Small Business Planning
Financial Planning for Small Business Owners
Running a business and managing your personal finances at the same time is genuinely difficult. Most business owners end up with two separate financial lives that never quite talk to each other. A personal investment account here, a business checking account there, a SEP IRA someone recommended years ago, and a tax bill that seems high every April without a clear explanation why.
The problem is not effort. It is that nobody has ever looked at the whole picture at once.
At Oak Street Advisors, we build a single, coordinated financial plan that covers your business and your personal finances together. Business cash flow, owner compensation strategy, retirement accounts, health insurance, taxes, and succession planning are all modeled as one connected picture, because that is what they are.
We are a fee-only fiduciary firm. We earn nothing from the products or plans we recommend. Our job is to help you build wealth efficiently, reduce your tax exposure, and eventually leave or transition your business on your own terms.
Why Business Owners Need a Different Kind of Financial Plan
A business owner’s financial situation is more complex than a W-2 employee’s. The decisions available to you are also significantly more powerful if you know how to use them.
Your compensation structure affects your tax bill, your retirement contribution limits, your Social Security benefits, and your ability to qualify for certain deductions. The type of retirement plan you offer, or don’t, affects how much you can set aside tax-deferred every year. How your business is structured affects how profits flow to you and what you owe in payroll taxes.
Most financial advisors are built for employees. They can set up an IRA and pick an asset allocation, but they are not equipped to think through how your business entity, compensation strategy, and personal financial goals all connect. That is the work we do.
What Small Business Planning Covers
Business Structure and Tax Strategy
How your business is structured (sole proprietorship, LLC, S-Corp, C-Corp) has direct implications for how you are taxed, how much you pay in self-employment taxes, and how you can pull money out of the business.
A lot of self-employed professionals and small business owners are leaving money on the table by operating under the wrong structure or paying themselves in a way that generates unnecessary payroll tax exposure. We evaluate your current structure and model the tax impact of alternatives, coordinating closely with your CPA on implementation.
Owner Compensation Strategy
How you pay yourself matters more than most people realize. A business owner who draws a $200,000 salary from an S-Corp is in a very different tax position than one who draws $80,000 in salary and takes the rest as a distribution. The right answer depends on your total income, your retirement plan goals, your QBI deduction eligibility, and your tolerance for complexity.
We work through the numbers with you and land on a compensation structure that makes sense for your situation now and as your income changes.
Small Business Retirement Plans
One of the biggest tax advantages available to business owners is the ability to contribute far more to a retirement account than a typical employee can. Depending on your income and business structure, the options include:
- Solo 401(k): For self-employed individuals with no full-time employees. Allows both employee and employer contributions, with total annual limits well above what a standard IRA or SEP allows. Can include a Roth component, a profit-sharing component, and after-tax contributions that support a Mega Backdoor Roth strategy.
- SEP IRA: Simple to set up and flexible. Contribution limit is a percentage of net self-employment income, up to annual IRS limits. Works well for sole proprietors with variable income.
- SIMPLE IRA: Designed for small businesses with employees. Lower contribution limits than a 401(k), but also lower administrative complexity.
- Safe-Harbor 401(k): Allows highly compensated owners to maximize contributions without nondiscrimination testing issues. Often, the right move when a business has a mix of high- and low-earning employees.
- Cash Balance Plan: A type of defined benefit plan that allows substantially higher annual contributions than a 401(k) alone, sometimes $100,000 to $300,000 or more per year, depending on age and income. Particularly effective for high-earning business owners in their 50s who want to reduce a large taxable income aggressively and are serious about catching up on retirement savings.
We evaluate all available options against your personal financial plan, your business cash flow, and your employee situation to find the plan type or combination that actually fits.
Coordinated Personal and Business Tax Planning
Business owners have more levers to pull on taxes than almost any other type of client. They also have more ways to get it wrong.
We model your personal and business tax situation together, looking for opportunities, including:
- Maximizing the Qualified Business Income (QBI) deduction under Section 199A
- Timing income and deductions across fiscal years
- Structuring retirement plan contributions to reduce taxable income
- Using a Health Savings Account as a tax-advantaged investment vehicle
- Identifying legitimate business deductions that are being missed
- Coordinating your tax strategy with your spouse’s income, if applicable
We do not prepare tax returns. We work alongside your CPA to make sure the strategy is built before the returns are filed, not reconstructed afterward.
Health Insurance Planning
Health insurance is one of the largest expenses for self-employed business owners, and it is also one of the more complicated decisions, with marketplace plans, group coverage, HRAs, HSAs, and association health plans all carrying meaningfully different cost and tax implications.
We help you evaluate your options and select coverage that fits your situation and your budget. If you are using a high-deductible health plan, we also integrate the HSA into your broader financial plan as a tax-advantaged investment account, not just a fund for medical bills.
Key Person and Business Life Insurance
If your business depends on you, or on one or two other key people, the financial impact of losing that person can be severe for the business, for employees, and for your family.
We analyze whether key person life insurance makes sense in your situation and, if so, how it should be structured and how the premiums fit into your overall financial plan. Because we earn no commissions from insurance, the analysis is based entirely on what makes sense for you.
Business Succession Planning
At some point, you will leave your business. Whether that means selling it, passing it to a family member, transitioning to a partner, or simply closing the doors, that event is likely to be one of the largest financial transactions of your life.
The business owners who have the most options are the ones who start thinking about succession before they are ready to act on it. We help you work through what the business might be worth, how a sale would be taxed, what structures could reduce that exposure, and how the proceeds fit into your personal retirement and estate plan.
Estate Planning Coordination
Business ownership creates estate planning complexity that a standard will and beneficiary designation update will not resolve on its own. Buy-sell agreements, business interest valuation, entity-level planning, and wealth transfer strategies all need to be considered alongside your personal estate goals.
We work alongside your estate attorney to make sure the business and personal sides of your estate plan are actually aligned, not just filed in separate folders.
How We Work with Business Owners
Most of our business owner clients come to us at one of a few inflection points. Their income has grown to the point where taxes feel out of control. They are approaching a sale or transition. They have never had a real financial plan and want one. Or they are trying to set up a retirement plan for their business and want guidance on which type makes the most sense.
Wherever you are in that process, we start with a comprehensive financial plan that covers both sides of the ledger — personal and business — and use that as the foundation for everything we recommend.
We do not offer one-time plan engagements. Our clients are ongoing relationships, which means we are available when your situation changes, when tax law shifts, and when you face a decision that requires someone who already knows your full picture.
Frequently Asked Questions About Small Business Financial Planning
Let's Talk About Your Business
The business owners who get the most out of financial planning are usually not the ones in the worst shape. They are the ones who suspect something could be structured better and finally decide to find out.
If that sounds familiar, it is worth a conversation.
Call us at (843) 946 9868 or schedule a no-cost intro call below.
Oak Street Advisors is an SEC-registered investment advisory firm with offices in Mt. Pleasant, SC and Myrtle Beach, SC. Investment advisory services offered through Oak Street Advisors. Registration as an investment advisor does not imply a certain level of skill or training. Content is for informational purposes only and does not constitute tax, legal, or investment advice.
