Navigating the entrepreneurial landscape requires one to take on multiple roles - from the CEO's leadership to managing complex financial tasks similar to a CFO. While this dynamic responsibility can be thrilling, it equally presents a high-stress environment prone to potential burnout.
EP Wealth Advisors recently held a webinar, “Planning for Business Owners” that dives into the importance of meticulous business and financial planning. Key takeaways from the session highlight important considerations from comprehensive business planning to how to support one’s business.
The Importance of Comprehensive Business Planning
Recognizing the importance of comprehensive business planning is a critical step in the evolution of your company, as it can provide the foundational blueprint for your venture. A proper business plan can offer clear direction, achievable objectives, and a strategic roadmap for you to follow. Establishing an end goal and staying alert to potential obstacles will help you implement your business plan.
Before initiating the business planning process, you must familiarize yourself with its key components. These components encompass understanding the corporate structure, tax strategies, cash flow, financial statements, insurance, risk management planning, and succession or exit planning.
Selecting the Correct Corporate Structure
An essential step in creating a business is deciding on the appropriate corporate structure. Each company structure offers different aspects of control, liability, taxation, and administrative complexity. Whether a sole proprietorship, partnership, LLC, or corporation – your choice should reflect your long-term vision and objectives for your business. Frequent alteration of your business structure for short-term advantages is not recommended. Building your business plan will help you decide which corporate structure is best for your business.
Approaches for Tax Planning
Tax planning for your business is another vital aspect that requires your attention for more than tax season.
Every business is unique, making tax strategies personalized to your company. These strategies must consider several factors, including the type of business, income structure, and geographical location. A skilled tax planner can guide you through the complexity of tax laws and aid you in maximizing tax savings.
Preparations for Post-Work Life
Although retirement planning may seem distant, it should be a part of your business strategy from inception.
Since you run your own business, you must be the one to plan and save for your retirement as a part of your future. Planning for retirement ahead of time can facilitate tax deductions and may bring financial stability for your future. The choice between profit-sharing plans, IRAs, and Simple IRAs will depend on your business's specific needs and dynamics. Simple IRAs are a great way to motivate you and your staff to plan for retirement, while profit-sharing plans are better for setting money aside for your long-term business plan.
Whichever plan your business requires, one of our financial planners can help you plan for your future with a Financial Health Assessment.
Decisions Regarding Business Real Estate
Decisions pertinent to business real estate, such as renting versus owning, or separating business activities from real estate, can considerably impact your venture's financial health. Business owners usually keep their operations and real estate in different entities for improved tax planning, increased cash flow flexibility, and protection against liabilities.
As you continue to build out your business plan, consider what options you have when it comes to your office location. You can try to find office space that you can rent temporarily at a good price; however, you might get locked into a place that doesn’t fit your needs. On the other hand, you can consider buying office space, giving you more flexibility in customizing your space to your unique business needs. Each option has pros and cons, and where your business is in its long-term plan will help you decide which one is better for you.
Plan for Your Future
Business planning is not a singular event but a continuous process that demands commitment and time. It involves anticipating challenges, preparing for countless scenarios, and aligning everyday operations with your long-term goals. Seeking professional guidance in this complex journey can provide peace of mind and a strategic roadmap steering your business toward success.
Contact EP Wealth Advisors today to start discussing your business plan and personal wealth management with one of our Certified Financial Planners! A Portfolio Review will provide you with a snapshot of where you stand today and includes an analysis of your investment returns, allocation, risk, and tax efficiency.