Financial Planning Mistakes Business Owners Make
The Secret to Protect Your Financial Future
1. - Deferring your taxes. - Business owners love the idea of deferring taxes. That's a big part of the appeal of tax-deferred retirement plans, such as 401(k)'s. But what direction do you think tax rates will be going over the long term? If, like many people, you believe taxes are going up, consider that if you're successful in growing your nest-egg, you'll only end up paying higher taxes on a bigger number. Even if tax rates stay the same, I estimate that by deferring your taxes, you'll ultimately pay 10 to 20 times more in taxes over a 30-year period. Consider paying your taxes up front - at least you know what they are.
2. - Confusing "saving" with "investing". - Wall Street and the financial planning industry have led us to believe that saving and investing are the same thing. They are not. The money you have in savings is money you don't want (or can't afford) to lose. Money you invest is subject to loss. Most people today invest to save, and as a result, have no idea what their nest egg will be worth when they plan to tap into it.
3. - Following conventional financial planning strategies: Following traditional financial and retirement planning methods is what got us into the mess we're in. If those strategies were working, most Americans wouldn't be wondering if they'll ever be able to retire, and what they'll have to give up in order to do so. Consider proven and time-tested ways to grow a substantial nest egg - without the risk or volatility of stocks, mutual funds, real estate, and other investments.
4. - Giving up control to financial institutions. - The financial and credit crisis has made us painfully aware of how little control we have when we rely on other people's money. And credit still remains very tight for entrepreneurs who need capital to start or expand their businesses. Many believe that paying cash for things - rather than leasing or financing them - is the answer. But this ignores an important, but little-known principle of economics - you finance everything you buy.
5. - Not demanding guarantees from your financial advisors. - Do you know what your retirement account will be worth in 10, 20, or 30 years, or on the day you plan to tap into it? If your answer is "No" or "I'm hoping it will be worth $X" - you don't have a plan. If you're relying on a financial advisor, stock broker or plan administrator for advice, ask them if they can tell you what your account will be worth on the day you plan to retire. Then follow it up with, "And will you give me a money-back guarantee if you don't hit that savings target?" If they say "No" - fire them.
Read the full article at: http://entrepreneurs.about.com/od/beyondstartup/a/Financial-Planning-Tips-For-Business-Owners.htm
Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.
Business management consultant.
Business consulting for women entrepreneurs in Houston, Advice for women entrepreneurs, Business Coach in Houston, Growth strategies for small business, Business continuation for women, Growth for women-owned businesses, Houston business coaching, Financial strategies for small business, Small business consulting in Houston, Business management consultant, Business, Consulting, Women, Entrepreneurs, Houston, Coach, Growth, Strategies, Coaching, Continuation, Owned, Owner, Financial, Consulting, Management
