Business owners will often engage the services of an accountant, but they’re less likely to review their own financial situation with a professional. We explain seven reasons they should.

Whilst business owners may be focused on short-term financial goals, it can be difficult to plan for the future. Those striving to grow a business can find their priorities revolve around their work, whether it’s growing a client base or finding new opportunities to innovate. It can come at the expense of their own financial security.

It’s common for business owners to engage the skills of an accountant, but how working with a financial planner can help them can be overlooked. But there are plenty of benefits that business owners can take advantage of when working with a financial planner, particularly when it comes to considering the long term. Among them are these seven.

1. Defining Long-Term Personal Goals

With a business to focus on, some owners find their personal goals are pushed aside. But it can mean the future they want is out of reach when they arrive at that point or they head in the wrong direction.

Financial planning goes beyond simply suggesting where investments should be placed or how much to put into a pension. It starts with understanding individual goals and aspirations, using this as a guide to making financial decisions that are right for each individual. As a result, seeking financial advice can be the catalyst for setting out long-term personal goals. With a sense of direction, these dreams are more likely to become a reality.

2. Understanding Personal Tax Liability

Organising finances can be difficult for anyone, but there’s often an extra layer of complexity for business owners. This is true when it comes to tax liability.

There are numerous regulations and allowances around tax, and it’s easy to overlook some that a business owner can take advantage of. For example, are they making full use of their dividend allowance each tax year or how they can take an income from the business in a way that minimises tax? A financial plan can highlight where these issues lie and create an efficient plan with the individual in mind.

3. Saving For Retirement

Business owners need to take greater responsibility for their financial future; this includes saving for their retirement. But with other decisions to make, pensions can be something that slips their mind. Other reasons for not saving into a pension is concerns over how their financial security may change in the future.

Working with a financial planner can help business owners understand how their current situation can be used to improve financial security in the long term. It’s a step that can keep them on track for goals that may still be several decades away.

4. Making The Most Of Savings And Investments

We all know we should be saving money for the long term and that investments can help assets grow. However, it can be complicated to understand where the best place to put money is. A financial planner can offer business owners advice on how to make the most of their wealth, with their goals in mind. For some, this may include building up a financial safety net to provide peace of mind. For others, it may be building an investment portfolio that reflects their risk profile.

5. Providing Financial Protection

Many people will take out insurance policies to protect assets, such as contents insurance, but fail to protect themselves. It’s something business owners may have overlooked too. If they were to become too ill or involved in an accident, for instance, would they still be able to maintain their lifestyle? An appropriate insurance policy can provide a safety net.

There may be circumstances where insurance policies can protect the business too, such as key person insurance. Financial planning gives business owners an opportunity to assess what’s most important to them and take steps to protect it where necessary.

6. Building An Exit Strategy

What happens when a business owner is ready to move on to the next chapter? Whether they want to retire or take on another project, considering their lifestyle and how to achieve it.

Exit strategies often focus on the business and sale price where applicable. However, financial planning can help put the business owner at the centre of the plans. For example, how much would they need to sell a business for to achieve their long-term financial plans? It’s a step that can help give business-related decisions a personal perspective and ensure they’re the right ones for the individual.

7. Benefitting Business Goals

Personal finance doesn’t just benefit the individual, it can help them work towards achieving business goals too. For example, a Self-Invested Personal Pension (SIPP) can be used to invest in business premises. This can add to a retirement fund and provide diversification. It can also provide the business with security and the space to grow if needed. There are rules around using a SIPP for business premises but in the right circumstances, it can be very useful.

Working with a financial planner gives business owners a chance to voice concerns or aspirations they may have and explore how personal finances can be used in an effective way that considers their lifestyle too.

If you work with business owners and would like to speak to our team about how we can work together, please contact us.