Financial Planning for Business Owners

coffee in cup with words small business owner and surrounding images to signify financial planningBusiness owners have some of the most complex financial situations we see at Watts Gwilliam & Company. Often times, business owners dedicate 100 percent of their time to running their company, leaving little time to focus on their other financial priorities, such as retirement. 

At Watts Gwilliam & Company, we have built our practice on offering the right type of financial help, tailored to the individual needs and unique circumstances of each of our clients. We have also garnered the training and experience to be especially useful in dealing with complex financial situations. Financial planning for business owners is one such complex challenge that necessitates a specialized approach, one that addresses both the personal and professional aspects of their lives.

This guide addresses some of the more important elements of financial planning for business owners, from managing taxes and employee benefits to handling personal investments and business succession plans. If you have a concern that is not addressed here, contact us. A no-obligation conversation can go a long way.

Chapter 1


Nobody likes dealing with taxes, but as a business owner, you face more tax obligations than most. A crucial element of managing employee payroll is applying the proper federal, state and local tax withholding. Your company’s profits are also subject to taxation from various levels of government. Meanwhile, accounting for such things as the amortization of equipment purchases, the treatment of deferred compensation and stock options or qualification for certain tax credits or rebates can make anyone’s head spin.

If your business has a CFO or in-house accounting team, you will want to ensure that everyone is operating with the same standards and objectives and that you have a third-party mechanism in place to audit your financials. A financial advisor with long-term business owner clients can bring a familiarity with these issues, offer recommendations on strategies to manage your tax burden and suggest accounting firms or similar service providers to help ensure your operations are not only compliant and but also leveraging all the eligible tax breaks written into complicated tax codes. 

Taxes: The Unexpected Retirement Killer (5 Strategies to Keep Your Wealth)

Chapter 2

Employee Benefits that Benefit You Too

As a business owner, you must worry not only about your own needs but also those of your employees. Purchasing group health and life insurance or setting up a retirement savings plan and making the required contributions on their behalf, as well as handling the everyday details of managing employee benefits, can become overwhelming. It can be easy to forget that you too are eligible to take advantage of the attractive benefits package you offer to your employees.

Tax-deferred workplace retirement plans and non-qualified deferred compensation plans are significant benefits that should not be overlooked. While a 401(k) plan may be your first option, the number of employees you have and whether they are partially compensated through company stock may determine if another plan makes more sense. Non-qualified plans, for example, are another avenue to accumulate retirement savings with the advantage of tax-deferred growth. If you are early in the growth of your business, the financial advisors at Watts Gwilliam & Company can assist in selecting the appropriate retirement plan for you and your employees as well as a service provider.

Employee healthcare options continue to evolve and should also be a top priority when making benefit decisions. Setting up a medical plan with a health savings account option can be a prudent way to set money aside for medical expenses while allowing contributions to grow tax-deferred until you need them. You may also gain advantageous rates on life insurance by purchasing it for you and your employees at group rates. 

Whatever route you take, make sure you understand your options. 

Chapter 3

Business and Personal Risks

Salaried employees count on a regular paycheck every week, but as the one providing that compensation, the responsibility falls on the business owner to maintain adequate cashflows to cover such ongoing expenses. What happens if sales fall sharply or the business is hit with the loss of a key contributor? 

A financial advisor who works with business owners can help you explore different scenarios and contingencies, which can help you manage the risks unique to your business through lending, cash management and insurance services that are there to provide a buffer when you need it. A financial advisor can also provide guidance on managing your business to not only avoid cash shortfalls but also stay in compliance with the myriad state, local and IRS requirements of running a for-profit enterprise. Those consulting services can extend to employee compensation and retention to ensure your best producers grow with the company. 

Remember, the risks you face are different than those of an average worker. It’s crucial to consider your personal life separate but in relation to your business and develop financial planning strategies that address the income and liability risks you face as a business owner as well as a personal investor.

What’s Your Financial Risk Tolerance?

Chapter 4

An Exit Strategy/Retirement Plan

Selling your business is not a lot like selling a house.

The current market will dictate the price, and supply and demand may not always be in your favor when you are ready to sell. At Watts Gwilliam & Company, we see many business owners whose retirement strategy is based completely on the sale of the business, which can be extremely risky. 

An exit strategy or succession plan may not always entail an outright sale of the business. Within some businesses, control will be transferred to a family member, business partner or partners. You may even maintain some involvement in business operations and be compensated for that contribution. If your business offered a company 401(k) retirement plan or a non-qualified deferred compensation plan, you could roll over your account balance into an IRA, or you can get help managing your non-qualified distributions. 

In other instances, the business may be controlled by several shareholders and a liquidity event may consist of the owner or majority shareholder selling their company stock. Because most small businesses are privately held, a tradable market may not exist for company stock, making it difficult to “cash out.” A financial advisor can help.

A Business Owner’s Guide to Retirement Plans

Can I Retire? Financial Advisor Asks 5 Questions to Find Out

Top 3 Questions We’re Asked About A High-Net Worth Retirement

Chapter 5

Managing Your Own Investments

Like professional athletes, the majority, or in some instances, all, of a business owner’s wealth is often tied up in the business. This can create concentrated risk and lead to the need for diversification in a business owner’s personal investments that bear a low correlation to the nature or industry of their business. Unfortunately, most business owners dedicate so much time to running the business, that there is little time to focus on their other investments. But it’s important to take these demands into account. 

A financial advisor with deep investment experience working with high-income-earning business owners can introduce alternative investments to help you lower the volatility of your portfolio, implement strategies to achieve better after-tax returns, and suggest strategies to help generate income safely in a low-interest-rate environment, hedging strategies that can help you withstand difficult markets when both your business and portfolio may be pressured.

How to Turn Concentrated Stock Holdings into Income Generators

The #1 Financial Planning Mistake Made by Business Owners (And How to Fix It)

What Past Markets Tell Us About Volatility, Alternative Investments

Chapter 6

Elements that Make Financial Planning More Complicated

Time is arguably the most valuable asset in a business owner’s life. All the pulls and tugs on your time that come from running an enterprise, caring for your employees and marketing for new business often leaves precious few hours to focus on personal financial planning. But such neglect at the expense of your business can prove costly, especially the later you are in your career. 

Your livelihood as a business owner may be closely intertwined with your personal assets, like real estate or concentrated stock holdings, making it challenging to separate the two. Such complex scenarios make proper and comprehensive financial planning even more crucial, both to your personal future and that of your business. 

Having confidence in the risk/reward profile of your personal portfolio can create the peace of mind that allows you to more fully focus on the priorities of your business. Don’t be afraid to ask for help. The right financial advisor can turn financial planning from an often-overlooked burden into a priority that merits the attention it deserves.

Business Owners: Do You Really Need a Financial Advisor? 6 Reasons the Answer is Yes! 

10 Warning Signs You’ve Got the Wrong Financial Advisor

Cash Management Strategies for Businesses with Cash Balances