Financial planning for business owners involves making the most of the unique benefits that come with owning a corporation.
Owning a business opens up more opportunities to grow your wealth, pay less tax, and reach your biggest goals, but that’s also what makes it complicated.
Why Business Owners Don’t Always Get What They Need From Financial Planners
Being incorporated opens up more opportunities to plan, save, and invest for the future. The only problem with having more opportunities is not taking advantage of them.
There are plenty of financial planners who will do a great job investing your cash or selling you insurance. However, if they’re not properly educated on how to plan for business owners, tax-efficient investment and planning opportunities will be overlooked.
You might find yourself with less money in your pocket, and working way too hard to get ahead.
If you want more money and time to do the things you love, find a financial planner who is well versed in these six areas.
6 Areas a Financial Planner Can Help Business Owners In:
- Proper goal planning: financial freedom means different things for everyone. Getting crystal clear about your goals will help build the financial plan that will get you to your dream life. You’ll feel motivated to jump out of bed each morning.
- Tax-efficient cash flow planning: many business owners are unsure what to do with money just sitting in the corporation. A financial planner can help you pay yourself the right amount to maintain your lifestyle and invest towards your long-term goals in the most tax-efficient manner.
- Proper debt structuring: debt can be a wealth creation tool when using innovative strategies to structure it. You want to make sure you’re paying off bad debt first and leveraging opportunities to grow your wealth.
- Corporate life insurance planning: A well-structured life insurance plan minimizes risk, protects your savings, and creates opportunities for short and long-term tax savings.
- Corporate investment planning: Using corporate investing strategies and composing a portfolio of the right corporate investments will lower passive investment tax. Keeping more money in your pocket rather than giving it to the CRA.
- Effective use of the Capital Dividend Account (CDA): The CDA can flow life insurance proceeds and 50% of capital gains out of your corporation tax-free in the form of capital dividends.
Watch the video on this topic
The Hunt for the Right Financial Planner
Now that you’re familiar with the different areas of expertise a financial planner can provide, here are two things to keep in mind when searching for the right planner:
The first is to make sure your financial planner is a fiduciary. This means they have a legal obligation to make recommendations in your best interest. Financial planners with a CFP designation must uphold the strict standard of fiduciary duty to their clients.
Understand how your financial planner gets paid. What motivates them? If you want transparent and unbiased advice, find a fee-for-service financial planner instead of a commission-based financial planner who offers free advice. Free advice may cost you more money because their incentive is to sell you products rather than deliver valuable advice.
(We recommend “interviewing” your financial planner. Here are questions you should ask when you first meet)
Do you want to hire a financial planner on your team to help reach your goals? Book a call, we’d love to help.