Jovan Johnson, MBA, CFP®, CPA/PFS
If you’re a small business owner, here’s an important reminder: Your business finances and personal finances are deeply connected. Over the years, I’ve worked with countless entrepreneurs and noticed a common truth. You can run a thriving business and still feel financially stressed or uncertain about your future, especially without a clear financial plan.
In this article, I’ll share six practical financial planning tips for small business owners to help reduce that uncertainty and build a more secure financial future.
6 Financial Planning Tips for Small Business Owners
1.) Pay yourself regularly
I can’t count how many times I’ve spoken with small business owners who feel nervous about paying themselves from the business.
Let’s be honest, you didn’t start your business just to say you’re a business owner. You likely created it to fund your life, gain some control, and build flexibility.
Yes, you’re a business owner, but you should also think of yourself as an employee. Just like you received consistent paychecks when working a traditional job, you should aim to build a similar structure in your business.
Establishing a consistent pay routine can help you manage your personal budget and keep your finances running smoothly, just like if you were getting a regular paycheck.
2.) Separate your accounts
I’ve worked with countless business owners who say they keep their personal and business finances separate. But once I start reconciling their books, personal expenses often pop up on the business credit card or bank account.
There are many reasons why you should avoid commingling your business and personal finances. First, it creates a tax mess. It can give the false impression that you have more tax-deductible expenses than you actually do, leading to surprises come tax season.
Second, it muddies your ability to make smart business decisions. When your business and personal spending are blended, it’s harder to clearly evaluate cash flow, profitability, or plan for growth.
Bottom line: Business and personal money should not live in the same account.
Clear separation = clearer decisions.
3.) Plan for taxes year-round
Every small business owner should be on a quarterly estimated tax payment schedule and, if applicable, a payroll tax schedule. If you’re working with a CPA or qualified tax professional, they should help you calculate what to pay and when, so you’re not caught off guard.
If you’re still bootstrapping or just getting started, keep it simple:
Set aside a fixed percentage of your business revenue each month into a separate business savings account. Use those funds to make estimated payments to the IRS and applicable state(s) based on the quarterly deadlines.
Here’s a quick snapshot of the IRS estimated tax schedule:
Remember: Set it aside, don’t touch it, and stay ahead of the IRS.
4.) Invest beyond your business
Your business is an asset, but it shouldn’t be your only one.
I speak with small business owners all the time who are reinvesting every dollar back into their business. While growth is important, here’s the hard truth: your business should not be your sole retirement plan.
Yes, your business may provide income.
Yes, you may plan to sell it one day.
But what if you can’t sell it, or it’s worth less than you expected?
That’s why it’s critical to invest beyond your business. That might look like:
- Building a brokerage account to grow long-term wealth
- Buying income-generating assets that don’t require your daily involvement
- Opening a SEP IRA, Solo 401(k), or Roth IRA
You work too hard to have all your eggs in one basket. Let your business be the launchpad, not the whole plan. Diversify your assets so your future doesn’t depend solely on your business.
5.) Strategically plan for benefits
One of the most overlooked areas for new business owners is benefits planning.
When you leave a W-2 job to become your own boss, the benefits you once relied on, health insurance, retirement contributions, paid leave, don’t come with you. Unfortunately, too many small business owners forget to rebuild that foundation.
Strategically planning your benefits isn’t a “nice to have.” It’s essential.
Your business can’t thrive if your life and health aren’t protected.
Here’s a short list of benefits every small business owner should consider setting up as soon as possible, or as soon as it’s financially feasible:
- Emergency Fund (can cover short-term disability gaps)
- Life Insurance
- Disability Insurance (short-term & long-term)
- Self-Employed Retirement Plan
- Health Insurance (medical, dental, vision, etc.)
- Health Savings Account (if eligible)
- Maternity/Paternity Leave (some states offer programs for entrepreneurs!)
I’ve worked with too many business owners 5+ years in who still haven’t put these basic protections in place. Don’t wait until it’s too late. Prioritize setting up the benefits that will help you build a secure and sustainable financial future.
6.) Have an exit plan
Even if you’re passionate about your work, you still need an exit plan.
If you’re running a business that earns less than $1M in profit, you might be thinking, “I’m not there yet.” But here’s the truth: every small business owner needs a business succession and estate plan.
And it’s not just about you.
It’s about your clients and your heirs.
Your clients deserve a smooth transition and continuity of care if something unexpected happens.
Your loved ones or successors need clear guidance, so they’re not left overwhelmed or in chaos.
Here’s the kicker: It’s never too early to start.
Whether your profits are $100K or $1M, having a basic exit plan in place is better than having nothing at all. You can always refine it over time.
Start now. Your future self and everyone who depends on you will thank you.
Final Thoughts
Financial planning isn’t just for large corporations, it’s essential for every small business owner who wants to build long-term stability, reduce stress, and create personal wealth.
Don’t wait for a crisis to get your finances in order. Start taking small, intentional steps now to build a solid financial foundation.
Need help implementing these financial planning tips for small business owners? Click here to book a free consultation and let’s talk about how we can align your business and personal finances to build lasting wealth and peace of mind.
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Disclosures
None of the information provided is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Piece of Wealth Planning LLC does not promise or guarantee any income or particular result from your use of the information contained herein.
