantial personal assets invested in their business. But what happens to your personal wealth if creditors come to cash in on your business debt? With a wealth management plan, you’ll be able to protect your personal wealth from the liability of the business. Your personal wealth is for your family’s security, so it should only be used if you have a plan to protect it.

Retirement planning

With the busyness of your day-to-day operations, planning for your retirement may get put on the back burner. But retirement planning is an essential part of wealth management for small business owners. There are different options with regard to retirement savings and planning that offer various benefits.

Whether you decide to use RRSPs or TFSAs as your retirement investment vehicle, it is helpful to understand the ins and outs of how these accounts work and what your investment options are. Your Iron Oak Wealth advisor can help you make the best choice for your small business wealth. Talk with your financial planner about the differences between RRSPs, TFSAs, and IRAs. We can help you determine the one that is right for you as a small business owner.

It’s also important to understand various life insurance policies and whether they can benefit your small business if you pass away. At Iron Oak, we’ve seen the mistakes that clients can make when it comes to financial planning. Let us help you make the right choices so you can have the future and the retirement you’re dreaming of.

Wealth building and your business

To increase your wealth from your small business, you need to have a plan that makes capital work for your company. Develop a strategy that focuses on growth and expansion. This can include developing good habits, such as making wise investment choices. There are many investment options to consider, from stocks to real estate and more. Understanding the market and what your best options are is what we do.

Holding extra wealth in your business is not the best way to build your wealth. You want to invest as much as you can. But it’s important to know where and how to invest capital. The wrong investment can lead to loss. A wealth manager can help you decide on the best option for excess capital.

While your focus should be on building your wealth, it’s also key to plan for rough patches. Saving for when times are tough is an important practice for everyone, not just small business owners. But it can help you from facing difficult decisions like having to sell your business when you don’t feel ready.

When you’re ready to delve in and learn more about wealth management for your small business, contact an IronOak advisor.

  • Home
  • About
  • Team
  • Services
  • Contact