Information or opinions expressed today are subject to
change without notice, are for general information only and are not intended
as an offer or solicitation with respect to the purchase or sale of any security or
offering of individual investment advice. Past performance does not guarantee
future results. Please consult a financial advisor to assess your individual
situation. Securities America and its representatives do not provide tax or legal
advice. Any tax or legal information provided here is merely a summary of our
understanding and interpretation of some of the current income tax
regulations and is not exhaustive. Tax-law is subject to frequent change;
therefore it is important to coordinate with your tax advisor. Securities offered
through Securities America, Inc., Member FINRA/SIPC, Advisory services
offered through KFG Wealth Management, LLC dba Korhorn Financial Group.
Mike Bernard Representatives. KFG Wealth
Management, LLC is not affiliated with the Securities America companies.
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Financial Insight and Considerations for IndividualsandSmall Business Owners
1. K O R H O R N F I N A N C I A L G R O U P , I N C .
Financial Insight and Considerations
for Individuals
and
Small Business Owners
Michael Bernard CFP®, ChFC, CIC, EA
Korhorn Financial Group, Inc.
Granger, IN
2. K O R H O R N F I N A N C I A L G R O U P , I N C .
Disclosures
Disclaimer:
Information or opinions expressed today are subject to
change without notice, are for general information only and are not intended
as an offer or solicitation with respect to the purchase or sale of any security or
offering of individual investment advice. Past performance does not guarantee
future results. Please consult a financial advisor to assess your individual
situation. Securities America and its representatives do not provide tax or legal
advice. Any tax or legal information provided here is merely a summary of our
understanding and interpretation of some of the current income tax
regulations and is not exhaustive. Tax-law is subject to frequent change;
therefore it is important to coordinate with your tax advisor. Securities offered
through Securities America, Inc., Member FINRA/SIPC, Advisory services
offered through KFG Wealth Management, LLC dba Korhorn Financial Group.
Mike Bernard Representatives. KFG Wealth
Management, LLC is not affiliated with the Securities America companies.
3. K O R H O R N F I N A N C I A L G R O U P , I N C .
Korhorn Financial Group, Inc
KFG Insurance Agency, LLCKFG Wealth Management, LLC
KFG Tax & Business Services,
LLC
First State Investment Center Granger Tax & Accounting
Harbor Country Tax & Accounting
Harger Accounting & Tax
Stonegate Insurance Agency
Johnson Insurance Agency
Core Services:
Individuals:
Comprehensive Financial Planning
Investment Management
Businesses:
Retirement Plans
Financial Education
Comprehensive Financial Planning
Core Services:
Individuals:
Personal Tax Preparation
Tax Planning
Businesses:
Corporate Tax Preparation
Payroll
Accounting
Consulting
Core Services:
Individuals:
Home, Auto, Life, Health, Disability,
LTC, Medicare Supplement
Businesses:
Commercial Insurance, Work Comp
Health Insurance and Benefits
K O R H O R N F I N A N C I A L G R O U P , I N C .
Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through KFG Wealth Management, LLC., KFG Tax & Business Services,
LLC and KFG Insurance Agency, LLC are subsidiaries of Korhorn Financial Group, Inc. Korhorn Financial Group and its subsidiaries are not affiliated with the Securities
America companies. Securities America and its representatives do not provide tax or legal advice. Those services are offered in conjunction with qualified
professionals. Tax services are offered through KFG Tax & Business Services, LLC..
4. K O R H O R N F I N A N C I A L G R O U P , I N C .
6 Areas of Financial Planning
Estate Planning: Educating on how assets
pass and the documents that are
recommended for a proper estate plan,
reviewing current estate plan to ensure it is
consistent with wishes, and completing the
implementation of beneficiaries to ensure
consistent with the will.
Present Financial Position: Organizing
assets and liabilities into a format that
allows for monitoring of progress and
establishing, when necessary, a spending
plan that if followed will help pursue
financial goals and work towards financial
peace.
Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through KFG Wealth Management, LLC. KFG Wealth Management, KFG Tax & Business Services,
LLC and KFG Insurance Agency are subsidiaries of Korhorn Financial Group, Inc. Korhorn Financial Group and its subsidiaries are not affiliated with the Securities America companies.
Securities America and its representatives do not provide tax or legal advice. Those services are offered in conjunction with qualified professionals. Tax services are offered through KFG Tax &
Business Services, LLC.
Retirement Planning:
Defining retirement goals/needs,
evaluating current position,
and adjusting variables in
an effort to help ensure the success
of the plan.
Investment Planning: Reviewing the
existing structure of investment accounts
and the appropriateness of current
investment tools and making
recommendations to ensure the structure
and tools are consistent with retirement
needs and personal tax situation.
Protection Planning:
Reviewing financial risks and
how they are managed to
ensure it is consistent with
Net Worth and need. Often
entails a complete insurance
review.
Tax Planning: Analyzes current tax situation and
determines opportunities to optimize situation in
light of all areas of your financial life.
Present
Financial
Position
Protection
Planning
Tax Planning
Investment
Planning
Retirement
Planning
Estate
Planning
K O R H O R N F I N A N C I A L G R O U P , I N C .
5. K O R H O R N F I N A N C I A L G R O U P , I N C .
6. K O R H O R N F I N A N C I A L G R O U P , I N C .
3 Habits of
Financially Successful
Business Owners
7. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #1: Choose how you want to
be taxed
8. K O R H O R N F I N A N C I A L G R O U P , I N C .
9. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Taxed as a Sole Proprietor:
– No formal organization or as a single-member LLC
– File on Schedule C of your individual tax return
– Revenue – Expenses = Business Net Income
– Net Income taxed:
• Federal Income Tax
• State and Local Income Tax
• Self Employment Tax
Habit #1: Choose how you want to
be taxed
10. K O R H O R N F I N A N C I A L G R O U P , I N C .
11. K O R H O R N F I N A N C I A L G R O U P , I N C .
12. K O R H O R N F I N A N C I A L G R O U P , I N C .
What is Self Employment Tax?
6.2% Social Security Tax
6.2% Social Security Tax
1.45% Medicare Tax
1.45% Medicare Tax
15.3% Self Employment Tax
13. K O R H O R N F I N A N C I A L G R O U P , I N C .
Self Employment Tax - Example
• Let’s assume your business makes $125,000 and has $75,000 in
expenses, making your net income $50,000
• Assume 25% Fed Tax and 5% State Tax
• Fed Tax: $50,000 x 25% = $12,500
• State Tax: $50,000 x 5% = $2,500
• Self Employment Tax: $50,000 x 15.3% = $7,650
• TOTAL TAX = $22,650
• Meaning you only get to keep $27,350 of your $50,000 income!
14. K O R H O R N F I N A N C I A L G R O U P , I N C .
Is there a better way for you to be
taxed?
Consider being taxed as a corporation
15. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Taxed as a S Corporation:
– As a single-member LLC or a S Corp
– File an 1120 S in addition to your individual tax return
– Pay yourself a salary just like other employees
– Revenue – Expenses = Business Net Income
– Net Income taxed:
• Federal Income Tax
• State and Local Income Tax
• NO Self Employment Tax
Habit #1: Choose how you want to
be taxed
16. K O R H O R N F I N A N C I A L G R O U P , I N C .
17. K O R H O R N F I N A N C I A L G R O U P , I N C .
What is Self Employment Tax?
6.2% Social Security Tax
6.2% Social Security Tax
1.45% Medicare Tax
1.45% Medicare Tax
15.3% Self Employment Tax
18. K O R H O R N F I N A N C I A L G R O U P , I N C .
Taxed As S Corp - Example
• Let’s assume your S Corp makes $125,000 and has $75,000 in
expenses, and in addition you take a $25,000 salary, making your
net income $25,000
• Assume 25% Fed Tax and 5% State Tax
Your $25,000 Salary is taxed:
Fed Tax: $25,000 x 25% = $6,250
State Tax: $25,000 x 5% = 1,250
FICA: $25,000 x 7.65% = $1,912.50
Payroll Tax: $25,000 x 7.65% = $1,912.50
Total Tax = $11,325
Your $25,000 Net Income is taxed:
Fed Tax: $25,000 x 25% = $6,250
State Tax: $25,000 x 5% = 1,250
Total Tax = $7,500
Total Tax = $18,825
19. K O R H O R N F I N A N C I A L G R O U P , I N C .
Taxed As S Corp - Example
• Let’s assume your S Corp makes $150,000 and has $75,000 in
expenses, and in addition you take a $25,000 salary, making your
net income $50,000
• Assume 25% Fed Tax and 5% State Tax
Your $25,000 Salary is taxed:
Fed Tax: $25,000 x 25% = $6,250
State Tax: $25,000 x 5% = 1,250
FICA: $25,000 x 7.65% = $1,912.50
Payroll Tax: $25,000 x 7.65% = $1,912.50
Total Tax = $11,325
Your $50,000 Net Income is taxed:
Fed Tax: $50,000 x 25% = $12,500
State Tax: $50,000 x 5% = 2,500
Total Tax = $15,000
Total Tax = $26,325
20. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Be Aware…
– To be taxed as a corporation subjects you to other tax
filings and other requirements (940, 941, UC1, etc.)
• Thus you probably should not choose this if your business
income is less than $50,000
– You must set your salary at a fair and reasonable level
– Use an attorney to help you select the right entity and get
it established
– Use a CPA firm to help with your taxes and filings
Habit #1: Choose how you want to
be taxed
21. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #2: Set up a retirement plan
for the business
22. K O R H O R N F I N A N C I A L G R O U P , I N C .
1) Tax Sheltered Saving
2) Help you take money out of the
business
Why start a retirement plan for the business?
23. K O R H O R N F I N A N C I A L G R O U P , I N C .
1. SIMPLE IRA
2. 401(k)
3. SEP IRA
What are your options
SIMPLE IRA
• $12,000 max contribution
• $2,500 additional contribution if
50 or older
• 3% company match contribution
• Easy to administer, no annual
filings
• Must cover employees that work
more than 1,000 hours per year
24. K O R H O R N F I N A N C I A L G R O U P , I N C .
1. SIMPLE IRA
2. 401(k)
3. SEP IRA
What are your options
401(k)
• $17,500 max contribution
• $5,500 additional contribution if
50 or older
• Various company match
contribution options
• Difficult to administer, annual
filings required
• Must cover most employees who
are at least 21 years old
25. K O R H O R N F I N A N C I A L G R O U P , I N C .
1. SIMPLE IRA
2. 401(k)
3. SEP IRA
What are your options
SEP IRA
• No employee contribution
• Employer contribution only
• Must contribute the same
percentage to each employee
• Easy to administer, no annual
filings
• Can make contribution up to tax
filing deadline
26. K O R H O R N F I N A N C I A L G R O U P , I N C .
Taxed As S Corp WITH SIMPLE IRA
• Let’s assume your S Corp makes $150,000 and has $75,000 in
expenses, and in addition you take a $25,000 salary, making your
net income $50,000
• You contribute the maximum $12,000 to your SIMPLE IRA
Your $25,000 Salary is taxed:
Fed Tax: ($25k - $12k) x 25% = $3,250
State Tax: ($25k - $12k) x 5% = 650
FICA: $25,000 x 7.65% = $1,912.50
Payroll Tax: $25,000 x 7.65% = $1,912.50
Total Tax = $7,725
Your $50,000 Net Income is taxed:
Fed Tax: $50,000 x 25% = $12,500
State Tax: $50,000 x 5% = 2,500
Total Tax = $15,000
Total Tax = $22,725
27. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #3: Work with a
Comprehensive Financial Planner
28. K O R H O R N F I N A N C I A L G R O U P , I N C .
They can help you with…
• Reviewing financial statements
• Budgeting and forecasting
• Guidance on insurance coverage needs
• Tax planning for when things go right, and
when they don’t
• Starting and managing a retirement plan
• Corporation (filings, establishing salary, etc.)
• Etc.
Why work with a Comprehensive Financial Planner?
29. K O R H O R N F I N A N C I A L G R O U P , I N C .
3 Habits of
Financially Successful
Individuals / Families
30. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #1: Have a spending plan
31. K O R H O R N F I N A N C I A L G R O U P , I N C .
Budgets are restricting!
32. K O R H O R N F I N A N C I A L G R O U P , I N C .
Budgets are freeing!
33. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Purposes of a budget:
– Tracking
• Knowing where your money is going
– Discipline
• Awareness of how much you can afford to spend in an
area, and when you’ve reached that level
Habit #1: Have a spending plan
34. K O R H O R N F I N A N C I A L G R O U P , I N C .
35. K O R H O R N F I N A N C I A L G R O U P , I N C .
36. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Best Practices
– Update your actual spending compared to budget
once a week
• Helps you monitor whether you’re over or under for
the month
– Embrace technology
• Consider using Mint.com, Quicken, etc to help with
monitoring, categorizing, alerts
Habit #1: Have a spending plan
37. K O R H O R N F I N A N C I A L G R O U P , I N C .
Includes the right bank account
structure
Habit #1: Have a spending plan
38. K O R H O R N F I N A N C I A L G R O U P , I N C .
Immediate
Spending
Delayed
Spending
Emergency
Spending
#1 #2 #3
The 3 Bank Account System
39. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #2: Use tax sheltered accounts
to save up for retirement
40. K O R H O R N F I N A N C I A L G R O U P , I N C .
Types of tax shelter account…
Traditional IRA
Roth IRA
401(k)
SIMPLE IRA
41. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #2: Use tax sheltered accounts
to save up for retirement
Pre-Tax Post-Tax
Traditional IRA Roth IRA
42. K O R H O R N F I N A N C I A L G R O U P , I N C .
Is it really that important?
Insert Guide to Retirement Slide
43. K O R H O R N F I N A N C I A L G R O U P , I N C .
• Best Practices
– Use your 401(k) to get a match from your
employer
– Use the Roth IRA if you’re in a low tax bracket
– Consider a Roth Conversion if you’re in a low tax
bracket
– Beware of contribution limits and eligibility limits
Habit #2: Use tax sheltered accounts
to save up for retirement
44. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habit #3: Have a plan
45. K O R H O R N F I N A N C I A L G R O U P , I N C .
The right plan and planning process
gives you:
Habit #3: Have a plan
CONFIDENCE CLARITY
46. K O R H O R N F I N A N C I A L G R O U P , I N C .
The right plan and planning process answers…
• Am I saving enough for retirement?
• Can I afford that much house?
• Will my family be taken care of when I die?
• Should I pay off my mortgage early?
• Can I pay for my kids college?
• Should I use an IRA or Roth IRA?
• Am I missing tax deductions?
Why have a financial plan?
47. K O R H O R N F I N A N C I A L G R O U P , I N C .
Habits for financially successful…
Businesses
1. Choose how you want
to be taxed
2. Set up a retirement plan
for your business
3. Work with a
comprehensive financial
planner
Individuals
1. Have a spending plan
2. Use tax sheltered
accounts to save up for
retirement
3. Have a plan
48. K O R H O R N F I N A N C I A L G R O U P , I N C .
Thank You!
Questions?