The first week of May is National Small Business Week, a time to recognize the hard work and impact of small business owners across the country. At DBHW Wealth Partners, we understand that running a business is more than a full-time job — it's a major investment of your time, resources, and heart.
Whether you're just starting out or have been growing your business for years, strong financial planning is key to long-term success. Here are six areas every entrepreneur should be thinking about:
1. Separate Your Business and Personal Finances
It may seem simple, but many business owners still mix accounts. Keeping your business and personal finances separate helps streamline accounting, protects personal liability, simplifies tax time and provides an audit defense. Open dedicated checking and credit accounts — your future self will thank you.
2. Build a Business Emergency Fund
Just like individuals need an emergency fund, so do businesses. Market fluctuations, unexpected repairs, or delayed receivables can all impact cash flow. Aim to set aside 3 to 6 months of operating expenses in an accessible reserve account.
3. Have a Cash Flow Plan
You’ve got cash in the bank, but do you have enough to hire an employee or buy that new software? Allocating a portion of every revenue dollar clarifies how much you have available for business growth or changes. Work with a professional such as a fractional CFO, to develop a plan to save for taxes, pay yourself, and grow your business.
4. Plan for Retirement — Yes, Even If You’re the Boss
Many entrepreneurs delay saving for retirement because they’re reinvesting in the business. But neglecting your own future security can be a costly mistake. Options like SEP IRAs, Solo 401(k)s, or SIMPLE IRAs offer tax benefits while helping you build a nest egg.
5. Understand Your Tax Obligations
Self-employment comes with unique tax requirements. Be prepared for quarterly estimated taxes, self-employment tax, and potential state business taxes. Working with a tax advisor can help ensure you're not underpaying — or overpaying — and that you're maximizing available deductions.
6. Have a Succession or Exit Plan
It might feel early but planning ahead for what happens when you eventually sell, pass down, or step away from your business is smart. A well-crafted succession or exit plan protects your hard work and ensures a smoother transition when the time comes.
We’re Here to Help
At DBHW Wealth Partners, we support small business owners with comprehensive financial planning — from tax strategy and retirement planning to cash flow management and exit planning. If you're looking for guidance tailored to your unique business goals, let's talk.
Happy National Small Business Week — and thank you for all you do for our communities!