Seven First Quarter Action Items for the Small Business Owner.
For the year-end period, the following items are examples of what I discuss with my clients who are small business owners.
1. Figure out how much you made for the year in January 2024; don’t wait until April.
Have a good understanding of your income and tax exposure for the year. If your financial systems cannot estimate this, figure out how you can introduce some automation.
2. Meet with your CPA and other advisors well in advance of March/April.
Many folks miss valuable tax / business planning opportunities because they simply don’t know. Keep your circle of advisors aware of your business activities and you’ll probably learn something. The laws are always changing; outsource to the experts.
3. Fund your retirement accounts.
Saving for retirement is one of the best ways to reduce your taxes. This is true for business owners and W2 employees. Know your tax deferred accounts and fund them: 401k, Roth401k, IRA, Roth IRA, Solo401k, SoloRoth401k, SEP IRA, SIMPLE IRA, HSA…know which plan(s) is best for you and the contribution limits.
Regarding 401ks, there are some great, low-cost 401k platforms in the market today. There are also generous tax credits for new 401k plans designed specifically for small businesses. Before applying the tax credits, it is about $1500-2000 / year to provide a SafeHarbor 401k plan with the platforms I am working with (for 5-10 employees in this example).
4. Pay yourself (after tax savings).
Be your own bank. No one regrets having dedicated savings and investment accounts.
5. Calculate your net worth.
Tracking your net worth is important on many levels. I use Elements financial planning software for clients; the calculations are based on net worth. It’s an amazing tool for any household or business owner. Elements measures all the components of your financial profile and scores them. It will help you understand if you are on target for financial independence. I’ll share a dedicated email about Elements soon…in the meantime, here is a teaser.
Elements answers the question, “Am I ok - do I have enough to retire?”
6. Seek business operating improvements.
Lower the cost of your 401k plan, review your healthcare plan, analyze business insurance coverage, improve accounting services, get your banking right. There is always something that can be improved, add a little discipline and next year you’ll appreciate the upgrades.
7. Reset your goals for 2024.
Goals matter…set some.
If you own a business and are interested to gain some outside help, I am happy to talk shop and learn about your situation.
Jon Fritzinger
Founder / CEO
Western Level Advisors LLC
Hello@westernlevel.com
About Western Level:
Western Level Advisors LLC is an independent Registered Investment Advisor. The firm provides investment management and long-term financial planning services for individuals and business owners. All services are provided on a fiduciary and fee-only basis. Western Level’s only purpose is to establish a clear pathway for each client to help them manage and compound their wealth. WLA commentary does not constitute investment, legal or tax advice.