Retirement Financial Planning Helpful in Tax Saving

by Paul Pulgerino Financial Planner

Remember Your Retirement

“Too complicated and too far away.” That’s  the response planners often hear from small  business owners on the subject of superannuation.

The good news is that you have better options  today than you may realise. And the reality is,  most business owners cannot afford not to  establish a retirement plan.

Even if you assume  that you’ll easily sell your business when you  retire and live on the proceeds, it’s risky to  assume that it will work out that way.

A wide array of options are available to small  business owners. No matter which plan you and your financial  planner choose, start your retirement plan as  soon as possible. In the early years of your  business, cash flow may not be on your side,  but time is. Take advantage of it.

A  Retirement Financial Planning Can Accomplish  Several Objectives

It can enable you to:

•       Put away money for retirement

•       Save on taxes

Business Succession Planning

Estate planning — and more specifically, business  succession planning — is essential for anyone  who owns a small business because typically

the business is the largest asset in the owner’s  estate. This is not just a tax issue. Without  business succession planning, it’s unlikely that  your business will survive to the next generation  or sell for its true value. This assumes, of course,  that succession or sale is a goal.

Here are six business succession planning

mistakes to avoid.

•       Waiting too long to plan. An ideal  succession plan requires laying the  groundwork over many years — some experts  recommend planning your exit strategy from  the day you start the business. How you  want to exit the business tomorrow strongly  influences how you structure and operate  the business today.

•       Assuming the children will take over  the business. Talk to your children to  determine what they really want. Learn their desires as soon as possible in order to  pursue other avenues if necessary, such as  selling to an employee or partner or finding  an outside buyer.

•       Dividing the business equally among  heirs. Equitable doesn’t have to mean  equal, and in the case of a business,  establishing an equal partnership among  heirs can be a recipe for disaster. As an  alternative, determine which child has  the talent and genuine desire to run your  business, and plan a way to leave your other children nonbusiness assets, such as  proceeds from life insurance.

•       Overlooking the possibility of a disability.  Most business succession plans address  the owner’s retirement or premature death,  but may overlook the possibility that the  business owner could become disabled and  no longer able to run the business. A good  succession plan addresses this possibility.

•       Failing to fund the succession plan. If  your plan is to sell your business to a family  member, partner, employee or outside  buyer at your death, disability or retirement,  how will they come up with the funds to  purchase the business? Loans and cash  are two options, but also analyze the pros  and cons of using life and disability buyout  insurance to fund a succession plan.

•       Planning alone. Business succession  planning is complicated. The tax issues  alone should send you to an expert for  advice. In addition, consider working with an  outside expert who can lead family meetings  and ease family conflicts by providing a  knowedgeable, objective perspective.

 

 

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Created on Dec 4th 2018 01:26. Viewed 737 times.

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