Business Financial Plan - Business & Owners, Strategies CPA'S

1. Rewarding, retaining and attracting key employees is a high priority for successful business. Enhancing employee benefits can often provide advantages to an employer as well as its employees. An Executive Bonus Plan is a bonus arrangement that allows employers to selectively offer permanent life insurance to certain key employees. The key employee owns the policy and the cash value, and selects the beneficiary to receive death benefits. The employer pays policy premiums as a bonus, which is a taxable compensation to the key employee and income tax deductible by the employer. This plan can provide death, disability and retirement benefits to key employees. Life insurance: is not a deposit of any bank, is not FDIC insured, is not insured by any federal government agency, is not guaranteed by any bank or savings account, variable insurance may go down in value.

1. When two or more people own a business together and want to make sure that the business continues if something happens to one of them. Is a contract that provides for the future sale of a business interest between business owners. When one owner dies, the tax free life insurance benefit received, depending on type, allows him/her to buy the business interest from the deceased owner’s estate. Depending on type, policies and cash values are not subject to creditors of the business. The surviving shareholder will receive full basis credit for the purchase of the stock. This will reduce any capital gains tax when the surviving owner eventually sells the business. Life insurance: is not a deposit of any bank, is not FDIC insured, is not insured by any federal government agency, is not guaranteed by any bank or savings account, variable insurance may go down in value.

1. Business have key individuals whose special talents, revenue generating ability, or management role, are critical. The loss of such individuals can be very harmful to the company. This type of life insurance is a strategy to financially provide protection against the loss of this type of employee. This type of life insurance will bring the funds necessary to sustain a business through a difficult period following the loss of a key individual. Can help to assure creditors that debts will be paid in the event of the key person’s premature death, cash surrender values can be used as collateral for bank loans, making cash available in the event of default, annual increases of the cash surrender value are not currently taxable to the business. Death benefits proceeds are generally received by the business income tax-free. Life insurance: is not a deposit of any bank, is not FDIC insured, is not insured by any federal government agency, is not guaranteed by any bank or savings account, variable insurance may go down in value.

1. Contractual agreement that can provide supplemental retirement, death, disability and severance benefits. Participation limited to a select group of management or highly compensated employees. No IRS approval. Cost recovery and/or control of plan assets, amounts deferred are not currently taxable to employee neither deductible to the employer. Benefits are taxable when received by employee and life insurance death benefits are not taxable to the employer. Distributions at death to a participant’s beneficiaries are generally taxable as ordinary income, life insurance death benefits are not taxable to the employer, benefits to employee are deductible only when paid. Employee could lose benefits if employer becomes insolvent. Life insurance: is not a deposit of any bank, is not FDIC insured, is not insured by any federal government agency, is not guaranteed by any bank or savings account, variable insurance may go down in value.