A white paper for business owners or those considering starting their own business.

1. SM
For Business
Financial planning considerations
when you own a business.
If you’re like many business owners, your personal and In today’s complex, competitive work environment, every
business financial needs, concerns, successes and employee matters. To attract and retain top workers,
challenges are intertwined. For example: consider these financial planning ideas:
> Cash flow in your business probably impacts your > Customized or enhanced benefits for business owners
personal cash flow. and executives — Since key employees are vital to
> Investment management may involve balancing your business and their overall compensation package
personal and business assets within your portfolio. can be an important motivator to reach goals and stay
with your company. You may want to provide additional
> Tax discussions with your accountant likely include insurance or retirement benefits as incentives for this
both your personal and business taxes. valuable pool of talent.
> And, your financial dreams and goals may be more > Workplace financial planning and education — According
complex than those of individuals who don’t own to one recent study, nearly nine in 10 (89%) employees
businesses. believe a financial plan that directly addressed their
workplace benefit costs and contingent financial
As a result, a comprehensive financial planning approach
decisions would be helpful.1 Giving employees
— one that factors in both business and personal needs
access to financial planning can help them plan
— is even more important for you. Having a financial
for their financial future, increase confidence about
plan can help ensure that the money decisions you make
financial decisions and reduce stress over financial
for your business also have the desired impact on the
concerns. In addition, education specific to your
personal side of your life.
benefits could boost understanding of and participation
As a business owner, your business may be your most in benefit programs.
important financial asset; it is likely a primary source of > Group benefit packages — Providing benefits such as
income and you may have a significant amount of your life and health insurance for employees may improve
assets and liabilities tied up in it. Financial planning can morale and retention.
help you identify ways to use your business to reach your
> Employee retirement programs — You can help your
personal goals and enable you to protect yourself, your
employees build financial security and confidence in their
family and your business regardless of what the future
futures through a company retirement plan. Additionally,
brings. An integrated financial plan should cover employee
your business may enjoy attractive tax benefits and will
attraction and retention, business protection, business
set itself apart in a competitive labor market.
valuation and business succession planning.
Business protection
Employee attraction and retention
When your business represents a significant portion of
Your workforce is vital to the current and future success your net worth, unexpected events such as a disability or
of your business. Key employees may directly impact disaster can have a significant impact on your personal
sales or production. Replacing their experience, and business finances. It’s also important to protect your
relationships or specialized skills could be a lengthy business against financial losses that could result from
and costly process. Additionally, the financial well-being the departure, illness, injury or death of a partner or key
of all employees contributes to their motivation, employees, as well as other hazards.
productivity and commitment.

2. These solutions and strategies may help ensure that your There are numerous ways to determine — and enhance —
business is protected: the value of your business. By updating the valuation every
few years, you can guarantee fair market representation in
> Disability income insurance — Nearly one in seven contracts, planning and negotiations.
people will be disabled for five years or more.2 In the
event you are affected by an illness, accident or injury, Business succession planning
disability insurance can provide income for you and Do you have a plan to effectively transfer your business
replace lost revenue to your business. It can also pay when it’s time for you to move on? Eighty-three percent
the bills and help keep your business open. of business owners expect their companies to continue
> Key person insurance — With this type of insurance, after their retirements and deaths, but only 64% have
your business is protected against the financial formal plans to transfer their businesses. Having a
consequences that result from a key person’s death or succession plan can help financially protect you and
disability. The policy is normally owned by the company, your business.
which pays the premiums and receives the benefit
when a key employee dies or is injured. The amount In the future, you may want to sell your business or
and cost of insurance needed by your business depends transition it to a family member. How can you treat heirs
on your situation and the age, health and role of the fairly, meet taxes and administrative expenses, and
key employee. ensure a successful and smooth transition?
> Professional liability/errors and omissions liability > A Buy-Sell agreement funded by life, disability and/or
insurance — With this type of specialty coverage, you buy-sell insurance can ensure the orderly continuation
are protected against losses from lawsuits filed against of your business in the event of a partner’s or other key
you by your clients (limited to acts of negligence). person’s death.
> General liability/business umbrella liability insurance — > Life insurance can help meet survivor income needs,
General liability insurance protects your business and ensure fair treatment of heirs and provide sufficient cash
personal assets from injury claims, property damages to pay business debts or taxes.
and advertising claims. An umbrella policy provides an You need a plan and a financial advisor
additional layer of financial protection.
Your business is a key component of your overall
> Property insurance/business interruption insurance —
financial picture, and it’s important for your personal
Business interruption insurance compensates you for lost
and business finances to work together. An Ameriprise
income if your company has to vacate its premises due to
financial advisor can help plan your personal and
disaster-related damage (if covered under your property
professional goals using our unique and collaborative
insurance policy). The policy covers the profits you would
Dream > Plan > Track >®approach to financial planning.
have earned as well as ongoing operating expenses.
Additionally, a financial advisor can coordinate services
Business valuation
with your other professional advisors (CPA, attorney,
Understanding the value of your business is an important etc.) to help you effectively and efficiently manage your
component of your overall financial health and can help money and address your needs through all stages
you receive a fair market price for the business during of your business’ life cycle. If you don’t already have
any transitions. A financial advisor can help you integrate an Ameriprise financial advisor, contact us at (800)
your business’ value with your personal financial situation, AMERIPRISE or visit our website at ameriprise.com to
so you can have a comprehensive view to plan for a learn more.
successful future.
1
The 2007 Ameriprise Workplace Financial Planning Benefit Decisions study
2
Disability Management Sourcebook
Ameriprise Financial cannot guarantee future financial results.
Financial planning services and investments offered through Ameriprise Financial Services, Inc.
Member FINRA and SIPC.
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