If you’re a doctor, lawyer, consultant, or other professional running your own practice, you’re likely spending the final months of the year focused on client work, employee management, and the daily demands of being a small business owner.
Financial planning? That often gets pushed to “later.”
When you’re running a practice, it’s easy to let certain financial tasks slip through the cracks. Here are the opportunities that tend to fall off the radar during the busiest time of year (and how we partner with you to help you stay on track).
Small Business Owner Financial Planning Means Looking at the Whole Picture
Your business finances and your personal finances aren’t actually all that separate. At least, they shouldn’t be when you’re doing comprehensive planning.
Yes, you need to keep them legally and administratively separate. But when it comes to making strategic decisions about your financial future, you can’t look at your practice in a silo. Your business is a major part of your overall financial picture, and the two influence each other constantly.
For example:
- If you want to invest significant capital into your business next year, much of that might come from personal assets.
- If your practice has accumulated profits, you might be able to take distributions that help fund personal goals like buying a second home or bolstering your investment portfolio.
- Your retirement timeline affects both how you’re running your business today and how you’re thinking about succession or sale down the road.
This holistic perspective is how we approach every client relationship at Team Hewins. We look at every aspect of your financial life, coordinate with your CPA or other advisors, and identify where the pieces connect. That way, you’re making well-informed decisions based on the complete picture.
Related: Click here to read “CPA vs. Financial Advisor: Which Do You Need?”
5 Year-End Financial Moves Small Business Owners Might Be Missing
1. Retirement Plan Contributions
This is the big one. If you’re a high-income earner running your own practice, maxing out your retirement plan contributions can be one of the most powerful tools you have for reducing your current tax burden while building future wealth.
Yet many business owners either forget to make their contributions or don’t realize they could be contributing more than they currently are.
The good news? There’s flexibility in terms of the type of plan you can set up and when you need to have it in place. For example, Solo 401(k)s, SEP IRAs, and SIMPLE IRAs each have different contribution limits, deadlines, and requirements that could be a right-fit option for you and your business.
We Can “Rehearse” the Future
One of our favorite planning exercises is helping business owners see their trajectory in concrete terms. We take where you are today (your income, expenses, assets, business value) and project forward based on different scenarios:
- What if you retire at 60? At 65?
- What if you sell your practice for X amount versus Y amount?
- How does increasing your retirement contributions today affect your long-term outlook?
We call this “rehearsing the future.” It gives you a realistic look at whether your retirement goals are achievable, what needs to happen to get there, and where you might need to adjust course.
2. Estimated Tax Payment Reviews
Most business owners are diligent about making quarterly estimated tax payments throughout the year. But life happens. Maybe you had an unexpectedly profitable quarter, or maybe you simply forgot to send in a payment on time.
Before December 31, we help you take a close look at what you’ve paid in estimated taxes year-to-date. Are you on track, or do you need to make an additional payment to avoid penalties and interest from the IRS?
Nobody enjoys getting hit with a big tax bill. But it’s even more frustrating when that bill comes with penalties and interest simply because payments weren’t made on time. Reviewing these together now can save you from that unpleasant surprise come April.
Related: 5 Essential Elements of Tax Planning with a Financial Advisor
3. Equipment and Business Purchases
If you’re planning to invest in new equipment, office furniture, computers, or other business assets, the timing of that purchase matters more than you might think.
When you make these purchases in the current tax year rather than waiting until January, you can potentially claim those expenses as deductions on this year’s return. This is especially valuable if you’re having a higher-income year than usual, because those additional expenses can help offset income and reduce your overall tax liability.
If you know you’re going to make these purchases anyway, strategic timing can turn a necessary business expense into a smart tax move. As our client, we’re here to help you find those opportunities and proactively put them into action.
4. Estate Planning & Succession
If you’re thinking about succession planning, whether that means passing your practice to a family member, selling to a partner, or eventually selling to an outside buyer, those conversations should be happening now, not later. Estate planning for business owners isn’t just about wills and trusts. It’s about making sure the business you’ve worked so hard to build can transition smoothly in a way that benefits you, your family, and your legacy.
How do you want the proceeds from a sale structured? Do you want them to go directly to your heirs, or into a trust that manages distributions over time? Do you have a realistic understanding of your practice’s value and what a sale might look like?
These are deeply personal questions, and the answers are different for everyone. The important thing is that we start the conversation together and help make sure your plan is customized to your specific situation.
5. Charitable Giving Strategy
If giving back is important to you, year-end is a great time to think strategically about how you structure those gifts. Depending on how your practice is set up, you may be able to make charitable contributions through the business itself, which can provide tax benefits that flow through to your personal return.
Cash donations are straightforward, but they’re not always the most tax-efficient approach. Depending on your situation, there might be more creative strategies worth exploring:
- Donating appreciated stock instead of cash can help you avoid capital gains taxes while still receiving the charitable deduction
- Bunching charitable contributions into a single year (if you’re having a particularly high-income year) to maximize the tax benefit
- Setting up a donor-advised fund if you want to make a larger contribution now but distribute it to charities over time
The key is tying your charitable goals into the broader conversation about your personal and business finances. If giving is near the top of your priority list, we want to make sure you’re doing it in a way that’s both meaningful and efficient.
Let’s Begin the New Year with Confidence
Even the most careful business owners can benefit from a year-end check-in. New opportunities arise, circumstances change, and sometimes there’s simply a strategy you haven’t considered yet.
If this raised any new questions about your business or personal finances or you’d simply like to check in again, we’d love to connect. It’s important to us that you begin the new year with confidence in your financial plan.
If you’re not yet working with Team Hewins, now is a great time to explore what comprehensive planning could look like for you. Let’s connect and discuss how a holistic approach to financial planning can simplify your life while strengthening your financial future for years to come.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.