The Business Owner’s Guide to Financial Planning

The entrepreneurial workforce is alive and growing rapidly. With so many startups and businesses forming, the opportunities to make money have become endless. As a financial adviser, I work with many business owners and see similar problems within each situation. They struggle with paying taxes, keeping track of expenses, saving money, or simply planning for the future. If you’re experiencing one, or all of these problems, this is the guide for you! I’m here to provide step by step instructions on how to properly plan your finances so you’ll be able to focus more on your business, and less about your money.

1. Keep Your Personal and Business Expenses Separate
Too many times I see clients who have no idea how much they spend on their business. One thing I always recommend is using a business bank account and a personal account. As easy as it sounds, many business owners have both accounts, but still mix up their expenses. And come tax season, you’re scrambling to gather your expenses to determine your tax write offs. One app I recommend business owners use is called “Levee”. You simply link your bank accounts, and one by one the app lists each transaction, whether it’s income or an expense. Similar to tinder, you swipe right if it was personal and swipe left for business. It’s a simple, but efficient way for you to keep track of not only your expenses, but also how much money you’ve made that month. Levee will also create projections of how much you will make in the year as well as how much you owe in taxes. It’s free to download, so give it a try.

2. Work With an Independent Financial Adviser
A good adviser should be able to break down your finances, figure out how much money you need to save, and also educate you on the different retirement accounts that are the specified for your situation. For example, if you’re an independent contractor self-employed, an “Individual 401(k)” or a “SEP IRA” account is a must have. They’re easy to set up and I handle it all for my clients.
However, the driving factor to working with an adviser is that they’re both independent and a fiduciary. Being a fiduciary forces them to legally act in your best interest, which all financial advisers actually don’t do. Being independent means the adviser does not own any specific products to sell to you. Because of that, each recommendation they provide is completely unbiased and conflict free. Banks like Wells Fargo, Morgan Stanley, and Merrill Lynch all have investment products of their own, which can cause a conflict of interest. Here at Gerber Kawasaki, we are both independent and a fiduciary.

3. Get a CPA
On top of working with a financial adviser, you must work with a CPA or accountant. An adviser like me specializes in saving and investing your money, but I’m not a tax expert. CPA’s are able to go into deeper detail about your expenses and find all the ways to save money on taxes. The easiest is by “writing off” your business expenses against your income. A write off is simply a deduction in the amount you’ve earned by your expense. By writing expenses off, it will appear that you made less money; therefore you pay less tax to the government. This is why it’s vital to keep track of what you spend on your business. There are a great deal of expenses you may not realize can count as a business expense. This is another advantage of having a CPA because they know everything that can count as a write off. Finding a good CPA can tough, but as an adviser, I am a resource to my clients and refer them to a CPA I know and trust.

4. How and When to Pay Taxes
Just like any other person, business owners file their corporate taxes annually. However, each quarter, you must pay an “estimated tax” amount based on what they think they owe. This once again goes back to the importance of keeping track of your expenses. CPAs may also do your bookkeeping, so they can have an idea of your current and projected income or expenses. That way, you don’t have to worry about your money and focus directly on your business.

In the end, business owners must have other professional business connections. You might think you can do everything on your own, but you will need help. I learned in economics 101 that specialization is key to a successful business. You need focus on what you do best, and let others do what they do best. As the owner, you specialize in your business. As the financial adviser (me), I specialize in budgeting, saving and investing your money. The CPA is the specialist in taxes and helping you pay as little as possible. I work with a lot of business owners, and I believe they’re very happy to have me not only as their adviser, but as a personal resource to find other professionals that can help them in any way possible. If you’re a business owner and have questions or would like advice, don’t hesitate to call!

By: Malcolm Jones
Investment Advisor Representative


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 course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393.