Being a female entrepreneur can be daunting, particularly if you have a family to look after.
Navigating the financial landscape as a business owner or being self-employed can present unique challenges for women. From managing cash flow and investment opportunities to planning for retirement, below are some simple steps for female entrepreneurs to get their finances on track.
1. Create a financial plan
Many women are put off of the idea of running their own business due to also having to juggle childcare commitments or potentially having to care for elderly family members.
A financial plan will allow female entrepreneurs to outline their financial goals, monitor their spending and track their progress. A financial plan needs to be regularly updated as your circumstances and goals change over time.
At Four Wealth Management, our clients receive regular review meetings to help their financial plans to stay on track – this is particularly important for financial entrepreneurs who are typically short on time and likely to have complex financial planning needs.
2. Separate business and personal finances
Keeping separate bank accounts and financial records for your business and personal finances is vital for keeping your personal financial goals and business financial goals on track.
Having boundaries between business and personal expenses will make it easier for you to prepare your tax return each year and also to calculate business expenditure and income.
3. Review your pension
Planning for retirement is essential for female entrepreneurs to ensure long-term financial security and independence. When you are self-employed, you do not benefit from the governments auto-enrolment scheme where your employer has to set up a pension for you.
Therefore, you are in complete control over your own retirement saving.
At Four Wealth Management, we can help you to set up a pension that you can save into on a monthly basis or you can contribute ad-hoc lump sums while benefiting from tax relief on money you put in.
If you have a limited company, then the most tax-efficient way to your some of the profits are to pay them into your pension so you can benefit from tax relief of up to 45%. This means for additional rate taxpayers, a £100 contribution to their pension only costs £55.
HMRC usually allows pension contributions to be deducted from profits for tax purposes which reduces your companies taxable earnings so your company doesn’t have to pay tax on money that is paid straight into your pension.
You can invest up to £60,000 per tax year into your pension or up to 100% of your annual earnings, whichever is lower, while getting tax relief on your contributions. You can also carry forward any unused pension allowance for the last three years.
A financial adviser at Four Wealth Management can help you to determine your retirement income goals calculate how much you need to save each year to achieve them.
Book a no-obligation meeting now
4. Use your business to pay for protection policies
Safeguarding your assets and mitigating risks is essential for protecting the financial future of yourself, your business and your family.
You should review your insurance policies, including health insurance, life insurance, and critical illness insurance, to ensure adequate protection for yourself and your family.
In many cases life insurance premiums can be treated as a business expense with HMRC. This means that life insurance costs can be deductible through your tax return if you own a limited company or are self-employed.
5. Consider your succession planning
You may have only recently started your business and be a long way off retirement. However, it is important to consider what you eventually want to happen to your business when you retire. Succession planning can form part of inheritance tax planning as businesses get relief from inheritance tax. Subject to other allowances being available, Inheritance Tax is up to 40% of the value of your estate over the nil rate band of £325,000.
This is a complex area, a financial adviser at Four Wealth Management can help you with inheritance tax planning.
Book a no-obligation meeting now
Get your finances on track now
Getting your finances on track as a female entrepreneur requires proactive planning and strategic decision-making.
A financial adviser at Four Wealth Management can help you to develop a comprehensive financial plan and help you to plan for your financial future.
Book a meeting online now or call us on 0117 973 0500
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
