If you’re a business owner, you are likely the Chief Everything Officer at work and have many
responsibilities. A business owner’s situation is unique since they are asset-rich and cash-poor because their
wealth is in their business-literally.

Regardless of the income a business generates, the ages of the owners, or how many employees it
has, a business financial plan can help plan for future and unexpected events. A financial plan is a road map of
what the business is trying to achieve in the short and long term. A business financial plan can help business
owners with the following:

• Developing a long-term financial strategy
• Measuring progress towards goals
• Developing budgets
• Managing cash flow
• Prioritizing expenses and capital purchases
• Determining an appropriate time for mergers, acquisitions, or a sale
• Help fund future opportunities
• Determining appropriate financial strategies to grow assets

For more complex business situations, these are some things that a business financial plan may
recommend and include:

A will for each owner

A will allows business owners to select who will receive what they own when they die. Without a
will, the state the owner resides in will determine how the business and other assets outside of the business are
divided.

A business estate plan

Businesses generally are illiquid, which can create problems for heirs or business partners if the
business transfers to probate. When a business owner dies, liquidation must occur, which can be difficult without an
estate plan. Here is why owners should consider a business estate plan:

• To help protect the wealth you’ve created
• To help ensure the business continues
• To help manage the estate and gift taxes
• To protect your employees, business partners, and heirs

What happens if there isn’t a business estate plan?

According to state laws, the business assets will transfer in probate if a business owner dies
without a will or an estate plan. The transfer may result in tax consequences depending on the estate’s value. Once
the transfer occurs, the business becomes part of the deceased’s estate. Here are other things that may result from
not having a business estate plan:

• The state assumes the responsibility of the business as part of the owner’s estate
• Employees may lose their livelihood
• Business partners may be impacted
• Legal expenses that were avoidable will accumulate
• Heirs have to wait to receive their inheritance

Creating a business estate plan will likely involve legal, tax, and financial professionals and an
insurance professional. This team helps ensure the business transition goes as intended through specific actions
outlined in the business’s estate plan. Here are items to include in a business financial plan:

Life insurance

Life insurance provides a death benefit for purchasing an owner’s share of the business by other
partners so that heirs are compensated. Life insurance can satisfy business liabilities or offer financial resources
to keep the business intact as the transition occurs from the deceased’s ownership to someone else.

Disability insurance

Disability insurance provides a monthly benefit to the owner based on a percentage of their
monthly income.

A business succession plan

A succession plan is a document that describes how the business will transition to partners or
family members or be sold to new owners. The plan also outlines the operations and management structure during the
transition period.

A living trust

This legal document provides directives for the owner’s assets and names either a legal entity or
person as the Trustee. This document helps ensure that regardless of what happens, the business and its assets will
be protected and end up with whom intended.

A Financial Power of Attorney

This individual will handle the business’s finances if the owner cannot and may help manage the
owner’s finances. They will oversee the transition of the business as the business’s or owner’s estate plan
dictates.

A business financial plan helps business owners measure their progress toward their goals and
recommends actions to help protect the business if the owner dies or becomes incapacitated. Contact our team at
Planned Financial Services for an initial conversation about your business, and together we will determine the next
steps for developing your business estate plan.

Important Disclosures

Investment advice offered through Planned Financial Services, a Registered Investment
Advisor.

The opinions voiced in this material are for general information only and are not intended to
provide specific advice or recommendations for any individual. To determine which insurance product(s) may be
appropriate for you, consult your financial professional prior to purchasing.

This information is not intended to be a substitute for specific individualized tax or legal
advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company
N.A., an affiliate of LPL Financial.

All information is believed to be from reliable sources; however, Planned Financial Services makes
no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

Tracking #1-05361336

Sources:

https://www.forbes.com/sites/forbesfinancecouncil/2022/08/03/four-reasons-business-owners-need-a-holistic-financial-advisor/?sh=5100cb562254

https://smallbusiness.chron.com/importance-financial-plan-small-business-4713.html