How a financial planner helps business owners

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxford).

Most business owners are aware of their need for an accountant. After all, taxes need to be filed each year and most limited companies recognise that it mitigates risk by getting a professional to look over everything. Yet why use a financial planner? To use an analogy, an accountant is like a mechanic for your car. They check that everything passes the legally required tests. Your financial planner, however, is like an experienced guide for a long, cross-continent road trip where you will encounter many challenges and opportunities that need navigating effectively.


Effective money management

An accountant can tell you how much tax you need to pay. They likely cannot tell you what to do to mitigate the unnecessary taxes which eat into your profits. A financial planner’s role is to ask the right questions to make your life easier, increase business efficiencies and generate more financial results. This can be especially helpful for owners of small businesses, where you need to act as de facto head of multiple departments (marketing, IT, product development etc.). Your business finances underpin all of this and need to be taken seriously. Cashflow issues, money mismanagement and such issues can quickly lead to failure. A financial planner can help ensure your business avoids problems like these.


Cost savings

Working with a financial planner may just sound like adding another cost to your business. Yet in all likelihood, it should result in savings. For a small business owner, a financial planner can put more back into your pocket through savvy tax management. In 2021-22, for example, the bands for income tax are 20% for income between £12,570 to £50,270 (after your personal allowance). A 40% rate then applies to any income £50,270 to £150,000. However, dividend taxes are still lower in this tax year. For Basic Rate taxpayers, the rate is 7.5% on dividend income after your £2,000 allowance is used up. For those on the Higher Rate it is 32.5%. A financial planner, often working together with your accountant. can therefore help you find an ideal balance between your salary and dividends which reduces an overall personal tax bill. 


Long term planning

As a busy business owner, it is easy to get consumed with the here-and-now as you try to keep your venture alive and growing. It can be hard to think about the longer term, such as retirement planning. Meeting with a financial planner encourages you to look at the overall trajectory of the business and how this affects your future. He/she can help a small business owner set up a personal pension (like a SIPP), construct an appropriate asset allocation and adjust periodically to ensure everything stays on track with your long term goals. A financial planner can also be immensely helpful for inheritance tax and estate planning purposes. After all, what roles does your business play in your retirement income plans – as well as how you may, one day, pass wealth onto your children?


Stage growth planning

A successful, growing business will pass through multiple stages of a business lifecycle as the team, operations and revenue expand. These various stages require careful financial planning as you “spend more” (e.g. on infrastructure) to “earn more”. Emotions can run high during these times and it’s easy to lose perspective. An experienced financial professional can bring their experience to the table and help you keep a cool head for the important decisions lying ahead of you. He/she can provide the financial information you need to help ensure everything is properly costed ahead of time, and that appropriate protections and contingencies are in place should your plans not work out as intended.  



Interested in finding out how we can optimise your financial plan? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469