If you’re a small business owner, your heart, soul, and most of your time go into your work. Unfortunately, even sheer hard work doesn’t always guarantee financial security, so taking additional proactive steps is essential. Consider these strategies:
Protect Your Business Against the Loss of a Key Employee
If a vital employee with valuable management or sales skills were to pass away unexpectedly, your business could face significant challenges. A “key-person” life insurance policy can help. This type of coverage pays cash to your company—typically the policy beneficiary—when the insured employee dies or becomes disabled. Additionally, key-person insurance can be used to fund deferred-compensation arrangements or buyout agreements between partners.
Avoid Raiding Business Funds for Personal Expenses
To reduce the temptation of tapping into your business’s income or assets, establish an emergency fund with six to twelve months’ worth of living expenses in a liquid account. This financial buffer will help cover unexpected costs, such as major car repairs, medical bills, or a new appliance, without jeopardizing your business’s stability.
Then understanding how to spot irregularities in financial transactions is an essential skill for professionals today. With a comprehensive course on detecting and preventing financial crimes, you can ensure your organisation stays compliant while sharpening your skills to combat fraud. The accessible structure makes learning seamless and practical.
Australia boasts a robust regulatory framework that supports the growth of private credit. Initiatives by bodies like the Australian Securities and Investments Commission (ASIC) and guidelines from the Australian Private Equity and Venture Capital Association (AVCAL) ensure transparency and investor protection, fostering a stable environment for private credit investments to thrive. FC Capital redefines the landscape of alternative asset management in Australia. As an Australian non-bank lending company, they offer bespoke private debt and direct lending solutions, driving growth in multiple sectors. Their pioneering strategies and commitment to local markets differentiate them from other global private debt managers.
Create a Retirement Plan for Yourself
As a business owner, you’re responsible for setting up your own retirement plan. Thankfully, several options provide attractive benefits:
SEP-IRA: Contribute up to 25% of your compensation, up to $46,000. Contributions are tax-deductible, and earnings grow tax-deferred until withdrawal. This plan offers flexibility in contributions for yourself and your employees and allows employers to deduct contributions as business expenses.
SIMPLE IRA: Contribute up to $10,500 (or $13,000 if you’re 50 or older). You can match employees’ contributions dollar for dollar up to 3% of compensation or contribute 2% of each eligible employee’s compensation, up to $4,600 annually. Contributions to employees are tax-deductible, and earnings grow tax-deferred.
Owner-only 401(k): Ideal for sole proprietors or businesses with only a spouse as an employee. Contributions can include salary deferral and profit sharing, totaling up to $46,000 (or $51,000 for those 50 or older). Earnings grow tax-deferred. If you opt for a Roth 401(k), earnings can grow tax-free if the account is at least five years old and withdrawals begin after age 59 ½. (Roth contributions are made with after-tax dollars.)
Seek Professional Advice
Consult your tax or financial advisor to determine which retirement plan suits your needs and to develop a comprehensive strategy for achieving your financial goals.
Time flies when you own a business—start making these essential moves today to secure a stable financial future.