A Financial Health Checklist for Small Business Owners

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

If any of your clients are small business owners, you know that the daily decisions they make impact their bottom line. Are they exercising the same care for their finances that they apply to the services they offer their customers?

Following is a checklist to help your clients evaluate their financial health as a small business owner:

Are they focusing on the big picture?

There are many pieces to small business owners’ total financial picture. Their financial plan, budget, and investments are three critical components no matter how busy daily operations become.

1. Financial planning

Taxes are one of the most significant expenses for business owners. To identify and follow the most appropriate tax planning strategies, small business owners need to be clear about both their business goals and personal financial goals.

Do they:

    • Maintain a prioritized list of business and personal financial goals and refer to it when they need to make new decisions?
    • Have a small business structure that offers them the most appropriate legal protections and benefits?
    • Reduce or defer taxes and maximize available deductions and credits? This may include timing income and expenses, using charitable gifting, and saving for retirement.