While it’s common for business owners to spend considerable time and effort focusing on business strategies for ongoing viability, it’s also important to make a dedicated effort towards building and protecting your own personal wealth.
Worrying trends for those who are self-employed include low superannuation balances or no superannuation savings at all [1] and relying on personal savings to prop-up business cash flow. [2]
We’re firm believers that business success and personal prosperity should go hand in hand, and it’s for this reason we have expanded our services to offer holistic financial management that considers all aspects of our clients’ business and personal financial lives.
Wealth accumulation for business owners is, or should be, a priority and here we outline three personal financial considerations:
#1 Prioritise your personal prosperity
Many business owners are focused on building a solid business and show less discipline when building their own personal wealth. Start now, and as you would for your business, take a disciplined approach that includes budgeting, cashflow planning, risk management and protection. We can help you with strategies for extracting wealth from your business to make the most of your circumstances. Simple steps such as paying yourself a regular salary, reviewing your expenses and debt to prioritise personal cashflow can make a positive difference to your personal wealth in the long run. We can help you plan for unexpected events, and help build a safety net for your finances.
#2 Prepare for the future
Wealth strategies need to consider the accumulation of assets and income streams beyond your life as a business owner. A well planned business succession plan should address the financial performance of your business as well as considering the most effective structures for achieving tax efficiencies and distributing wealth.
Superannuation is an integral part of wealth accumulation and strategies that make the most of your superannuation include:
- Building your retirement savings in a tax-effective way by utilising your annual concessional (pre-tax) caps.
- Taking advantage of rules allowing you to ‘catch-up’ unused concessional contribution limits for up to five years; and if you are under 65, you can also contribute three years of non-concessional (after tax) contributions (up to $330,000) in one year from 1 July 2021.
- Business owners with a turnover of less than $2 million can also make super contributions from the sale of their business.
- Considering a SMSF. We can discuss whether a flexible tax environment and having greater control of investments through a SMSF, is appropriate for your circumstances and financial goals.
And, don’t forget to invest!
Economic downturns are a normal part of the economic cycle that can represent good buying opportunities. Your investment strategy should be about building income producing assets and creating passive income for the long term. We recommend creating a diversified portfolio across different investment options that can consider your future financial goals.
#3 Protect your financial position
Protecting your financial position should include addressing your immediate risk needs which are appropriate business and personal insurances. We have a six step formula for helping business owners to achieve personal prosperity by building, managing and protecting a significant asset portfolio alongside their business interests. Through our review process and cost benefit analysis, we guide the process of assessing costs, risks and benefits of financial options and choices, to create a clear understanding of possible outcomes prior to decision making.
As business owners ourselves, we understand the challenges of adapting your business to changing circumstances while building personal wealth for life beyond business.
If you would like to know more about strategies for protecting your personal financial position and building your personal wealth, I encourage you to give us a call on 03 9708 8801 or email info@rvpartners.com.au.
At Robinson Voss Partners, we have over 40 years combined experience and expertise in specialised tax issues, accounting, business and financial advice. We are single-minded in our goal to help our clients achieve business success and personal prosperity.
In the third article in our ‘Personal prosperity for business owners’ series, we outline personal cashflow and debt management strategies for business owners.
Link to article #1: Shining the spotlight on personal asset exposure.
General Advice Disclaimer: The information contained on this webpage has been provided as general advice only. The contents have been prepared without taking account of your objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this webpage, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.
[2] https://www.suncorp.com.au/about-us/news/media/business-owners-sme-over-me.html
