Financial planning for families includes setting money aside for college funds, establishing trusts, and making sure the bills are paid. However, when you own and operate a family business, there is a lot more financial business and special considerations involved. Here are some of the more unique considerations with this type of financial planning.
Keeping the Business Afloat
A business that struggles is often one where the owners have to find other monetary sources to keep the business going. That often means that any money set aside in savings, college funds, and other vehicles may be used, which can lead to a lot of other issues with planning one's future. If you do not tap the savings, investments, and college funds for the kids, you may borrow money. Borrowing looks better on paper, but ultimately you have to pay it all back. This might put the ransacking of savings on hold for a few years, but what happens when the loan you took out to support the business during rougher times comes due? A financial planner can help you examine this situation from a number of directions, and then choose the least damaging and most feasible option so that you can keep the business, keep the savings, keep the kids' college funds, and have it all work out.
Contributing to Savings and College Funds
Too many parents think that just having savings accounts into which they can deposit funds for their kids' college tuition is enough. It really is not. Tuition is constantly climbing every year. What you save for your kids over the next ten years in traditional savings accounts is not going to be enough, and worse still, interest is taxable income!
You need something like a sheltered annuity or Roth IRA to manage to save enough. The penalties on these education plans are stiff enough that you will be very hesitant to tap that money, too, which will ensure that the money you save for the kids will still be there when your kids go to college. The financial planner can show you what a big difference it makes to invest in savings and sheltered education plans, plus get tax deductions that you could use to reinvest in the family business.
Paying Personal and Business Taxes Quarterly
The government really does not care how you pay your tax liability, so long as you pay it. Consider paying it quarterly, which reduces the overall amount due the following year. It makes it much more manageable to pay than paying a huge chunk all at once.
Contact a service, like Business Financial Services, for more help.