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CONTACT:

Centered Financial LLC

701 Palomar Airport Road

Ste. 300

Carlsbad, CA 92011

Case Study #3

Growing Your Company


Name: Matt

Age: 52

Profession: Engineer/Business Owner

Spouse: Rachel (47) Office Manager for their business

Children: Daughter, Rebecca (22), recently graduated from college.


This is a representation of typical client situations. This is not an actual client.

GOALS

Reduce taxes, attract talent and build a good team, save effectively for retirement, create an exit strategy

Matt just completed a 5 year purchase of his company.  He is a very experienced engineer and has continued to grow the company after taking over.

With his note paid off, he is looking for ways to reduce taxes this year.

 

He has maintained a skeleton crew over the last 5 years and has done most of the work himself.  He is now ready to begin building a team.  His priority is to provide a balanced work environment that provides flexibility for his engineers to create their best work.  However, he is interested in how to create the right financial incentives as well.

Rachel, Matt's wife, works in the business, and their daughter is financially dependent while she completes an internship.

PROCESS

Business Financial Plan, Retirement Plan Fiduciary Service, Employee Education

Discovery and Organization Process:

  • Our initial meetings are focused on understanding the current dynamics, successes and challenges the business has experienced.

    • Out of these conversations, an action list is created that captures the short-term, mid-term, and long-term expectations that we need to work on.

  • We gathered the company's tax forms and review the P&L, Income and Cash Flow Statements.

  • We also reviewed current benefits and retirement plans.

Strategy Sessions​

  • A review of the tax forms and financial statements allowed us to create a forward projection with several different scenarios for company growth.  This allows Matt to visualize the tax burden and the bottom line that he should expect as his company grows.​

  • We ran several scenarios of owner's compensation to review the taxation.

  • We reviewed the current retirement plan and show how it needs to be restructured to provide a better incentive for employees and better flexibility for managing taxes for Matt.

  • We set goals for retirement plan contributions and owner distributions to coordinate with Matt's personal financial plan.

  • We analyzed the risk of unexpected disability and premature death.

RESULTS

A plan for immediate change that adapts to company growth.

This process enabled Matt to take action on so many items that were in his mind and not getting done.  It allowed him to solidify his financial team and continue growing his business.

  • By visualizing forward cash flow with various tax scenarios, Matt was able to see how he could make key personnel decisions to get where he wants to be.

  • Hiring Centered Financial as a retirement plan fiduciary transfers the burden and liability of the retirement plan decisions for the company.

    • Matt received an updated company retirement plan with ongoing support to analyze investments and make contribution decisions that will reduce taxes.

    • Matt's employees get ongoing support and education for their retirement portfolio.

  • We implemented a plan for ongoing employee financial education to create a more stress-free work environment.

  • We recommended insurance and risk management techniques to help cover unexpected losses.

  • We worked with Matt and his other trusted contacts to establish a method of valuing the company and set up a succession plan.

  • Matt has a clear picture of his company's financial health.  He has the correct financial instruments set up to allow him to use tax-savings strategies and hire and retain talented employees.  He has a financial team that continues to support and educate him as scenarios need to be updated.