Case Study

Financial Planning For Small Business Owners

Meet Ronil

Small business owner financial planning

If you are a small business owner, you are likely juggling a lot of responsibilities to keep your business running smoothly. Finding the balance between how much time you dedicate to your business and other commitments such as family, exercise, personal finance, and other life goals can be challenging. Savvy business owners know that delegating certain tasks to the right parties is fiscally rewarding and saves time. A small business financial planner can help you navigate the financial complexities that come with running a business.

Ronil's situation

When Ronil, came to us, he wanted help with his small business and personal finance planning. Ronil started his business 8 years ago. Since then, it grew into a successful small company with 4 full-time and 3 part-time employees. He is starting to accumulate more cash than he needs in his bank account.

Ronil is ready to invest more of his money wisely. He hates paying taxes and was looking for ways to reduce his tax burden. He also wants to offer his employees benefits, including retirement options, while saving money for his future. Ronil has two old 401(k) plans from his previous jobs. Ronil was unsure of where to start when he came to work with us.

Ronil - Small Business Owner


How we helped

  • Developed options for employee retirement benefits that would benefit the employees, Ronil, and the business. 
  • Gave recommendations on different company retirement plans to choose from and assisted Ronil’s business in setting up the plan. 
  • Analyzed Ronil’s tax burden and developed recommendations for strategic tax planning.
  • Helped Ronil open, fund, and invest in an IRA, so he can grow his money with tax advantages.
  • Helped open a brokerage account and programmed monthly investments.
  • Gave investment recommendations for Ronil’s company retirement plan, IRA, and brokerage accounts.
  • Analyzed his two old 401(k) plans and gave guidance on what to do with those.

What is financial planning for small business owners?

Financial planning for small business owners involves creating a roadmap for the financial future of their business and managing their finances in a way that helps them reach their business and personal financial goals.

As a business owner, you know that your most important financial asset is your business. Financial planning is critical for small business owners to ensure that their businesses remain sustainable and profitable in the long run. It can be hard to set aside time to manage your personal finances, mitigate financial risks to your business, assess your tax situation, and save for retirement. That’s where a financial advisor can help.

A good financial planner will help you clarify your goals and determine where you want your business to be in the short term and in the long term. They will help you determine how much money you need now and in the future, for things such as business expansion and retirement planning. 

The result of financial planning is a well-thought-out long-term financial strategy that includes a set of goals with actionable steps to achieve your personal and business financial goals. A small business financial planner can help you put your financial life together, giving you peace of mind knowing that your finances are secure so that you can focus on growing your business. 

(Don’t forget to download the ‘Common Retirement Plans For Small Business Owners’  guide if you haven’t already).

Here are eight financial tips for small business owners from a financial planner: 

1. Separate your business and personal goals

Personal: What are your immediate personal priorities? Do you want to fully fund your child’s college expenses? Do you want to retire at 55 and enjoy the fruits of your labor? What are your 5 and 10-year financial goals?

Business: Where do I want my business to be in 10 years? Do I have the right people in the right seat? Am I spending enough time on sales and marketing? Do I want to provide a retirement plan or health insurance to my employees?

These are just a few of the questions that you should ask yourself when you are creating your business and personal goals. Once you know what your goals are, then you can map out the steps you need to take in order to achieve these goals. 


2. Cash flow analysis

Cash flow analysis is essential for any business. A healthy cash flow is important to make sure that your business keeps running. You should perform a formal cash flow analysis to know how much money flows in and out of your business. Find ways to generate more cash, like reducing the time it takes for your customers to pay you.

3. Manage taxes

Tax planning can be very complicated for small business owners. You don’t want to get hit with a huge tax bill. It’s best to hire a tax planning professional. It will not only free up your time but it may also reduce your tax liability. A CPA will know the tax laws in your area. Financial planners can also help with big-picture tax planning and crunching the numbers on estimated tax payments.

4. Small business retirement planning

Many small business owners assume they will never retire but this isn’t the case. Retirement is an inevitable part of the future.  Retirement planning is essential for small business owners who want to secure their financial future and ensure that they have enough money saved for retirement.

Establish a tax-advantaged retirement account for yourself: Many experts recommend saving at least 15% of your pre-tax income in a tax-advantaged retirement account. Below are some  of the best self-employed retirement plans:

  • IRA: Anyone who earns an income can open an IRA. You can choose between a traditional IRA or a Roth IRA. A traditional IRA offers an up-front tax break and a Roth IRA provides tax-free income in retirement. The 2024 contribution limit for an IRA is $7,000 or $8,000 if you are aged 50 and older. There are income eligibility limitations.
  • SEP IRA:  This is a version of a traditional IRA that offers similar tax benefits. Any employer, including sole proprietors, can set up a SEP IRA. This can also be extended to your employees if you have any. The 2024 contribution limit is up to 25% of your compensation, with a maximum of $68,000.
  • Solo 401(k): If you do not have any employees, then you may want to consider a Solo 401(k). You make contributions as both an “employer” and as an “employee,” providing you with the ability to save more. As an employee, self-employed individuals can contribute up to $23,000 in 2024, or $30,500 for those 50 and older. As the employer, individuals can also contribute up to 25% of their net income from self-employment. The 2024 annual contribution limit is $69,000 or $76,500 for those aged 50 and older.
  • SIMPLE IRA: A SIMPLE IRA is designed for people who are self-employed or who have less than 100 employees. You can contribute up to $16,000 in 2024, or $19,500 for those aged 50 and older. As the employer, you can also contribute either a 2% fixed contribution or 3% matching contribution as an employer-sponsored match to the plan. A self-employed individual can contribute both as an employer and an employee.


Do you have old 401(k) plans? If you have 401(k) plans from previous employers and want to consolidate them, then you should consult your financial advisor to weigh the pros and cons. You should also evaluate your overall financial portfolio and risk tolerance.

Offer a retirement plan to employees: If you have employees then it’s important to search for the right type of retirement package for your team. This will help you attract the right talent. Your business may also be eligible for an immediate federal income tax deduction if you establish and fund
an employer-sponsored retirement plan.

The three most common retirement plans that small businesses with employees can offer include:

  • SEP IRA: A SEP plan is a retirement plan that allows employers to contribute to their employee’s retirement accounts. It is designed to provide small business owners with an affordable, yet easy-to-manage retirement plan that offers benefits to both the employer and employee.

    With a SEP plan, employers can contribute up to 25% of an employee’s compensation or a maximum of $69,000 (for 2024), whichever is less. This retirement plan can help small business owners provide a secure retirement for their employees, while still keeping costs low.

  • SIMPLE IRA: A Simple IRA plan is a retirement plan designed for small businesses with 100 or fewer employees. It allows employees to contribute a portion of their salary to the account, and employers are required to match a portion of those contributions.

    This plan offers numerous tax advantages, making it a great choice for both employers and employees. For employers, contributions are tax-deductible and can reduce their taxable income. Employees benefit from their contributions being pre-tax, meaning they pay less income tax, and any earnings on the contributions are tax-deferred until it is withdrawn.The SIMPLE IRA contribution limit is $16,000 for 2024, or $19,500 for those aged 50 and older.

  • Regular 401(k): You can also establish a regular 401(k) for yourself and your employees. You will have to find the right 401(k) vendor who can offer good investment options, can take care of the IRS paperwork, and have reasonable fees.  You and your employees can contribute up to $23,000 in 2024, or $30,500 for those 50 and older. You can also establish an additional profit-sharing scheme. A savvy financial planner can help guide you with this.

5. Create employee benefits to hire and retain good talent

Providing employee benefits is essential to hiring and retaining good employees. Some additional benefits that you may want to consider as part of your employee benefits package include:

  • Health insurance
  • Life insurance
  • Paid time off (PTO)
  • Flexible work schedule
  • Paid family leave
  • Dental and vision insurance
  • Disability income insurance
  • Long-term care insurance
  • Professional development

6. Make sure that you have insurance for your small business

It’s important to prepare for the unexpected, especially when you are a small business owner. Some insurances that you may want to consider include:

  • Insurance for physical damage: property and casualty insurance provides losses due to physical damage or the destruction of your business.


  • Life and disability income insurance: You can purchase life insurance and disability income insurance to cover you, with the business named as the beneficiary. Upon death or disability, the policy will pay your business a certain amount of money, which it can then use to cover its normal operating expenses.


  • Asset insurance in the event of a lawsuit or threat: With a liability insurance policy, the insurance company will pay third parties who claim they were injured on your property or damaged by your product or service. If a lawsuit is threatened or filed, the insurance company will hire and pay a lawyer to defend you. The amount paid for both of these scenarios will depend on your policy limit.
  • Business owners policy: A Business Owner’s Policy (BOP) combines business property and business liability insurance into one business insurance policy. It helps cover your business from claims resulting from things like fire or theft. Business owners’ insurance helps cover claims related to personal and advertising injuries.


  • Employment practices liability insurance: This will cover legal expenses if an employee sues your business for things like discrimination, harassment, and wrongful termination.

7. Create an estate plan

Proper estate planning helps to provide for your loved ones, business partners, and employees who rely on your business. It can also provide clear instructions on how the business should proceed if something happens to you.

8. Take advantage of tax deductions and credits for small businesses

As a small business owner, you may qualify for some tax deductions and credits that many large corporations don’t qualify for. To deduct a business expense, it must be ordinary (common and accepted within your business/trade) and necessary (helpful and appropriate for your business/trade). Here are some of the most common small business expenses.

Tax deductions and credits for small businesses
Legal and professional service feesThe fees that you pay to tax professionals, consultants or lawyers, can generally be deducted as a business expense.
Insurance premiumsMost insurance premiums you pay for your business can be deducted as a business expense.
AutoIf your business owns its own vehicle, or you use your car for business, you may be able to deduct certain maintenance and fuel costs associated with the business use of the car. If you want to deduct this expense then you need to track it throughout the year. You can either use the standard mileage allowance or your actual business-related vehicle expenses to calculate your deduction.
RentIf you rent a property for your trade or business then you may be able to deduct the rent as an expense. If you work from home, you can also deduct a portion of your rent or mortgage that you use exclusively for your business.
Travel/flightsBusiness travel costs may be deducted as a business expense.

Do you need a financial planner as a small business owner? 

Financial planning for small businesses is essential to make informed decisions that drive growth and success. A financial advisor can potentially help you navigate your personal and business finances, budget for the long term, help mitigate liabilities and risk, maximize your tax situation, and ensure that you can retire comfortably, among other things.

As a small business owner, the complexity around financial planning for both yourself and your business can be very overwhelming. You need to make a lot of important financial decisions that can have a significant impact on both your personal life and your business. Financial planners are experts in their field and can help you navigate the complex financial world. They have up-to-date knowledge of market trends and tax information that could save you time and money. The more time that a financial planner can help you free up, the more you can focus on other aspects of your business.

Financial planning for small businesses requires an in-depth understanding and knowledge of the unique financial challenges facing small business owners. It’s important to look for a financial planner who specializes in financial planning for small business owners to ensure that they will develop a financial plan for your unique situation. 

What to look for in a small business financial advisor:

You might be tempted to choose the first financial advisor that you come across. However, research is key. Financial planning is an ongoing process so it’s important to find someone who genuinely wants to help you succeed. Here are some things to consider when selecting a small business financial planner: 

  1. Who have they worked with: Look for a financial advisor who has experience working with small businesses. Small business finances can be complex, so it’s important to look for a financial advisor with expertise in small business finance.

  2. Fiduciary: Look for a financial advisor who acts as a fiduciary 100% of the time. A fiduciary financial advisor is legally obligated to act in your best interest.

  3. Fees: Financial planners can be paid in various ways but it’s important to look for a fee-only financial advisor. A fee-only financial planner is paid through a set fee. You know exactly what you are paying for. There are no commissions, kickbacks, or referrals.

  4. Qualifications and credentials: There is not one specific way to become a financial planner. There are over 200 different designations. The top designations include: Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Accredited Financial Counselor (AFC).


How District Capital Management helps small business owners

At District Capital, we work with small business owners to help them navigate the financial complexities of running their own business.  We are a small business ourselves and we have been providing financial planning to professionals and entrepreneurs in their 30s and 40s since 2013.

We have learned what keeps small business owners up at night and how we can really make a difference.  We are passionate about helping small business owners grow their business and achieve their financial goals. 

Our comprehensive small business financial planning services take into account both business needs and family priorities. Our services include:

  • Retirement planning for both yourself and your employees
  • Tax planning
  • Ongoing investment advice
  • Cash  management
  • Risk management
  • Estate planning


Find a small business financial advisor near you

Managing small business owner finances is something that you may want to consider leaving in the hands of an expert. A small business financial advisor can help you make sound financial decisions for your business and your household.  If you want help with your finances and are interested in having a comprehensive financial plan, schedule a free discovery call with one of our financial advisors today.

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Disclaimer: Case studies are hypothetical client scenarios. Planning recommendations may differ from your situation. Please consult with your own advisor before making any changes to your Financial Plan, Investments, or Insurance coverage.

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