Financial Planning Priorities for Business Owners

From my experience, business owners have specific financial planning priorities when it comes to ensuring the success and stability of their businesses. Here are seven items to keep top of mind:

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1.?????Business structure and incorporation to determine the most suitable legal business structure for an enterprise, such as sole proprietorship, partnership, or incorporation. Incorporation offers benefits like limited liability protection and potential tax advantages, but it may not be suitable for all businesses.

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2.?????Cash flow management ensures that a business has sufficient funds to meet expenses, invest in growth opportunities and manage unforeseen circumstances. This involves processes to create a budget, monitor expenses, and establish effective cash flow management practices to optimize the business' financial health.

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3.?????Tax planning and compliance implements effective strategies to minimize tax liabilities while complying with tax laws. This includes understanding deductible business expenses, tax credits, and allowances specific to the enterprise’s industry and building awareness of tax planning opportunities for both short- and long-term goals.

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4.?????Succession planning ensures a smooth transition of a business in cases of intergenerational transfer, retirement, disability, or death by guiding the parties through a comprehensive plan that addresses leadership, ownership transfer, and the financial implications of the transfer.

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5.?????Business insurance provides coverage to protect a business against various risks and provides financial security in case of unforeseen events. This includes general liability insurance, property insurance, professional liability insurance, as well as life, disability, health, and key person insurance.

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6.?????Retirement planning involves strategies to ensure a sufficient nest egg for a business owner’s retirement years while considering the timing and sale of the business and exit strategies. It addresses the avenues available for personal retirement savings or other tax-efficient opportunities available to business owners.

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7.?????Risk management endeavours to identify and mitigate risks that could impact a business' financial stability. This includes diversifying revenue sources, maintaining a cash reserve for emergencies, and implementing effective risk management strategies to protect against market fluctuations, changes in regulations, or other unforeseen events.

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Central to addressing these objectives is the importance of having a professional team of advisors – your Certified Financial Planner?, tax accountant, corporate lawyer, and others – who coordinate their efforts to work on your behalf to guide, assist with decision-making, and ensure compliance with your legal and financial requirements.

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Remember, every business owner's situation is unique, and financial planning priorities vary based on factors such as your business size, industry, and personal goals. It is essential to work closely with professionals who understand the business landscape and can provide personalized advice based on your specific circumstances.

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Chris Gorman is a Certified Financial Planner? (CFP?), Chartered Life Underwriter? (CLU?), and Chartered Investment Manager? (CIM?). He also holds a Master of Business Administration (MBA) degree from UBC’s Sauder School of Business and a Master of Laws (LLM) degree specializing in tax law from Osgoode Hall Law School.?

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. Investia Financial Services Inc. is a trademark and business name under which Investia Financial Services Inc. operates.