The Life of an Entrepreneur

Nearly One Third of American Entrepreneurs Struggle
to Balance Both Business and Personal Needs

– Almost two thirds of entrepreneurs work more than 40 hours per week, which is above the average of just under 35 hours per week for the average American worker
– A majority do not have a succession plan in place for their business
– Reviewing income options, learning how to minimize taxes and choosing an insurance plan are among factors business owners should take into consideration

CHICAGO, ILLINOIS–(Marketwired – Dec. 16, 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.

The stresses associated with getting a business off the ground often leads to a situation where the business becomes their sole focus in life

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.
Tax-advantaged savings plans: Individual Retirement Arrangements (IRAs), 401(k) plans and Roth IRAs are options to help entrepreneurs plan.

Succession planning
Establishing a plan to ensure the orderly transfer of management and ownership of a business to the next generation helps prepare the employees, the owner and the owner’s family for when the owner is no longer involved in the business.

“Seeking out advice from an outside financial professional can help entrepreneurs effectively manage both business and personal wealth management issues,” said Mr. Williams. “When a business owner starts developing a plan with an advisor, it’s essential that both their business and personal needs are considered as part of a holistic approach to managing financial issues.”

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About the BMO Wealth Institute
The BMO Wealth Institute provides insights and strategies around wealth planning and financial decisions. The Institute’s team of professionals have deep expertise around all aspects of wealth planning including retirement, estate, tax and insurance.

About BMO Private Bank, a Part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high net worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.

BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member FDIC. Not all products and services are available in every state and/or location.