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 offers liability protection and simple taxes, while an S-Corp can reduce self-employment taxes through salary and distributions. Many business owners use an LLC taxed as an S-Corp for maximum flexibility.
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, separate business and personal accounts, and use lines of credit, business savings accounts, or business credit cards. Automating invoicing and accounts receivable improves cash flow.
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.
How do I grow my business without taking on too much debt?
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 is the best retirement plan for small business owners?
Top 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.
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 reduce taxes and provide retirement income.
Can I use my business to fund my retirement?
Yes. Many owners save through business retirement plans (SEP IRA, Solo 401k, Defined Benefit Plan) while also building business equity for a future business sale or succession plan.
Insurance & Risk Management
What insurance do business owners need?
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 protect my business if something happens to me?
Use a succession plan, key person insurance, and a buy-sell agreement funded by life insurance. This ensures business continuity and protects family income.
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?
Always use a business checking account, business credit card, and separate bookkeeping software (like QuickBooks or Xero). This keeps your LLC or S-Corp compliant and simplifies tax filing.
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 why do business owners need one?
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 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’s the best way 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 ensures a smooth transition.
Can I use an ESOP (Employee Stock Ownership Plan) to exit my business?
Yes, an ESOP allows employees to buy ownership over time. It can provide tax advantages, business continuity, and retirement income for the owner while rewarding loyal employees.
