Tips for small business owners in current economic environment


After the Recession: Threats and Opportunities for Entrepreneurs

Unfortunately few operating businesses are immune to the effects of the recent credit crunch.  As the threat of inflation continues and prices rise, oftentimes available credit doesn’t.  Small business owners are left to restock inventories with less liquidity.  This effect can quickly snowball and cause serious liquidity and credit problems.  Keeping lines of credit open and maintaining an additional cash buffer may ease the pressure a bit.  Business owners can also look for loans from less traditional sources. A permanent life insurance policy, for example, provides death benefit protection, but can build equity in the form of cash value you can borrow against should you need to.[1]

Opportunity: Retirement Contribution Tax Deductions

Many business owners are so certain they will be able to fund their retirement through the sale of their business that they don’t bother to make any other retirement plans.  The reality is, a sale might not be easy and there are attractive opportunities for current tax deductions through qualified retirement plans.

Traditional plans remain popular and include IRA’s, 401(k)s, SEP’s, and SIMPLEs. They allow employers to take a tax deduction on contributions.  Other IRS-approved plans are increasing in popularity such as the 412(e)(3) plan. This plan may allow certain small business owners to make potentially higher initial tax deductible contributions. You should consult your tax or legal advisor prior to establishing a qualified retirement plan.

Opportunity: Increased Unemployment Results in Larger Employee Pool

For employers looking to bring on new employees, the down economy may actually benefit their business.  Increased unemployment has flooded the employee pool with more highly qualified candidates than ever before.  Employers shouldn’t overlook potential candidates because of the stigma of having been laid off.  The job market presents the opportunity for small business owners to attract and retain big business talent at small business costs.  It may also be wise to hire commission-based employees, often known as “pay for performance.”  Employers will find an increasing number of qualified individuals that may have never considered commission-based compensation before, willing to give it a try.

This educational third-party article is being provided as a courtesy by

John M. Jett, New York Life Insurance Company.

For additional Information on the information or topic(s) discussed, please contact:

John M. Jett

Financial Adviser

Eagle Strategies, LLC

A Registered Investment Adviser

4757 S. Jackson Rd,

Edinburg, TX 78539

(956) 225-9005.

Registered Representative offering securities through NYLIFE Securities, LLC, Member FINRA/SIPC, A Licensed Insurance Agency

Neither New York Life, nor its agents, provides tax, legal, or

accounting advice. Please consult with your professional adviser for tax, legal, or accounting advice.

1 The cash value in a permanent policy is accessed through policy loans, which accrue interest at the current rate, and cash

withdrawals. Loans and withdrawals will decrease the available death benefit and cash value.