Financial Insight and Considerations for Individuals and Small Business Owners

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Information or opinions expressed today are subject to …

Information or opinions expressed today are subject to
change without notice, are for general information only and are not intended
as an offer or solicitation with respect to the purchase or sale of any security or
offering of individual investment advice. Past performance does not guarantee
future results. Please consult a financial advisor to assess your individual
situation. Securities America and its representatives do not provide tax or legal
advice. Any tax or legal information provided here is merely a summary of our
understanding and interpretation of some of the current income tax
regulations and is not exhaustive. Tax-law is subject to frequent change;
therefore it is important to coordinate with your tax advisor. Securities offered
through Securities America, Inc., Member FINRA/SIPC, Advisory services
offered through KFG Wealth Management, LLC dba Korhorn Financial Group.
Mike Bernard Representatives. KFG Wealth
Management, LLC is not affiliated with the Securities America companies.

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  • MATT BEGINS WITH QUIZ

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  • 1. K O R H O R N F I N A N C I A L G R O U P , I N C . Financial Insight and Considerations for Individuals and Small Business Owners Michael Bernard CFP®, ChFC, CIC, EA Korhorn Financial Group, Inc. Granger, IN
  • 2. K O R H O R N F I N A N C I A L G R O U P , I N C . Disclosures Disclaimer: Information or opinions expressed today are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sale of any security or offering of individual investment advice. Past performance does not guarantee future results. Please consult a financial advisor to assess your individual situation. Securities America and its representatives do not provide tax or legal advice. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor. Securities offered through Securities America, Inc., Member FINRA/SIPC, Advisory services offered through KFG Wealth Management, LLC dba Korhorn Financial Group. Mike Bernard Representatives. KFG Wealth Management, LLC is not affiliated with the Securities America companies.
  • 3. K O R H O R N F I N A N C I A L G R O U P , I N C . Korhorn Financial Group, Inc KFG Insurance Agency, LLCKFG Wealth Management, LLC KFG Tax & Business Services, LLC First State Investment Center Granger Tax & Accounting Harbor Country Tax & Accounting Harger Accounting & Tax Stonegate Insurance Agency Johnson Insurance Agency Core Services: Individuals: Comprehensive Financial Planning Investment Management Businesses: Retirement Plans Financial Education Comprehensive Financial Planning Core Services: Individuals: Personal Tax Preparation Tax Planning Businesses: Corporate Tax Preparation Payroll Accounting Consulting Core Services: Individuals: Home, Auto, Life, Health, Disability, LTC, Medicare Supplement Businesses: Commercial Insurance, Work Comp Health Insurance and Benefits K O R H O R N F I N A N C I A L G R O U P , I N C . Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through KFG Wealth Management, LLC., KFG Tax & Business Services, LLC and KFG Insurance Agency, LLC are subsidiaries of Korhorn Financial Group, Inc. Korhorn Financial Group and its subsidiaries are not affiliated with the Securities America companies. Securities America and its representatives do not provide tax or legal advice. Those services are offered in conjunction with qualified professionals. Tax services are offered through KFG Tax & Business Services, LLC..
  • 4. K O R H O R N F I N A N C I A L G R O U P , I N C . 6 Areas of Financial Planning Estate Planning: Educating on how assets pass and the documents that are recommended for a proper estate plan, reviewing current estate plan to ensure it is consistent with wishes, and completing the implementation of beneficiaries to ensure consistent with the will. Present Financial Position: Organizing assets and liabilities into a format that allows for monitoring of progress and establishing, when necessary, a spending plan that if followed will help pursue financial goals and work towards financial peace. Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through KFG Wealth Management, LLC. KFG Wealth Management, KFG Tax & Business Services, LLC and KFG Insurance Agency are subsidiaries of Korhorn Financial Group, Inc. Korhorn Financial Group and its subsidiaries are not affiliated with the Securities America companies. Securities America and its representatives do not provide tax or legal advice. Those services are offered in conjunction with qualified professionals. Tax services are offered through KFG Tax & Business Services, LLC. Retirement Planning: Defining retirement goals/needs, evaluating current position, and adjusting variables in an effort to help ensure the success of the plan. Investment Planning: Reviewing the existing structure of investment accounts and the appropriateness of current investment tools and making recommendations to ensure the structure and tools are consistent with retirement needs and personal tax situation. Protection Planning: Reviewing financial risks and how they are managed to ensure it is consistent with Net Worth and need. Often entails a complete insurance review. Tax Planning: Analyzes current tax situation and determines opportunities to optimize situation in light of all areas of your financial life. Present Financial Position Protection Planning Tax Planning Investment Planning Retirement Planning Estate Planning K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 5. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 6. K O R H O R N F I N A N C I A L G R O U P , I N C . 3 Habits of Financially Successful Business Owners
  • 7. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #1: Choose how you want to be taxed
  • 8. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 9. K O R H O R N F I N A N C I A L G R O U P , I N C . • Taxed as a Sole Proprietor: – No formal organization or as a single-member LLC – File on Schedule C of your individual tax return – Revenue – Expenses = Business Net Income – Net Income taxed: • Federal Income Tax • State and Local Income Tax • Self Employment Tax Habit #1: Choose how you want to be taxed
  • 10. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 11. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 12. K O R H O R N F I N A N C I A L G R O U P , I N C . What is Self Employment Tax? 6.2% Social Security Tax 6.2% Social Security Tax 1.45% Medicare Tax 1.45% Medicare Tax 15.3% Self Employment Tax
  • 13. K O R H O R N F I N A N C I A L G R O U P , I N C . Self Employment Tax - Example • Let’s assume your business makes $125,000 and has $75,000 in expenses, making your net income $50,000 • Assume 25% Fed Tax and 5% State Tax • Fed Tax: $50,000 x 25% = $12,500 • State Tax: $50,000 x 5% = $2,500 • Self Employment Tax: $50,000 x 15.3% = $7,650 • TOTAL TAX = $22,650 • Meaning you only get to keep $27,350 of your $50,000 income!
  • 14. K O R H O R N F I N A N C I A L G R O U P , I N C . Is there a better way for you to be taxed? Consider being taxed as a corporation
  • 15. K O R H O R N F I N A N C I A L G R O U P , I N C . • Taxed as a S Corporation: – As a single-member LLC or a S Corp – File an 1120 S in addition to your individual tax return – Pay yourself a salary just like other employees – Revenue – Expenses = Business Net Income – Net Income taxed: • Federal Income Tax • State and Local Income Tax • NO Self Employment Tax Habit #1: Choose how you want to be taxed
  • 16. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 17. K O R H O R N F I N A N C I A L G R O U P , I N C . What is Self Employment Tax? 6.2% Social Security Tax 6.2% Social Security Tax 1.45% Medicare Tax 1.45% Medicare Tax 15.3% Self Employment Tax
  • 18. K O R H O R N F I N A N C I A L G R O U P , I N C . Taxed As S Corp - Example • Let’s assume your S Corp makes $125,000 and has $75,000 in expenses, and in addition you take a $25,000 salary, making your net income $25,000 • Assume 25% Fed Tax and 5% State Tax Your $25,000 Salary is taxed: Fed Tax: $25,000 x 25% = $6,250 State Tax: $25,000 x 5% = 1,250 FICA: $25,000 x 7.65% = $1,912.50 Payroll Tax: $25,000 x 7.65% = $1,912.50 Total Tax = $11,325 Your $25,000 Net Income is taxed: Fed Tax: $25,000 x 25% = $6,250 State Tax: $25,000 x 5% = 1,250 Total Tax = $7,500 Total Tax = $18,825
  • 19. K O R H O R N F I N A N C I A L G R O U P , I N C . Taxed As S Corp - Example • Let’s assume your S Corp makes $150,000 and has $75,000 in expenses, and in addition you take a $25,000 salary, making your net income $50,000 • Assume 25% Fed Tax and 5% State Tax Your $25,000 Salary is taxed: Fed Tax: $25,000 x 25% = $6,250 State Tax: $25,000 x 5% = 1,250 FICA: $25,000 x 7.65% = $1,912.50 Payroll Tax: $25,000 x 7.65% = $1,912.50 Total Tax = $11,325 Your $50,000 Net Income is taxed: Fed Tax: $50,000 x 25% = $12,500 State Tax: $50,000 x 5% = 2,500 Total Tax = $15,000 Total Tax = $26,325
  • 20. K O R H O R N F I N A N C I A L G R O U P , I N C . • Be Aware… – To be taxed as a corporation subjects you to other tax filings and other requirements (940, 941, UC1, etc.) • Thus you probably should not choose this if your business income is less than $50,000 – You must set your salary at a fair and reasonable level – Use an attorney to help you select the right entity and get it established – Use a CPA firm to help with your taxes and filings Habit #1: Choose how you want to be taxed
  • 21. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #2: Set up a retirement plan for the business
  • 22. K O R H O R N F I N A N C I A L G R O U P , I N C . 1) Tax Sheltered Saving 2) Help you take money out of the business Why start a retirement plan for the business?
  • 23. K O R H O R N F I N A N C I A L G R O U P , I N C . 1. SIMPLE IRA 2. 401(k) 3. SEP IRA What are your options SIMPLE IRA • $12,000 max contribution • $2,500 additional contribution if 50 or older • 3% company match contribution • Easy to administer, no annual filings • Must cover employees that work more than 1,000 hours per year
  • 24. K O R H O R N F I N A N C I A L G R O U P , I N C . 1. SIMPLE IRA 2. 401(k) 3. SEP IRA What are your options 401(k) • $17,500 max contribution • $5,500 additional contribution if 50 or older • Various company match contribution options • Difficult to administer, annual filings required • Must cover most employees who are at least 21 years old
  • 25. K O R H O R N F I N A N C I A L G R O U P , I N C . 1. SIMPLE IRA 2. 401(k) 3. SEP IRA What are your options SEP IRA • No employee contribution • Employer contribution only • Must contribute the same percentage to each employee • Easy to administer, no annual filings • Can make contribution up to tax filing deadline
  • 26. K O R H O R N F I N A N C I A L G R O U P , I N C . Taxed As S Corp WITH SIMPLE IRA • Let’s assume your S Corp makes $150,000 and has $75,000 in expenses, and in addition you take a $25,000 salary, making your net income $50,000 • You contribute the maximum $12,000 to your SIMPLE IRA Your $25,000 Salary is taxed: Fed Tax: ($25k - $12k) x 25% = $3,250 State Tax: ($25k - $12k) x 5% = 650 FICA: $25,000 x 7.65% = $1,912.50 Payroll Tax: $25,000 x 7.65% = $1,912.50 Total Tax = $7,725 Your $50,000 Net Income is taxed: Fed Tax: $50,000 x 25% = $12,500 State Tax: $50,000 x 5% = 2,500 Total Tax = $15,000 Total Tax = $22,725
  • 27. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #3: Work with a Comprehensive Financial Planner
  • 28. K O R H O R N F I N A N C I A L G R O U P , I N C . They can help you with… • Reviewing financial statements • Budgeting and forecasting • Guidance on insurance coverage needs • Tax planning for when things go right, and when they don’t • Starting and managing a retirement plan • Corporation (filings, establishing salary, etc.) • Etc. Why work with a Comprehensive Financial Planner?
  • 29. K O R H O R N F I N A N C I A L G R O U P , I N C . 3 Habits of Financially Successful Individuals / Families
  • 30. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #1: Have a spending plan
  • 31. K O R H O R N F I N A N C I A L G R O U P , I N C . Budgets are restricting!
  • 32. K O R H O R N F I N A N C I A L G R O U P , I N C . Budgets are freeing!
  • 33. K O R H O R N F I N A N C I A L G R O U P , I N C . • Purposes of a budget: – Tracking • Knowing where your money is going – Discipline • Awareness of how much you can afford to spend in an area, and when you’ve reached that level Habit #1: Have a spending plan
  • 34. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 35. K O R H O R N F I N A N C I A L G R O U P , I N C .
  • 36. K O R H O R N F I N A N C I A L G R O U P , I N C . • Best Practices – Update your actual spending compared to budget once a week • Helps you monitor whether you’re over or under for the month – Embrace technology • Consider using Mint.com, Quicken, etc to help with monitoring, categorizing, alerts Habit #1: Have a spending plan
  • 37. K O R H O R N F I N A N C I A L G R O U P , I N C . Includes the right bank account structure Habit #1: Have a spending plan
  • 38. K O R H O R N F I N A N C I A L G R O U P , I N C . Immediate Spending Delayed Spending Emergency Spending #1 #2 #3 The 3 Bank Account System
  • 39. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #2: Use tax sheltered accounts to save up for retirement
  • 40. K O R H O R N F I N A N C I A L G R O U P , I N C . Types of tax shelter account… Traditional IRA Roth IRA 401(k) SIMPLE IRA
  • 41. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #2: Use tax sheltered accounts to save up for retirement Pre-Tax Post-Tax Traditional IRA Roth IRA
  • 42. K O R H O R N F I N A N C I A L G R O U P , I N C . Is it really that important? Insert Guide to Retirement Slide
  • 43. K O R H O R N F I N A N C I A L G R O U P , I N C . • Best Practices – Use your 401(k) to get a match from your employer – Use the Roth IRA if you’re in a low tax bracket – Consider a Roth Conversion if you’re in a low tax bracket – Beware of contribution limits and eligibility limits Habit #2: Use tax sheltered accounts to save up for retirement
  • 44. K O R H O R N F I N A N C I A L G R O U P , I N C . Habit #3: Have a plan
  • 45. K O R H O R N F I N A N C I A L G R O U P , I N C . The right plan and planning process gives you: Habit #3: Have a plan CONFIDENCE CLARITY
  • 46. K O R H O R N F I N A N C I A L G R O U P , I N C . The right plan and planning process answers… • Am I saving enough for retirement? • Can I afford that much house? • Will my family be taken care of when I die? • Should I pay off my mortgage early? • Can I pay for my kids college? • Should I use an IRA or Roth IRA? • Am I missing tax deductions? Why have a financial plan?
  • 47. K O R H O R N F I N A N C I A L G R O U P , I N C . Habits for financially successful… Businesses 1. Choose how you want to be taxed 2. Set up a retirement plan for your business 3. Work with a comprehensive financial planner Individuals 1. Have a spending plan 2. Use tax sheltered accounts to save up for retirement 3. Have a plan
  • 48. K O R H O R N F I N A N C I A L G R O U P , I N C . Thank You! Questions?