While your accountant is typically looking backwards at last year’s results to figure out your tax implications, we look forward at growing your wealth.
As a business owner, you are an expert at generating revenue and building a business. You know how to scale, how to hire, and how to drive profits. However, there is a common paradox we see with successful entrepreneurs: their business is thriving, but their personal financial picture is often stagnant.
Business owners frequently treat their personal wealth as a secondary concern, something to deal with “someday” when they exit. In the meantime, they often rely on a retirement plan and assume their accountant has the rest covered.
While accountants play a critical role, they are not always financial planners, and even when they do offer planning support, their busy schedules can make it difficult to provide the ongoing, proactive attention clients need most. While your CPA ensures you are compliant with the IRS today, a financial advisor acting as your Personal CFO helps you aim to plan, build, access, and protect wealth for tomorrow.
At Stonewater Financial, we go beyond simple retirement planning to help you implement strategies aiming to extract value from your business while you are still running it. Here is how.
1. Wealth Extraction: Diversifying Beyond the Business
Many owners leave excessive cash trapped inside their corporation because they are concerned about the personal tax impact of withdrawing it. The result can be “lazy capital” earning minimal interest in a business account.
We work with you to create a wealth extraction strategy. This involves more than just a salary or dividend; it is about systematically moving capital from your business balance sheet to your personal balance sheet. By seeking to diversify your assets outside of your company, you can help reduce your personal exposure to the specific risks of your industry.
2. Facilitating Growth: Liquidity Without Liquidation
One of our key philosophies for business owners is that you shouldn’t necessarily have to liquidate your safety net to fund your growth.
If you need capital to buy new equipment, expand to a second location, or bridge a cash-flow gap, your first instinct might be to sell investments or take a high-interest business loan. A potential alternative is a Securities-Based Line of Credit (SBLOC).
By pledging your non-qualified investment portfolio as collateral, you can access a line of credit. This strategy allows your investments to potentially stay in the market while you access the liquidity you need.
(Please note: Securities-based lending involves special risks and is not suitable for everyone. Market downturns may require the deposit of additional funds or the sale of assets to maintain the line.)
3. Risk Management: Protecting the “Golden Goose”
Your biggest asset isn’t your inventory or your real estate; it is you and your ability to grow.
If you were unable to work for six months due to an illness or injury, what would happen to your business? What would happen to your family’s lifestyle? Relying on savings is rarely a sufficient strategy.
We integrate robust risk management into your plan, helping you evaluate the transfer of this risk by reviewing the need for:
- Disability Insurance: To help replace your income if you are unable to work.
- Key Person Insurance: To provide your business with capital to navigate the loss of a critical employee (or yourself).
- Buy-Sell Agreements: To ensure there is a funded plan in place if a partner exits unexpectedly.
4. Tax Mitigation: The “Personal CFO” Difference
Your business tax return and your personal tax return should not be viewed in isolation. They are two halves of the same whole.
We serve as the quarterback between you and your CPA, ensuring nothing falls through the cracks. By evaluating your full financial picture, not just isolated pieces, we help uncover opportunities that can be missed in a siloed approach, such as designing profit-sharing plans to maximize business deductions or implementing charitable giving strategies to reduce income taxes and capital gains exposure.
The Bottom Line
Your business is likely the engine of your wealth, but it shouldn’t be the only vehicle you drive.
Stop treating your personal finances like a side hustle. Let Stonewater Financial act as your Personal CFO, helping you pursue the growth of your business and your personal net worth in tandem.
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Compliance
Stonewater Financial and LPL Financial do not provide legal or tax advice. Please consult your legal or tax professional regarding your specific situation. Securities-based lending involves special risks and is not suitable for everyone. If the market value of the pledged securities declines, you may be required to deposit additional funds or securities, or the pledged securities may be sold to meet the margin call. The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.
