As we near the end of this fiscal year and look ahead to the first quarter of 2023, many of Utah’s entrepreneurs are considering ways to improve their businesses. One of the easiest ways to improve your business, whether you’re already running a successful company or you’re just starting your business, is creating a financial plan for 2023.
In terms of the potential savings and capital-building that might result, this is an essential step for growing your enterprise. Join us for a dive into the ways that Utah’s business owners can use their resources more intelligently this fiscal year through financial planning.
This article discusses these topics:
- Taxes are going up in 2023 for Social Security’s COLA
- Tax planning can help you reduce your tax liability
- Financially plan a future you’ll look forward to
- Leverage professional wealth management’s advantage
Taxes Are Going Up in 2023 for Social Security’s COLA
There’s no pretty way to say this: taxes are increasing for Social Security’s cost of living allowance (or “COLA”) in 2023. All high-net-worth individuals, especially entrepreneurs, need to be aware of this fact. It has the potential to significantly impact everyone’s financial plans to one degree or another.
Lesser earners will enjoy the tax-favored treatment. Ironically, the COLA itself may not keep pace with inflation any longer than its predecessors. Regardless, business owners and the affluent should be proactive in anticipation of the additional tax burden.
The COLA is expected to raise maximum taxable wages from $147,000 in 2022 to $160,000 in 2023. Consequently, high-net-worth employers need to be setting aside funds to pay the resulting higher payroll taxes. It can be challenging, but planning ahead for predictable tax increases can help entrepreneurs avoid possible financial surprises down the road.
Tax Planning Can Help You Reduce Your Tax Liability
Tax planning is a smart strategy affluent individuals and small business owners use to reduce their tax liability. In other words, by taking advantage of the multitude of deductions available, you can legally reduce how much you owe the IRS.
It’s possible to save money short-term, over a year, but the greatest potential savings are only possible over multiple years (or even decades). For example, utilizing the best type of IRA now for saving for your future retirement can help—both in terms of what you save today and in terms of reducing how much taxation bites into your future income as a retiree.
I should warn you, as well: I can’t recommend a D-I-Y approach. The U.S. Tax Code gets changed about every year, even though it’s already thousands of pages long. This makes it an ever-growing maze of restrictions. To be blunt, if you don’t know it well, you’re likely to get in trouble (in a time when the IRS is already singling out the successful for audits).
Rather than poking that bear, I recommend using a guide, a tax-planning professional. As Scott Marsh Financial, we specialize in helping people find applicable deductions safely. It’s just another aspect of being a CERTIFIED FINANCIAL PLANNER™ in Utah. We’re here every business day, and we follow the annual tax code changes (to keep you from having to).
Financially Plan a Future You’ll Look Forward To
Utah is a great place to begin preparing for your future. Whether you’re looking to grow your business, become more affluent, or both, there are plenty of opportunities and resources to help you reach your goals. However, financial planning for high-net-worth individuals is not a one-size-fits-all process.
Instead, it should be tailored to your evolving needs and objectives in order to help ensure that your goals are met over time. Even for the affluent, tax planning must consider a range of factors, from inflation adjustments and volatility risk to managing taxes appropriately.
This is because, unfortunately, enjoying a comfortable lifestyle today alone cannot guarantee retirement into similar luxury. Inflation, for instance, means that money is worth less. Put another way, it loses its purchasing power. As a result, a million dollars in the bank today may not cover the same amount of goods and services tomorrow.
Normally, an investment portfolio might provide reliable income to supplement your savings’ lost value, but these aren’t normal times. The second punch pummeling the financially successful is stock market volatility: A bear market dominated 2022 and seems likely to remain for at least the first quarters of 2023.
This harsh economic weather, hopefully, won’t last forever. Nevertheless, for the time being, proactively planning to protect your savings and investments is essential. The good news is that by doing so, you can potentially preserve your wealth to become a generational legacy.
Leverage Professional Wealth Management’s Advantage
Again, with respect for the entrepreneurial spirit, there’s doing things yourself to save money and then there’s shortchanging yourself. Unless you’re a financial industry professional, the odds are that you don’t have the tools, experience, or time to create n optimal plan for yourself and your business.
That’s what makes professional wealth management an ideal option for business owners (as well as individuals and families) looking to maximize their savings without exposure to high levels of volatility and risk. An experienced team of professionals can help you navigate inflationary pressures well enough to make well-informed decisions about your asset allocation.
For example, at least once a year, we help you rebalance your portfolio. This is more than rotating your investing tires: During bear markets, it’s especially important to make sure that your holdings are diversified, meaning that you don’t have too concentrated of a position within any one asset type.
This can prevent widespread losses, should one particular investment lose value. For example, if you own shares of a citrus grower whose crops are damaged by an unusually severe winter, only those shares are diminished. Since the rest of your investments are a varied mix of real estate, commodities, stocks, and bonds, they remain unaffected.
At Scott Marsh Financial, we continuously monitor your portfolio’s performance and adjust accordingly based on current market conditions. This can help to ensure that your assets remain secure through prolonged periods of uncertainty.
Utilizing our services can be a great step toward ensuring that your savings and investments keep growing. Contact us to learn about our retirement planning for high-net-worth individuals, as well.