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SM
For Business
Financial planning considerations
when you own a business.

If you’re like many business owners, your pers...
These solutions and strategies may help ensure that your                There are numerous ways to determine — and enhance...
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Planning Considerations For Business Owners

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A white paper for business owners or those considering starting their own business.

Published in: Economy & Finance, Business
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Planning Considerations For Business Owners

  1. 1. SM For Business Financial planning considerations when you own a business. If you’re like many business owners, your personal and In today’s complex, competitive work environment, every business financial needs, concerns, successes and employee matters. To attract and retain top workers, challenges are intertwined. For example: consider these financial planning ideas: > Cash flow in your business probably impacts your > Customized or enhanced benefits for business owners personal cash flow. and executives — Since key employees are vital to > Investment management may involve balancing your business and their overall compensation package personal and business assets within your portfolio. can be an important motivator to reach goals and stay with your company. You may want to provide additional > Tax discussions with your accountant likely include insurance or retirement benefits as incentives for this both your personal and business taxes. valuable pool of talent. > And, your financial dreams and goals may be more > Workplace financial planning and education — According complex than those of individuals who don’t own to one recent study, nearly nine in 10 (89%) employees businesses. believe a financial plan that directly addressed their workplace benefit costs and contingent financial As a result, a comprehensive financial planning approach decisions would be helpful.1 Giving employees — one that factors in both business and personal needs access to financial planning can help them plan — is even more important for you. Having a financial for their financial future, increase confidence about plan can help ensure that the money decisions you make financial decisions and reduce stress over financial for your business also have the desired impact on the concerns. In addition, education specific to your personal side of your life. benefits could boost understanding of and participation As a business owner, your business may be your most in benefit programs. important financial asset; it is likely a primary source of > Group benefit packages — Providing benefits such as income and you may have a significant amount of your life and health insurance for employees may improve assets and liabilities tied up in it. Financial planning can morale and retention. help you identify ways to use your business to reach your > Employee retirement programs — You can help your personal goals and enable you to protect yourself, your employees build financial security and confidence in their family and your business regardless of what the future futures through a company retirement plan. Additionally, brings. An integrated financial plan should cover employee your business may enjoy attractive tax benefits and will attraction and retention, business protection, business set itself apart in a competitive labor market. valuation and business succession planning. Business protection Employee attraction and retention When your business represents a significant portion of Your workforce is vital to the current and future success your net worth, unexpected events such as a disability or of your business. Key employees may directly impact disaster can have a significant impact on your personal sales or production. Replacing their experience, and business finances. It’s also important to protect your relationships or specialized skills could be a lengthy business against financial losses that could result from and costly process. Additionally, the financial well-being the departure, illness, injury or death of a partner or key of all employees contributes to their motivation, employees, as well as other hazards. productivity and commitment.
  2. 2. These solutions and strategies may help ensure that your There are numerous ways to determine — and enhance — business is protected: the value of your business. By updating the valuation every few years, you can guarantee fair market representation in > Disability income insurance — Nearly one in seven contracts, planning and negotiations. people will be disabled for five years or more.2 In the event you are affected by an illness, accident or injury, Business succession planning disability insurance can provide income for you and Do you have a plan to effectively transfer your business replace lost revenue to your business. It can also pay when it’s time for you to move on? Eighty-three percent the bills and help keep your business open. of business owners expect their companies to continue > Key person insurance — With this type of insurance, after their retirements and deaths, but only 64% have your business is protected against the financial formal plans to transfer their businesses. Having a consequences that result from a key person’s death or succession plan can help financially protect you and disability. The policy is normally owned by the company, your business. which pays the premiums and receives the benefit when a key employee dies or is injured. The amount In the future, you may want to sell your business or and cost of insurance needed by your business depends transition it to a family member. How can you treat heirs on your situation and the age, health and role of the fairly, meet taxes and administrative expenses, and key employee. ensure a successful and smooth transition? > Professional liability/errors and omissions liability > A Buy-Sell agreement funded by life, disability and/or insurance — With this type of specialty coverage, you buy-sell insurance can ensure the orderly continuation are protected against losses from lawsuits filed against of your business in the event of a partner’s or other key you by your clients (limited to acts of negligence). person’s death. > General liability/business umbrella liability insurance — > Life insurance can help meet survivor income needs, General liability insurance protects your business and ensure fair treatment of heirs and provide sufficient cash personal assets from injury claims, property damages to pay business debts or taxes. and advertising claims. An umbrella policy provides an You need a plan and a financial advisor additional layer of financial protection. Your business is a key component of your overall > Property insurance/business interruption insurance — financial picture, and it’s important for your personal Business interruption insurance compensates you for lost and business finances to work together. An Ameriprise income if your company has to vacate its premises due to financial advisor can help plan your personal and disaster-related damage (if covered under your property professional goals using our unique and collaborative insurance policy). The policy covers the profits you would Dream > Plan > Track >®approach to financial planning. have earned as well as ongoing operating expenses. Additionally, a financial advisor can coordinate services Business valuation with your other professional advisors (CPA, attorney, Understanding the value of your business is an important etc.) to help you effectively and efficiently manage your component of your overall financial health and can help money and address your needs through all stages you receive a fair market price for the business during of your business’ life cycle. If you don’t already have any transitions. A financial advisor can help you integrate an Ameriprise financial advisor, contact us at (800) your business’ value with your personal financial situation, AMERIPRISE or visit our website at ameriprise.com to so you can have a comprehensive view to plan for a learn more. successful future. 1 The 2007 Ameriprise Workplace Financial Planning Benefit Decisions study 2 Disability Management Sourcebook Ameriprise Financial cannot guarantee future financial results. Financial planning services and investments offered through Ameriprise Financial Services, Inc. Member FINRA and SIPC. © 2007–2008 Ameriprise Financial, Inc. All rights reserved. 232143 C (5/08)

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