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Strategic Planning Needed for Business Owners…

Strategic Planning Needed for Business Owners…

October 31, 2023

If you are a business owner, you are already a visionary. You’re someone who saw a hole in the market and built a business to fill it. Now you need to be a strategic planner in seeking to reduce your tax burden, protect your assets, and manage a smooth transition of your wealth.

Our One Financial Services team is here to help guide you through estate planning and asset protection strategies, as well as the transfer of wealth to future generations or charitable causes.

Business Entity Structure: Is your business entity structure aligned with your tax objectives? You may want to consider more tax-efficient formats such as converting from a sole proprietorship to a limited liability company (LLC) or exploring the benefits of an S corporation election.

Evaluate current tax benefits and long-term implications of your chosen entity structure. While an LLC may provide tax flexibility, an S corporation can offer potential tax savings through pass-through taxation. Weigh these factors against your business's growth plans and objectives.

Qualified Retirement Plans: Contributions made to qualified retirement plans, like 401(k)s or defined benefit plans can provide tax advantage to you as the business owner and help to attract and retain top talent. These contributions are typically tax-deductible, offering immediate tax savings.

You will want to consider any retirement plans carefully to ensure they align with your financial goals and employee needs, as well as balance those contributions while maintaining cash flow on ongoing operations. 

Post-Transactional Tax Planning: Focused tax planning remains crucial after a transaction such as a merger or acquisition, or a reorganization or restructuring.

Review your legal structure to make sure it continues to align with the entity’s specific needs and goals

Be sure to keep personal and business finances separate to avoid jeopardizing asset protection structures.

Those asset protection strategies should reflect the changes in your business, personal circumstances, and the legal landscape.

Estate Tax Planning: Estate tax planning strategies such as gifting, establishing trusts, or utilizing life insurance, to minimize the estate tax burden and preserve wealth for future generations are important strategies. Estate taxes can erode the value of your wealth when transferring it to the next generation.

You will need to stay updated about estate tax exemption limits to make informed decisions about wealth transfers.

You can also reduce your taxable estate by gifting assets during your lifetime, using annual gift exclusions, and considering significant lifetime gifts with estate tax benefits.

Life insurance can provide liquidity to cover estate tax liabilities, ensuring heirs receive the entire estate value without selling assets.

Be Empowered: Strategic tax planning empowers you to protect your assets, minimize tax liabilities, and facilitate wealth transfer. By working closely with your One Financial Services advisor and our experienced team of estate planning professionals, you can navigate the evolving tax landscape and pursue a successful financial legacy. Proactive planning today can lead to significant tax savings and an independent future for your business and loved ones.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.