Financial Planning For Business Owners Is Often Two-Sided
Business owners have access to a lot of financial tools that employees don’t have access to; this is a great advantage, however it can be overwhelming too. A financial plan can relieve this.
A financial plan examines your current and desired financial status and determines your short, medium, and long-term financial goals and how you can achieve them—for yourself, your family, and your business. Here are a few reasons of why you should get a Financial Plan.
- Why do you need a Financial Plan?
- Worry less about money and gain control.
- Organize your finances.
- Prioritize your goals.
- Focus on the big picture.
- Save money to reach your goals.
Business owners – Personal and Business finances are connected
Business owners have access to a lot of financial tools that employees don’t have access to; this is a great advantage, however it can be overwhelming too. A financial plan can relieve this.
What does a Financial Plan for a Business include?
There are 2 main sides your business financial plan should address: Growth and Preservation
Growth:
- Cash Management- Managing Cash & Debt
- Tax Planning- Finding tax efficiencies
- Retaining & Attracting Key Talent
Preservation:
- Investment- either back into the business or outside of the business
- Insurance Planning*/Risk Management
- Succession/Exit Planning
- What does a Personal Financial Plan include?
What does a Financial Plan for a Personal side include?
There are 2 main sides your financial plan should address: Accumulation and Protection*
Accumulation:
- Cash Management – Savings and Debt
- Tax Planning
- Investments
Protection*:
- Insurance Planning
- Health Insurance
- Estate Planning
Tax Minimization Strategies
We will review your income, including salary, earnings from investments, and any other asset or business venture that attracts taxes. Review your tax returns for the past couple of years and use them to devise a tax minimization strategy. Strategies such as: income deferral options such as registered retirement saving plans, deferring capital gains, income splitting, tax credits gifting assets and investing in certain types of life insurance*.
Buy an Insurance Policy*
Take care of contingencies such as disability, debilitating illness, or premature death by having insurance coverage. Buy insurance that will provide for the medical costs of a critical illness. Life insurance protection provides financial resources for the remaining family members in the event of your premature death. We can design a plan where your insurance premiums will be waived if you are disabled.
Save For Retirement
If you are employed, make sure you participate in your employer’s retirement plan. Most employers will match your contribution or add a percentage of your salary to your retirement account. If you are self- employed you should open an RRSP if you don’t already have one. An RRSP is one of the most popular ways to save for retirement in Canada and your contributions are tax-deductible. In short, it will boost your retirement savings and reduce your tax bill.
Financial Planning and Tax Minimization Strategies
Pay Off Mortgage
Since you are at your peak earning years, you should use the extra income to fast-track your mortgage payments.
Reduce Debts
Take a review of all your debts, bills, and other financial obligations to see how much you owe.
Write A Will
Prepare a will outlining how your estate will be distributed after you die.
Stay on Budget
With new perks, you may be tempted to upgrade your lifestyle. However, it is important to ensure that you are not spending more than you are making.
Work with Professional Financial Advisers
Making a solid financial plan is a complex process that may require the assistance of financial planning and investment professionals. Accureta Wealth Management is a part of IA Private Wealth and helps clients plan their finances through smart tax minimization, investment, and retirement planning strategies. We go with our clients throughout the journey, enabling them to approach the future with confidence and financial security. Contact us to speak to our wealth management professionals.
