CHICAGO, ILLINOIS--(Marketwired - Dec 12, 2014) - The BMO Wealth Institute today issued a report, The Life of an Entrepreneur, which examines the various business-related and personal challenges faced by American entrepreneurs. According to the report, 26 percent of business owners struggle to balance the needs of their business with the needs of their family.
"There is an array of work-related and personal worries that entrepreneurs face when they're building up their business and trying to make it into a success," said Stephen Williams, Vice President, U.S. Financial Planning Strategy, BMO Private Bank. "The stresses associated with getting a business off the ground often leads to a situation where the business becomes their sole focus in life."
The report also found that American entrepreneurs face the challenge of long work days; 63 percent work more than 40 hours per week, which is above the normal average of 35 hours per week for the average American worker. Further, more than half (53 percent) do not have a succession plan in place, which is one of the most important factors in ensuring that a founder's business will continue to grow and prosper long after they have retired or passed away. The report noted that taking the time to sit down and develop a plan can be tedious; however, planning may help ease daily worries and create a work-life balance.
"It often happens that entrepreneurs are so focused on managing the everyday demands of running a business that long-term priorities, such as retirement and planning for the future of their business, get pushed aside," said Mr. Williams. "Having a comprehensive and personalized wealth plan, which includes a business succession planning component, is critical for any business owner."
The report outlines various wealth management considerations for business owners:
Income options: Being paid by salary, dividends or a bonus can have different ramifications for the entrepreneur and the business. Depending on federal, state and local taxes, there could be tax rate advantages when getting paid a salary. However, tax-deferral opportunities might be lost.
Minimizing taxes: Combining both personal and business taxes can often be beneficial to entrepreneurs. Those who allocate business income from an S Corporation (a special type of corporation created through an Internal Revenue Service tax election) can help to minimize taxes, particularly if there are tax advantages that apply for income to be taxed personally.
Insurance needs: Choosing an insurance plan that can care for entrepreneurs, their family and their business can be challenging and requires specific knowledge around risk and insurance-based strategies.