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Retirement: Sheltering Your Business Profits and Value

Share current LOB: SmallBusiness

Your business-related assets, and the savings you derive from your business, will play a key role in your retirement strategy. You can save and shelter more of the profits your business generates with retirement plans such as a 401(k) or by creating a trust that transfers your business assets with lower taxes.

If you are like 75 percent of business owners and plan to fund some or most of your retirement from savings extracted from your business,1 there are a number of options to consider, including:

Maximize Retirement Plan Contributions

Many business owners are taking advantage of qualified retirement plans like 401(k)’s, SEPs and SIMPLE IRAs to reduce their tax bill and put more of their profits in the bank.

The Internet makes it easy and affordable to set up and run a 401(k) that can help you and your employees make regular contributions towards your retirement and realize the tax and talent management benefits of a companysponsored retirement plan.

Develop a Succession Plan

A good succession plan will allow you to pass your business onto family members, employees or a designated successor, while minimizing the tax consequences. Still, according to SunTrust business owner research, only six percent of owners have a plan in place to pass their business assets onto family and designated beneficiaries. With no succession plan in place, you risk increased estate taxes and squabbles amongst the various people who feel they have a stake in the business, including management, employees and family members.

If you plan to pass along your business assets to your family, consider getting a referral to a succession planning expert who can arrange to transfer the assets at the lowest possible cost in terms of taxes and hassles.

Generate Greater Cash Flow

Focusing on generating more cash flow is a practical path to funding retirement programs. Increased income will allow you to more fully fund company retirement plans, which can save you money for retirement and shelter income from taxes.

But improving cash flow is not always simple, and many owners will need help. Your business banker has a wide range of solutions, advice and resources necessary to help you make the most of your business assets by maximizing cash flow and savings, leveraging your time and helping you plan ahead.

Business owners believe their business banker is more qualified to help them build the value of their businesses—before it is time to retire—than the financial advisors who manage their investments. And, 60 percent of owners with more than five years experience running their businesses think it’s important to seek professional advice. So, if you haven’t already, make sure you make your business banker a key part of your retirement “team.”


About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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