Initially, you may have hired an accountant to help with accounts receivable and payable. However, tax consulting can also help you grow your business. Tax consulting should help you take advantage of tax deductions, like Section 179 expensing, in conjunction with available tax credits, such as, Georgia’s Retraining Tax Credit. Businesses may be able to offset a substantial amount of income while making capital improvements.
A business valuation can provide the valuable information to help owners make informed decisions about the business’s future. It is likely that your current business tax adviser may have optimized deductions and reduced taxable income; therefore, your financial statements may not reflect the intrinsic value of your business. A C.P.A. who is a qualified business valuation expert can recast your financials from tax-based accounting, to determine your business’ value.
Benefits and compensation
A 401(k) plan is one of the most robust retirement savings programs available today. New rules regarding fee disclosure and fiduciary responsibility have complicated plan sponsorship for small businesses. As a plan sponsor, you should consider the plan costs in relation to the amount of assets, number of participants and the additional services you receive. Hiring an expert can help you reduce your fiduciary liability by making sure your plan is compliant with ERISA requirements, enhance employee education and improve investment selection through quality and diversification.
Your business has been your primary wealth generator for years. If you have been investing for retirement during that time, special attention needs to be paid to the diversification between your personal and business assets. You may own shares of your own company as a way of providing additional compensation, or you own shares of publicly traded companies in the same industry. Over exposure in any particular sector could create undue risk for your retirement savings. Additionally, for business owners, the lines can be blurred between personal financial goals and business financial goals. A financial adviser can design an asset allocation that offers diversification between your personal and business assets.
Most business owners believe they should begin planning about five years before they are ready to exit. However, there are many processes that may take longer than five years. Whether the goal is to transfer the business interest to the next family generation; orchestrate an employee or partner-lead buyout; sell the business on the open market or liquidate the business, business owners should seek to implement strategies that have the highest probability of turning their business’s value into maximum after-tax cash.
William G. Lako Jr., CFP, is an executive in residence at Kennesaw State University’s Coles College of Business and a principal at Henssler Financial. Lako is a certified financial planner.The Cherokee Tribune will periodically publish columns from KSU business faculty.