A business owner may believe that their company will continue to thrive and provide investment capital when sold, or if passed on to the next generation can create a salary or dividend payments. For some, their personal financial stability is riding only on the future success of the company.
Separate personal retirement planning from business Don’t be overly optimistic. Your company may or may not create sufficient ongoing revenue to meet all your needs. Look at maximizing your RRSP and using TFSAs as you work at developing the business. View your personal needs separately from your daily business progress.
In life, just as you would separate your roles of business leader, spouse and/or father, it is wise to separate these areas of your financial planning and future retirement income use.
An estate plan may be needed When a business represents the major value of an estate; planning becomes necessary. An estate plan will also indicate your potential future retirement income that you can hope for from your business and other assets.
Life insurance can solve estate tax liabilities, and cover other business debts as well as fund a buy-sell agreement. It can also fund buying out a competitor or hiring new key players. It has provided security for a spouse and other heirs, equalizing an estate among beneficiaries who may or may not work in the business. Life insurance is one of the most creative products business owners and partners can use.