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Value Creation Blog

You Need A Process For Taking Money Out Of Your Company – Wealth Management

Posted by Josh Patrick

wealth managementMany of the private business owners we work with have accumulated a lot of cash and marketable securities within their business.  When I talk with them about moving the cash out of the business into their own accounts I often am greeted with an almost panicked response.

I never really thought a lot about this until the same thing happened with two clients within two days of each other.  At the same time, I’ve started working with Susan Bradley at the Sudden Money® Institute.  What I’ve learned from Susan is that people behave differently when they come into a financial windfall than they would in other times in their lives.

In this particular case, a financial windfall is having personal responsibility instead of corporate responsibility for money that might have been in your business.  Moving this money from your business to your personal account often feels very different.

In fact, the amount of responsibility one feels for money that is theirs versus money that is in their company is often dramatic.  When money is in your account it often feels very real.  When that same money is in your company’s bank account, you know that it’s yours, but at the same time it doesn’t really feel that way.

I’ve come to understand that we need a process for helping business owners move money from their company to their own personal account.  Here are some of the questions I think business owners might want to answer as they think about moving from their company to their own personal accounts:

What happens if I need to use that money in my business? 

You can always loan the money back, but you won’t want to and that’s a good thing.

How will I invest the money? 

This is a good thing for you to learn.  If things go well, you’ll sell your business someday and have even more money you’ll have to invest.

What will I use this money for? 

If you have some personal needs that you’ve been putting off, your might want to use the transferred money to pay for some personal needs that you’ve been putting off.  If not, you can just save and invest it.

I don’t want my spouse to know we have extra money. 

This is what I call a silly reason.  If you don’t have a good relationship with your spouse, this might have some validity.  If you do, you should celebrate your success with her.

What are you going to do with the money, how are your going to do it and why are you going to do it? 

These are all really good questions when you realize you have money that could be used for other purposes than supporting your business. 

Sometimes it makes sense to start with why you’re doing something and other times it makes sense to start with what.  In either case, answering that question can help you make plans around your money and your life that make sense.

As always, I’m interested in your thoughts.  Please email me at Jpatrick@stage2planning.com with any thoughts or comments you might have.

Josh Patrick

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Securities and Investment Advisory Services offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Stage 2 Planning Partners and NFPSI are not affiliated.

This article is published for residents of the United States only.  Registered Representatives and Investment Adviser Representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed.  Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.

Topics: for business owners, financial planning, wealth management

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