UNIQUE CHALLENGES FACED BY BUSINESS OWNERS & RESTRICTED STOCK RECIPIENTS

^{By Louis Green, CFA®, CFP®, CRPS®}

Challenges Unique to Professionals

Consider challenges that are unique to your profession. For example, if you are a medical professional, your student loans may have prevented you from funding an investment account. If debt is still a concern, create a plan to reduce your debt while also funding an investment portfolio. If you have a busy schedule, consider collaborating with an advisor who understands the unique challenges of your career and can accommodate meeting at a time convenient for you. Use virtual meetings to meet with your advisors if your time is limited.

If you own a medical practice, consider implementing extra insurance and asset protection strategies to protect yourself against lawsuits.

Restricted Stock and Stock Options

If you receive restricted stock or stock options, calculate how your holdings in employer stock (as a percentage) compare to your overall net worth. If you had to start from scratch, would you keep this allocation or would you diversify your investments?

Be mindful of the tax you must pay from the vesting of restricted stock awards. If you decide to sell some of your recently vested stock at a profit, you will be responsible for paying an additional tax on the proceeds from that sale. Look at all of your positions to determine the optimal position to sell. Look for positions that can be sold at an advantageous rate (long-term versus short-term capital gains rate), or even at a loss.

Business Owners

If you are a business owner, be mindful of the unique challenges and opportunities available to you. Consider pre-sale planning so that you are prepared when your company is sold.

Consider a buy-sell agreement,¹ which will allow you and your partners to set a valuation for the business and create a process to sell portions of the business to other partners or back to the business itself. Buy-sell agreements are activated when a triggering event occurs, such as the death or disability of one of the owners.

Increase the attractiveness of your business by keeping all your documents in order, creating systems and processes, documenting the strengths, weaknesses, opportunities, and threats of the business, and ensuring that operations can run efficiently without you.

Tax Strategies for Business Owners

There are many deductions and credits available for business owners. Some of the items to consider are the Qualified Business Income Deduction and the Qualified Small Business Exclusion.

Qualified Business Income Deduction

The Qualified Business Income Deduction allows eligible owners of sole proprietorships, partnerships, S Corporations, and trusts and estates to deduct up to 20% of their qualified business income.²

Qualified Small Business Exclusion

The Qualified Small Business Exclusion allows business owners to potentially exclude up to 100% of capital gains from the sale of their small business, subject to certain conditions and amounts.³

Fraud Protection and Digital Assets

Two other areas to consider are fraud prevention and digital assets. You should be on the lookout for frauds that can occur through the phone, email, or over the internet. Potential scammers have become increasingly sophisticated with their techniques. Do not share any information with anyone you do not recognize and watch out for anything that seems too good to be true.

Consider leaving instructions in your will or trust to address your digital assets. Take inventory of all your digital assets and leave usernames and passwords for your executor or trustee. Provide clear instructions around what you wish your loved ones to do with all your digital assets.

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All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).

1 https://www.investopedia.com/terms/b/buy-and-sell-agreement.asp

2 https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-cuts-jobs-act/qualified-business-income-qbi-deduction/L69VZ4PjA_US_en_US

3 https://www.sba.gov/blog/qualified-small-business-stock-what-it-how-use-it