Business Owner Tax Savings Fuels Exit Strategy

Does your business rely entirely on you to produce income?

Is there a way to smoothly create the income you need to leave the business behind and still have enough income to live that life you dream of? 

A good example is C, who has done a great job following our instructions!

She owns and operates a training and editing company. Typically she works alone.  She will not sell the business or bring on employees.  She maximizes her billing and is very good at what she does.

We have worked with her since her startup in 2005.

Business revenue runs from $170,000 to $200,000 with one strong year of $279,000.  Average is $198, 375.

Over the 14 years her total gross revenue (Sales) of $2,780,000 has allowed us to pay her a salary of $1,722,800 (62%).

We have also funded $363,734  (13%) in her SEP plan that has almost tripled over that time frame to $ 907,694.

When her mortgage balance got down to $150,000 she started asking about paying it off.  It made sense and really helped her feel secure.  We arranged for her to use the year end bonus to pay it down.  In less than five years she owned her home free and clear. So exciting to see that payment gone.  She tells me “I feel much more at ease knowing that my finances are well organized and that my house is paid off.” 

She is currently building a portfolio of CD’s and index mutual funds outside the business, adding on average $25,000 each year.

Our role has been as an advisor and second opinion. She uses QBO, that gives us great access to the numbers.  At periodic points  we review and also do a year-end tax planning session. Before she leaves that session we know what  her annual tax return will look like. I make sure that her tax bill is paid in her paycheck withholding.  Our rule is no unexpected tax bills with this lady. We set up her SEP contribution and discuss how the year has gone.  Together we move some numbers around and get a workable plan before the year ends.

The simple plan we have in place with her has her on track to replace her income from her assets, has paid off her home and saves her over $13,000 in taxes annually.

Total value $163,518 saved.  

And that is so awesome because the day she decides that she is done working, she can turn on the income from her investments.  And live happily in her paid for home.  She loves travel and  she is good to go at a moments notice.

What have you done to improve your business this week? Book a 15 minute video call with me today.