As an entrepreneur, you are the expert in the goods and services you offer to customers. However, you may be less familiar with the financial aspects of managing your business.
Incorporating a CERTIFIED FINANCIAL PLANNER™ professional into your team of advisors is a smart way to ensure that you are growing your business sustainably. Here are some important financial planning strategies that a CFP® professional can help you with:
1. Choosing a corporate structure: Each type of corporate structure is subject to its own tax code and financial responsibilities. Determining which structure makes the most sense for your business is crucial but complex, given the wide range of factors involved. A CFP® professional can help you navigate this decision in your favor. As your business grows, keep the dialogue open with your advisor to ensure that the classification of your corporate structure is not negatively impacting cash flow.
2. Organizing your expenses: Your business may feel personal, but it’s important to keep business and personal expenses separate. A CFP® professional can help you establish a plan to manage personal and business finances in a way that allows you to achieve your financial goals.
Side note for expense organization: Be sure to deduct all indirect costs when preparing your taxes. If you are not deducting expenses like travel, automobile expenses, home office utility bills, marketing materials, and continuing education related to your industry, you are leaving money on the table.
3. Saving for retirement: While retirement may not be a priority when launching your own business, it is important to plan for it. One of the great benefits of being your own boss is having the freedom to maximize your retirement savings. A CFP® professional can help you understand options like IRAs, profit-sharing 401(k)s, and solo 401(k)s, and help you select the one that will reduce your taxable income now and pave the way for a comfortable future.
On a related note, including a retirement plan in the benefits you offer your employees will make your company a more attractive place to work, helping you attract top talent.
4. Maintaining personal financial health: As you grow your business, it can be easy to lose sight of your family’s financial health. A CFP® professional can help you protect your personal assets and continue progressing toward your other financial goals at a time when your business seems to be the top priority.
These are just a few of the areas where a financial advisor can help your business succeed. They can also provide cash flow analysis, advise on your insurance needs, create a succession roadmap, and more. For additional insights on financial planning for small businesses, and to find a CFP® professional to work with, visit LetsMakeAPlan.org.
Launching a small business is both an adventure and a lot of work. Seek specialized assistance in key financial planning strategies so you can focus on the aspects of your business you are most passionate about.
Source: StatePoint