Financial Advisors for Small Business Owners

Some financial advisors specialize in helping small business owners. These advisors can help with tax planning, retirement planning and risk management. Small business owners might consider working with a financial advisor if they struggle to manage their business or personal finances.

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  • Written By
    Jennifer Schell, CAS®

    Jennifer Schell, CAS®

    Financial Writer, Certified Annuity Specialist®

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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  • Edited By
    Savannah Pittle
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    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Reviewed By
    Thomas J. Brock, CFA®, CPA
    headshot of Thomas J. Brock, CFA, CPA

    Thomas J. Brock, CFA®, CPA

    Investment, Corporate Finance and Accounting Professional

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

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  • Updated: August 14, 2023
  • 7 min read time
  • This page features 5 Cited Research Articles

Key Takeaways

  • Financial advisors can help small business owners with things like tax planning, retirement, operational support and risk management.
  • Small business owners may consider seeking help from a financial advisor when their business first starts to turn a profit, or if they’re struggling to manage their personal or business finances.
  • When looking for a financial advisor, consider advisors who specialize in helping small business owners and look for credentials from organizations like the Certified Financial Planner Board.

Owning your own business can be an extremely rewarding career path, but it comes with many challenges. Managing personal money on top of business finances can prove to be overwhelming for many small business owners.

This is where financial advisors can help. A financial advisor can help you organize your business and personal finances in a way that helps you reach your goals.

What Can a Financial Advisor Do To Help Small Business Owners?

Financial advisors offer a wealth of services to help small business owners. The most common services a financial advisor might provide to a small business owner include tax planning, investment planning, retirement planning, operational support and risk management.

When planning for and paying taxes as a small business owner, you’ll want to consider all your options to minimize your liability. A financial advisor can help you create a tax plan that takes advantage of expense categories, credits, business structure and the nuances of tax law to make sure you don’t pay more than you owe.

Establishing a strategic financial plan for your business is incredibly important for success, and a good financial advisor excels at creating these plans. An advisor can help you determine metrics for your business’ success, track those metrics and plan to reach them.

Financial advisors also offer guidance when making important decisions. They can guide you through diversifying your investments, deciding whether to sell or transfer your business to new management and developing a succession plan.

“If nothing else, financial advisors are supposed to do two things: reduce their clients’ money stress and simplify their financial lives. This is especially the case with small business owners, who generally have more money stress than most people, as well as quite complex finances.”

Devin Faddoul, CFP®, founder of Adda Financial

Planning for retirement can be complex even for the average person, and small business owners face even more complications due to being self-employed. This is another challenge that a financial advisor can help you overcome.

“A small business owner can find a great deal of value working with a financial advisor when it becomes time to choose and service a retirement plan for their business,” said Ryan Glover, a Certified Financial Planner™ professional from Tarheel Advisors. “Choosing the plan that is the right fit for your business can be quite complicated, and not just any financial advisor or CPA is knowledgeable in this part of the financial industry.”

Some financial advisors can help business owners improve their financial operations. “The best way that a financial advisor can help small business owners is by finding ways to take non-essential work off the owner’s plate,” said Forrest Baumhover, a Certified Financial Planner™ professional and owner of Teach Me! Personal Finance.

A business owner’s advisor might assist with reviewing the company’s revenue, expenses and current debts. With this information, the advisor can develop a financial plan to maximize the company’s profitability and efficiency.

Managing risk is a core component of financial wellness, and it becomes even more important when you’re running a business. Small business owners can benefit from a financial advisor’s expertise when thinking about risk management.

Financial advisors can help you select specialized insurance products to address the unique risks that come with business ownership. These include disability insurance, life insurance for business owners, business liability insurance and worker’s compensation coverage.

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When Do You Need a Financial Advisor?

“A small business owner should reach out to a financial planner when they are feeling overwhelmed, confused or frustrated by their finances – either personally, for the business or both,” said Certified Financial Planner™ professional Devin Faddoul. If you are struggling with financial planning or management, a financial advisor can help you find the best path forward.

You may want to connect with a financial advisor shortly after or even before you start your business. The advisor can help you create a financial plan for your business to set you up for success.

“I advise using the services of a financial advisor right at the beginning of your journey as a small business owner. Because most small business owners have invested a lot of their own funds into their business, it’s essential to have a strong financial plan to build your business on a solid foundation.”

– Anthony Martin, founder and CEO of Choice Mutual

Some experts recommend talking to a financial advisor as soon as your business becomes profitable. “At this point, they might already be overwhelmed with financial work that they can offload to the right advisor,” said Baumhover, “but before this point, they’re probably too focused on making their business profitable to conduct a serious search.”

That said, it’s never too late to seek out help from a financial advisor. Certified Financial Planner™ professional Gabriel Lalonde recommended consulting an advisor when considering big changes in your business or personal finances, “such as planning for retirement or passing ownership.”

How To Find a Financial Advisor That Specializes in Working With Small Business Owners

To find a financial advisor who specializes in working with small business owners, many experts advise reaching out to your local professional network. Ask other small business owners if they can recommend an advisor that’s been helpful to them.

The internet is also a great place to research financial advisors who suit your needs. Websites like Financial Planning Association’s PlannerSearch or the Certified Financial Planner Board contain databases of accredited financial professionals you can search for by location to find an advisor near you.

What To Look For

“When looking for a financial advisor, it is important to consider their qualifications and experience,” said Andrew Lokenauth, a professor of finance at the University of San Francisco’s School of Management. “Look for a financial advisor who has experience working with small business owners and who is certified by a reputable organization.”

A worthwhile financial advisor will have certifications or memberships from organizations such as the Certified Financial Planner Board or the National Association of Personal Financial Advisors.

You might also consider looking for an independent advisor. These professionals work on a fee-only basis, as opposed to other advisors who may receive commissions. Advisors who work on commission are compensated based on sales for a third party, so you may not know if their recommendations are what is best for you or what they need to sell.

Another factor to consider when choosing a financial advisor is whether they are a fiduciary. Fiduciaries are upheld by law to act in their clients’ best interests. They must not recommend anything that does not benefit their clients, and they’re required to inform clients of any conflicts of interest they have when making recommendations.

What To Ask

Besides confirming their experience with other small business owners and their credentials, there are a few key points to address during an initial consultation with a financial advisor.

Consider asking the advisor about their fees and how they are compensated. You’ll want an advisor you can trust completely, and being upfront about fees from the beginning could be the sign of a trustworthy professional.

You may also want to ask some questions about the past experiences of the advisor. Kevin Chancellor of Black Lab Financial Services suggested asking something like, “What are some strategies you’ve used in the past to help business owners with succession planning?” Chancellor said that a good advisor should be able to discuss in detail the strategies and resources they’ve used to deal with similar situations.

If you’re seeking an advisor who can help you plan for retirement, Chancellor also recommended asking what process the advisor has for establishing a retirement plan for your business. “If somewhere in their answer they do not mention working with your tax or legal team or they do not understand how your business is structured, then I would look elsewhere,” Chancellor said.

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Integrating Personal and Business Financial Planning

You might also consider how a financial advisor can help you integrate your business into a personal financial plan. An advisor can create a comprehensive financial plan that incorporates individual and business tax planning, retirement planning and business operations to help you get the most out of your hard work.

An integrated personal and business financial plan can answer important questions, such as how much and what type of income you should be withdrawing from your business. It can also help you plan for the tax implications of your business on your personal finances.

The plan your financial advisor creates could also include considerations for what happens to your business after you’re gone. It could entail making sure you have enough life insurance and that your business is dealt with properly in your will.

If you don’t plan to run the business for the rest of your life, you may consider discussing succession planning with your financial advisor. The advisor can help you craft an exit strategy that allows you to move forward into your next stage of life while getting the maximum value out of your business.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: August 14, 2023