Business Solutions – Hanson Financial

The Right Options For Your Business

Overcome the challenges that keep finances from being more strategic. Small business owners are hugely underserved in the financial landscape. In the early years of your business, money is lean. Every penny is used to keep the business afloat.

The growth and maintenance of your business may require making major purchases, investments, and more. Smart financial planning and decision-making create value for your organization and ensure its growth into the future. We can show you how to recapture major expenses that would otherwise be lost while creating a nice way to supplement your retirement and tax-free income.

Small Companies Enjoy the Same Benefits as Large Corporations

The everyday struggles of business owners may seem at odds with “The Elusive American Dream.” Not only are you concerned with running and growing your business, but you must also plan towards providing for your retirement and possibly towards helping employees with their long-term financial goals. With YFB, you can have a dramatic impact on the success of your business now, and on your ability to reach your eventual retirement goals. The concept has been an accepted practice in large businesses and corporations for some time. These types of businesses have a much greater need for capital and have long known the financial benefits of putting yourself in the position of being your own bank.

Entrepreneurs should really be in “two businesses” as well – the business that creates your revenue and the business that finances your business. Smaller companies can enjoy the same benefits as large corporations!

Many businesses like McDonalds, Disney, and even JC Penny used the cash value in whole life insurance policies to build their businesses. Learn how these companies turned insight into action here >

The impetus Behind The Plan is Simple

There are two concepts at the heart of the YFB concept. The first is the concept of the mutually-owned life insurance company. This means that it’s the policyholders who own the company (not corporate shareholders). This means the profits (dividends) go to the the policyholders, boosting their returns. The advantage is that over time as your cash value increases, your dividend increases as well. The good news is that dividend payments received from participating life insurance policies are not subject to taxes by the IRS. Dividends are not taxable as income because they are not dividends in the traditional sense – they represent a portion of the insurance company’s profit, that profit was made from you. In essence, the IRS treats them as though they are refunds for over-payment of premium. Over time, those dividends can exceed the premium you paid in by a significant amount!

The second engine driving the concept in they are dividend-paying whole life policies from companies that have paid dividends every single year for at least the past 100 years consecutively. The companies credit you a dividend even when you are taken a loan from your policy. This lets you use your money and still have it growing for you though you never touched it. This difference is key. When you borrow money against a life insurance policy, you are not really borrowing your own money. You are borrowing from the general fund of the life insurance company and using the cash value in your policy to secure the loan. They charge interest on the loan, yes – but they do not stop paying the compounded rate and the dividends on the money you borrowed against.

Liquidity, Flexibility & Security to Finance Business Expenses

A properly structured plan allows you to remove the bank from the equation and essentially become your own bank. Think of the power and flexibility your business can have by acting as your own lender. With YFB, you are able to make this a possibility for your business. You can create a unique business account with business capital that is completely under your control. These plans offer the business owner a way to plan for retirement while also having access to that same capital for purchases like:

Paying for lease or building space
Buying equipment
Buying vehicles
Paying for travel
Buying offices supplies
Expand staff by hiring new employees

When money is needed, the business has liquidity to make these purchases.

Another big benefit of using this concept for your business is that the underlying interest paid back into the plan can be used as a tax write off (taxable income) for the business—another added benefit.

These policies also offer another key attribute that make them so effective for business owners. The capital can grow inside the account at a guaranteed compounded 4% rate of return. The business owner now has an investment option that can provide them with capital while preparing for retirement.

Some of the potential benefits you can unleash by financing your business using this concept include:

Control your own capital
Improve liquidity and cash flow
Eliminate debt and create flexibility
Grow your business while reducing interest expenses
Reduce taxes and increase your financial legacy
Build predictable tax-favored wealth
Increase retirement savings without worrying about the volatility of the stock market

Tax-advantaged: One of the Best Perks!

While most people may look at life insurance proceeds simply as a way to pay off debt or to replace the insured’s income, there are tax-related benefits that can make life insurance policies a viable planning tool in small business.

Certainly, one of the primary advantages of life insurance is that death benefit proceeds go to your beneficiary income tax free. This means the recipient of the funds can make full use of the money for paying off debt, replacing lost income or meeting other important needs during a difficult time.

Looking beyond the help tax-free death benefits can provide for your family when you are no longer here, there are additional advantages to this type of insurance that could be useful while you are still alive.

Tax-deferred growth
Tax-free cash flow
Tax-free death benefit
Tax-preferential treatment, especially advantageous for individuals in a higher income tax bracket
As taxes rise, tax-free cash flow becomes more advantageous

One of the best perks using high cash value life insurance is that you can borrow against the cash value throughout your life, and it is not hit with income tax. The gain in the cash value is not taxed until it is withdrawn. This means that the funds are essentially able to obtain gains on top of gains, year after year, allowing the money to grow substantially over time.

The concept is not new, it and has been helping out individuals and businesses for a long time. By using it, one can find tax benefits, cash liquidity and long-term grown. However, the plan is not a simple solution and, with any financial concept, proper planning and maintenance must be done in order to achieve long-term financial goals.

Interested in working with us, why not contact us for a chat?

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