Wealth Management Tips for Entrepreneurs and Small Business Owners

When you’re an entrepreneur, you’re in charge of all business details — including finances. By taking the time now to think about the future, you can intentionally set your business up for financial security beyond the day-to-day flow of income and expenses.

You don’t need an employer to prepare for retirement, get insurance or create a secure income flow. You can seek these financial planning options independently and create a portfolio that complements your career path as your business grows. Here are three ways a CFS* Wealth Management Advisor at Elevations Credit Union can assist you.

1.  Create a retirement plan

You can’t work forever, so planning for the golden years is a must-do, even for the newest business owner. An advisor can look at your current income and help you determine how much you can comfortably put aside each pay period to start funding your retirement plan. If you’re a former employee, you’re probably familiar with an employer-sponsored 401(k) plan. As a small business owner, you have similar options for long-term savings, including:

  • Traditional IRAs: This tax-deferred savings option is available to anyone under 70 1/2 years old and comes with annual limits. It’s best combined with another savings option for those earning medium to high levels of income.
  • Roth IRAs: This savings option has annual contribution limits and is funded with dollars that have already been taxed. Roth IRAs are an excellent option for new business owners with slow-growing incomes.
  • Deferred Compensation Plans: Is your business booming? You can postpone some payroll dollars, putting you in a lower income bracket now and ensuring funds for future use.

2.  Choose from various insurance options

Things happen. Entrepreneurs get sick. Retail locations get damaged. Business equipment breaks. Setting up insurance to cover the vital components that keep your business thriving is essential. An advisor can help you navigate:

  • Life Insurance: If something happened to you, can your family run the business? Or would it be wise to have cash from a life insurance policy distribution ready so they can manage day-to-day living without a business income?
  • Overhead Expense Insurance: If you become disabled, this insurance will cover your core business expenses, including retail space rent, utilities, salaries for your employees and more.
  • Short-Term Disability: This insurance provides payments that cover your income if you’re unable to work due to a temporary health situation not related to your job.
  • Key Person Insurance: This protects cornerstone individuals. Owners, founders and CEOs are often covered by this insurance to prevent the business’s downfall if they were unable to work.

3. Set up a savings account that fits your needs

Having liquid assets on hand can help your business achieve long- and short-term financial goals. For example, these assets can help you meet payroll, whether it’s merely for yourself or a small team. Consider moving deposited income from a day-to-day checking account into an interest-earning savings account, which can serve as a holding tank for funds until it’s time to cut a check. As a bonus, those dollars are earning interest while they wait to be distributed.

If you have a bit more flexibility, and your income is higher than your expenses, you may consider investing in certificate accounts. These savings options require a $500 minimum deposit and are inaccessible for 3 to 60 months while earning higher interest rates than a common savings account. These accounts could be a great place to stash holiday bonuses or employee merit rewards.

A CFS* Wealth Management Advisor at Elevations Credit Union can help you evaluate and refine your current financial plan so you can focus on growing your business. Contact our team today to set up an appointment by phone or in branch.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Elevations Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Author John Marx

John has been in the financial services industry since 1986 and is currently Elevations VP of Wealth Management, in addition to being a registered Financial Advisor through CUSO Financial Services, L.P. He shares helpful tips on investments, insurance and money management.

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