Fantastic Finances: How Entrepreneurs Can Manage Their Wealth Effectively
Monday, August 7, 2017, 6:00 AM | Leave Comment
One of the perks of starting your own business is that you get a keep a majority of the profits. However, it isn’t enough to just make money.
In addition to making money, you have to be able to manage it effectively.
Fortunately, there are many tools and resources available to help with that task.
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How Much Would You Earn if You Were an Employee?
The first question that you have to ask yourself is how much you will get paid.
The easiest way to determine the size of your paycheck is to think about how much you would be paid if you were an employee.
Paying yourself a market salary will keep money inside of the company as well as help you manage your personal finances.
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What Forms of Compensation Are Acceptable?
There are many ways that the owner of a company can compensate him or herself.
For instance, it may be possible to hold shares of stock, take distributions on a quarterly basis or simply tie up your wealth in assets such as land or equipment.
Some choose to forego a salary completely and base their net worth on the value of their companies. This may be advantageous from a tax perspective as capital gains are treated better than wages.
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Get Help from a Wealth Management Specialist
Wealth management strategists may be able to teach you more about how to manage and make the most of your money.
Certain companies, such as UBS – The Burish Group, realize that it may be a good idea to put money or assets inside of a trust.
This may offer protection from creditors as well as reduce potential estate taxes when you die.
You may also learn how to leverage assets to secure loans instead of taking a salary.
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Don’t Live Outside of Your Means
No matter who you are, you shouldn’t live beyond your means. While you may want to help your kids, friends or charitable organizations, you should know that the money is going to good use.
Many wealthy folks have gone broke investing millions into a business that fails or because they couldn’t say no to friends or associates.
It is important that you understand how the health of your business may impact the health of your personal financial situation.
Talking with an accountant or tax expert may make it easier to manage your money while still living the type of lifestyle that you want and have earned for yourself.
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Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.
