If you own a business, you’ve got a lot on your plate. And in today’s constantly changing world, it’s easy to let certain mistakes happen because you’re busy focusing on other, more urgent things.
Here are three critical mistakes I see over and over that could cost you big-time.
Mistake #1: Not knowing what kind of business structure or entity is right for your business now and in the future. Because it can change over time.
Whether you’re set up as an LLC, S Corp, C Corp and so on, your structure affects your business’s taxation, liabilities and even your future exit opportunities. So understanding the differences and choosing the right one is crucial.
Mistake #2: Not planning for your ideal exit. What do you plan to do with the business? Will your children or employees take it over some day? If you’re going to sell it, how should you structure the sale to maximize your success and reduce your tax liability? Is this your retirement plan?
Each of these exits requires a different strategy, and you need to start thinking about it long before you hit the eject button so you can maximize the value.
Mistake #3: Not paying yourself the right way. Many entrepreneurs I see aren’t taking their income the right way to maximize their goals and limit their tax liability. Having the right payment structure in place can help you accomplish all of that while avoiding raising red flags with the IRS that could lead to painful tax audits.
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If any of these mistakes sound familiar — or spark the need for a conversation — I’m here to listen and help you take action, so you can focus on your business. If you’d like to speak personally about what’s going on, feel free to set up a complimentary consultation.
Bautis Financial Advisor Commentary: August 12, 2021