The Ultimate Guide To Financial Planning For Business Owners

The Ultimate Guide To Financial Planning For Business Owners

November 20, 2020

If 2020 has taught us anything, it’s that you can’t just fly by the seat of your pants and hope for the best. And no one has seen that more than business owners. This year has highlighted every business owner’s need for planning and preparation. When it comes to your financial life, here is how you need to plan. 

Tax Planning

Since the day you started paying payroll taxes as a self-employed person, you probably realized that one of the greatest threats to your financial well-being is taxation. On top of the 15.3% payroll tax, you have federal and state income taxes, capital gains taxes, and possibly corporate income taxes.

Every dollar saved in taxes is a dollar that can be used to grow your net worth and/or your business. As such, tax planning is vital for business owners. Tax planning includes everything from the type of entity you use for your business and whether it is taxed as a pure pass-through or S corp to whether you have employees or contract workers and how you manage deductible expenses. Proper tax planning can have a major impact on your bottom line, so it is important to work with a forward-thinking wealth manager who specializes in working with business owners in addition to your CPA.

Retirement Planning

Whether or not you ever want to retire, it is important to plan for the possibility. Every business owner should be setting aside money now so that later on in life they will have the option of living without a business-related income. Fortunately, the government has provided tax-advantaged ways of doing that. 

Sponsoring a qualified plan through your business will allow you to set aside money for the future pre-tax, which lowers your current tax bill and may even help you qualify for the qualified business income tax deduction. Sponsoring a retirement plan is also a great way to reward, attract, and retain talent. There are a number of retirement plan options available to business owners, from the popular 401(k) to the more aggressive cash balance plan, and the right one for you will depend on your business cash flows, your savings needs, and your employee demographics.  

Succession Planning

What will your business do when you are gone? Whether you have passed from this life or just passed on to the golf course or a lakeside cabin, it is important to have a plan for the future. One of the biggest mistakes that business owners make is not having a succession plan in place. Do you want to sell the business or pass it on to a family member or your employees? If you don’t make a plan now, that may not be possible. Having a plan in place well in advance can help you minimize taxes, transaction costs, and relational friction.

Estate Planning

You pour your life into building a business you want to provide for the future well-being of you and your family for generations to come. Not only do you need to have a plan for passing on the business, but you also need a plan for passing on the wealth that the business has created. Estate planning is important for everyone, but even more so for those who have built significant wealth through entrepreneurship. A proper estate plan will help you minimize transfer taxes while allowing you to decide how and when to pass on your wealth to your loved ones in order to leave the legacy that you desire.

Asset Planning

While you may feel like your business is your entire life, it should not be your entire financial life. The principle of diversification applies to business owners just as much as every other investor. Having your net worth consist solely of your business increases your personal financial risk. As many people learned this year, when you have all of your assets tied up in your business and something happens to your business, it can be devastating for your personal finances. Every business owner needs to have a strategy for transferring business assets into personal assets for business liability and personal protection.

How We Can Help

As you can see, there are a lot of financial planning areas that business owners need to be aware of: tax planning, retirement planning, succession planning, estate planning, and strategic asset planning. Your personal finances, and possibly those of future generations of your family, depend on the planning and preparation that you do now.  

If you want an experienced professional to guide you through all of the areas of planning that you need to navigate, we can help. At Anderson Financial Strategies, our wealth managers are experienced in helping business owners just like you prepare for the future and protect that which they’ve given their lives to build. To learn more about how we can help you with your financial planning, please call us at 855-237-4545 to schedule an executive briefing to discuss your goals.

About Shon

Shon Anderson is president and chief wealth strategist at Anderson Financial Strategies, LLC with over 15 years of experience. As a fiduciary, Shon’s mission is to provide his clients with quality financial expertise along with rapidly responsive service through an honest relationship. He specializes in providing family office-style services to help his clients organize and focus their financial life. Shon graduated from Wright State University with a bachelor’s degree in financial services and an MBA in finance. He is a CERTIFIED FINANCIAL PLANNER™ (CFP®) practitioner and holds the Chartered Financial Analyst (CFA®) designation. His insights have been quoted in leading financial news publications such as CNBC, Yahoo Finance, Fox Business, Consumer Reports, Forbes,, Investment News, and Kiplinger. Shon serves as an adjunct professor teaching personal finance courses at Wright State University, leads CFP® exam review courses for Keir Educational Resources, and is president of the CFA Society Dayton. Shon and his wife, Jessica, reside in Sugarcreek Township, Ohio, and are blessed with triplet daughters, Elizabeth, Bridgette, and Alexandra, along with their son, Jacob, and dog, Jack. Over the years, Shon has been involved in several volunteer organizations including the Wright State chapter of Delta Tau Delta as an alumni adviser and was a Big Brother in the Big Brothers/Big Sisters program. To learn more about Shon, connect with him on LinkedIn.