Each week on That Business Show, we wrap up the week with a Focus on You! Juliann Nichols, CEO of Focus on You Strategy, specializes in bringing out the CEO in you via CEO Exchanges and strategy sessions designed to help you automate and delegate your processes. On this edition of Focus Friday, the focus was on common mistakes that entrepreneurs make that impact their finances with our guest Lori Nadglowski who is the Founder of Laurel Wealth Management. Lori was a founding partner of Wealth Advisor of Tampa Bay where she was the Chief Operating Officer and has extensive experience in the management and operations of key departments of various financial institutions. She served as Assistant Vice President of the Electronic Banking Department for the Bank of Tampa prior to her decade-long service as Chief Compliance Officer, Controller, and Principal of Florida Investment Advisors. After a career spent in Finance, she launched Laurel Wealth Management in 2016 with a focus on financial literacy not only for adults and entrepreneurs but children as well!
The discussion begins with the first mistake that plagues entrepreneurs – not seeking professional advice when determining the type of structure to use for your business. This is critical because the type of structure you choose (or don’t choose) will determine how you pay income tax, social security tax and Medicare tax. You could unknowingly be paying too much in taxes because you failed to seek out professional assistance at the inception of your operation and your personal assets could be at risk as well.
We continue the discussion with another critical mistake that derails many entrepreneurs and that is ignoring personal credit. Personal credit will be relied upon by many to establish business credit and it is imperative that you enter business with a strong credit presence. As the business develops, it will develop its own credit rating but that is years down the road. Credit is an important part of our culture and for the parents that listen, talk with your children about credit before they graduate and get them a credit card so they can begin to learn how to manage their own credit and also begin developing their credit history.
The mixing of business and personal expenses is another area that causes strife for business owners. It is highly recommended to use a personal and a business card for your expenses because you could be missing out on important tax deductions. It is allowable to use one card for all purchases but you must have a process / program to separate out the expenses and if you do not do that daily / weekly then you are likely to forget what is what. Take the time to setup separate cards for yourself and your business. Quickbooks also has an app for this.
Another area that trips up entrepreneurs is not accounting for uneven cash flow. This means you need a budget. For some entrepreneurs, the cash flow is seasonal and you need to have funds available for the off seasons to get you through the year. You need to know how much to set aside to account for your fixed expenses during your off seasons.
Lori then touches on how business owners fail to plan for their exit. With most business owners focused on just getting their business functional and profitable, a proper exit strategy is oftentimes the last thing on their minds. This is an area that Juliann and Focus on You Strategy works with you on too. When you establish a business, you must also plan for exiting the business at the same time.
Lastly, we touch on retirement planning. As w-2 employees, it is easy to setup a deduction to fund your retirement but when you own the business, you need to take the time to setup that retirement and your own deduction. It’s the same process but requires you to be diligent and setup your own retirement plan and regularly contribute to that plan. Lori specializes in wealth management and if you need help with business planning, retirement of any of these discussion points, get in touch with her today at 813-252-0799 or visit www.laurelwm.com for more information. As noted earlier too, she works with children on wealth management too so ask her about how she can help your child better prepare for financial management. Find this interview and many more at www.thatyoutubechannel.com and please subscribe to us on iTunes and YouTube, just search for That Business Show!