Education
Business Owners
The information provided here is for general educational purposes only and is based on common financial assumptions and estimates. It should not be considered personalized financial advice. Before making decisions about investments, retirement planning, taxes, insurance, or business strategies, consult with a qualified financial advisor, tax professional, or other licensed expert who can review your specific situation.
Business Structure & Taxes
Should I run my business as an LLC or S-Corp?
An LLC provides limited liability protection and is generally taxed as a pass-through entity, while an S-Corporation tax election may allow business owners to structure compensation through both salary and distributions in accordance with IRS requirements. Some business owners choose to have their LLC taxed as an S-Corporation to align with their operational and tax-planning preferences.
What business expenses are tax-deductible?
Common tax deductions include home office expenses, business travel, equipment, software, employee benefits, and retirement plan contributions (SEP IRA, Solo 401k). Proper bookkeeping is essential to maximize tax savings.
How do I lower taxes as a small business owner?
Strategies include setting up a SEP IRA or Solo 401k, contributing to an HSA, income splitting with family, Section 179 deductions, and using tax-deferred annuities. Working with a tax advisor ensures compliance.
Cash Flow & Business Growth
How do I manage cash flow better in my business?
Create a cash flow statement, maintain separate business and personal accounts, and consider using tools such as lines of credit, business savings accounts, or business credit cards when appropriate. Automating invoicing and accounts receivable can help support more consistent cash-flow management.
How much should I pay myself as a business owner?
Business owners often pay themselves through a salary (W-2 for S-Corp) plus dividends or owner’s draws. The right approach balances personal income taxes, Social Security contributions, and business reinvestment.
What are some considerations for supporting business growth while managing debt levels responsibly?
Growth can come from reinvesting profits, using SBA loans, equipment financing, or private equity. A financial plan helps balance business loans, cash reserves, and long-term growth goals.
Retirement & Exit Planning
What are some common retirement strategies small business owners may consider?
Potential options include the Solo 401k, SEP IRA, SIMPLE IRA, and Defined Benefit Plans. A Solo 401k allows high contributions and Roth options, while a SEP IRA is easy to set up and tax-deductible. An experienced financial advisor can help guide you through the pros and cons of these strategies to determine which option may be better suited for your specific needs.
How do I sell my business when I retire?
Business owners often use a business valuation, succession plan, and buy-sell agreement. Pairing this with life insurance, trusts, or installment sales can help reduce taxes and provide retirement income.
Can I use my business to fund my retirement?
Some business owners use retirement plans, such as SEP IRAs, Solo 401(k)s, or Defined Benefit Plans, as part of their overall savings strategy, while also focusing on building business value that may support a future sale or succession plan depending on their long-term objectives.
Insurance & Risk Management
What insurance do business owners need to consider?
Common coverage includes general liability insurance, professional liability (E&O), business owner’s policy (BOP), key person insurance, and disability insurance. Life insurance can also fund a buy-sell agreement.
How do I help protect my business if something happens to me?
Consider tools such as a succession plan, key person insurance, and a buy–sell agreement funded by life insurance to help address potential transitions and support the continuity of business operations and family financial needs.
Bookkeeping & Financial Management
Do I need a CPA or bookkeeper for my small business?
A bookkeeper handles daily transactions and payroll, while a CPA provides tax planning, audits, and financial strategy. Many business owners benefit from having both roles in place.
How should I separate business and personal finances?
Use a business checking account, business credit card, and separate bookkeeping software (like QuickBooks or Xero) to help maintain clear separation between business and personal finances and to support accurate record keeping for tax purposes.
How much should I save in a business emergency fund?
Business owners should keep 3-6 months of operating expenses in a business savings account or money market account. This helps cover payroll, rent, and inventory during downturns.
Succession & Exit Strategy
What is a buy-sell agreement and what considerations make it important for some business owners?
A buy-sell agreement is a legal contract that outlines what happens to your business ownership if you retire, become disabled, or pass away. Many owners fund it with life insurance or disability insurance to help protect family and partners.
How do I value my business before selling?
A proper business valuation looks at EBITDA, cash flow, assets, and market comparables. Business owners often work with a CPA, valuation expert, or M&A advisor to set the right selling price.
What are some common ways to pass my business to my children?
Many use a succession plan with tools like family trusts, gifting shares, buy-sell agreements, and estate planning. Coordinating tax planning, retirement income, and life insurance better ensures a smooth transition. A dedicated financial advisor can help guide you through these potential options to determine which may be better suited for your specific retirement goals.
Can I use an ESOP (Employee Stock Ownership Plan) to exit my business?
An ESOP is a structure that allows employees to acquire ownership interests in a company over time. Depending on the design and circumstances, an ESOP may offer certain tax benefits, support business-continuity planning, and provide a potential liquidity path for the owner while offering employees an additional workplace benefit.
