"This is the big leagues"! My exact thought as I was walking aimlessly through the Detroit Tigers' clubhouse in 2011. I was a 20-year-old trying to figure out how this "big league" thing worked. It felt like every need I had was being met proactively by a world-class staff and clubhouse attendants. I never thought a clubby would help me save thousands of dollars on my taxes. Yet, that is exactly what happened when a clubhouse attendant, in passing, asked if I was contributing to the MLB 401(k) plan. It sounded Greek to me, "401..what"? You see in 2011, minor league players had no access to a team-sponsored 401(k) as they do now. So when I got called up to the big leagues, I didn't know what it was, how it worked, or the benefits of doing it. Funny to think about now, but the conversation has saved me thousands (probably more) off my lifetime tax bill. In this blog, I am going to break down everything you need to know about the Major League Baseball 401(k) plan. As you read this, remember retirement planning for professional athletes starts while you are still playing. MLB 401(k) Plan A 401(k) plan is a company-sponsored retirement plan. Said another way, it is a benefit an employer offers you to further incentivize you to stay with them. A 401(k) is one of the most standard benefits companies provide. The reason is simple: it is an efficient way to save for retirement. You see, the IRS provides benefits for 401(k) contributions. Contributions work in one of two ways: Roth Contributions Traditional Contributions The difference between the two is how those contributions are taxed. Roth contributions receive no current-year tax benefits, but your money grows tax-free and comes out tax-free after age 59.5. Traditional contributions receive a current-year tax benefit (deduction), but your money grows tax-deferred and is taxed upon taking it out. In short, one type provides a benefit today while the other provides a benefit in the future. The key is understanding what your tax bracket is today and what you are projecting it to be in the future. Another note on 401(k) plans is that those tax benefits don't come without a catch. You see, contributions are subject to a 10% penalty should you withdraw them before the age of 59.5. ***Roth contributions can be taken out, but all investment growth is subject to penalties. Now that we understand the basics of 401(k) plans, let's dive into how the Major League Baseball 401(k) plan works. MLB 401(k) Eligibility & Enrollment Remember how 401(k) plans are company-sponsored plans? Well, that means there are often restrictions as to when you are eligible for the plan. For the Major League Baseball plan, a player must be on the active 26-man roster or the MLB injured list. Once you become an active player, you are automatically registered on the plan. That does not mean you're optimizing your situation; it simply means you are enrolled. In spring training, teams will provide you with a form to elect your plan status and contributions (more on that later). Our team at Moment helps players each year to ensure all eligibility and enrollment forms are completed correctly. Here are the key details of the MLB 401(k) plan: The plan is held at Vanguard Your eligibility is based on your roster status MLB provides players with enrollment forms in spring training So remember this while you are automatically eligible and enrolled upon being added to the active roster, that is just step one. The understand how to maximize the MLB 401(k) plan, we have to understand who, what, and how money is contributed to the plan. MLB 401(k) Contribution Limits The MLB 401(k) plan has three different ways you can make or receive contributions. Pre-Tax Contributions (Players make these) Post Tax Contributions (Players make these) Major League Baseball Contributions (Team makes these) A pre-tax contribution means that you are putting in money before paying taxes on this money. Remember how traditional 401(k) contributions receive a tax benefit? This is how. A post-tax contribution means that you are putting in money that you have already paid taxes on. MLB contribution is a direct team contribution to your 401(k). More on this later but this amount varies from year to year. In 2025, the contribution limits are as follows: $23,500 pre-tax $70,000 employee + employer (post-tax + MLB) The key to understanding the MLB 401(k) plan is understanding how MLB contributions work. This is not a match (common for a 401(k)); this is a direct team contribution. That means a player is not required to make a contribution to receive this benefit. Instead, they receive this benefit based on that year's service time. For a player to be eligible for a team contribution, they must achieve a quarter of the year of MLB service time in that season. That equates to 43 days on the active roster. You see, teams are assessed a luxury tax based on going over certain levels of spending. In 2023, that spending level was $237,000,000. 1st time offenders pay a 20% tax 2nd time offenders pay a 30% tax 3rd time (or more) offenders pay a 50% tax A portion of that tax is allocated to player benefits, including MLB 401(k) contributions. So the more teams spend (and go over the threshold), the more money players receive in team 401(k) contributions. Here is an example of the 2025 MLB 401(k) contributions for players: $17,500 Quarterly Team Contribution $70,000 Yearly Team Contribution Players, to receive the maximum benefit from the MLB 401(k) plan, you need to make sure your financial team understands all the details of the plan. MLB 401(k) Considerations Now that we understand what a 401(k) is and how the MLB 401(k) contributions work, let's discuss the fine print. You know the stuff that matters that no one ever talks about. Investment Selection When you start contributing to the MLB 401(k) plan, that is just a contribution, not an investment. That money will be automatically put into a conservative life strategy fund administered by Vanguard. You need to work with a qualified financial team to make sure your contributions are properly invested based on your goals. I have seen players leave hundreds of thousands on the table by not adjusting their investment selections. Plan Rollovers At some point, your playing career will end and you will have a choice to make. You can roll over (move) your 401(K) to an IRA or keep it at Vanguard. An IRA stands for Individual Retirement Account and essentially functions the same way as a 401(k) without the company component. There are no tax consequences involved with rolling this money from the MLB 401(k) to your IRA. Yet there are several key tax planning considerations to understand. If you want a deeper dive into tax planning for professional athletes , you can check out that blog. For this one, just understand you need to make sure there is a tax strategy in place should you wish to make this move. The transition time from current player to former player can be an optimal time to think long-term about tax planning. Everyone focuses on the massive salaries you can earn as an MLB player, and rightfully so. Yet, it is critical not to overlook the benefits the MLB 401(k) plan provides current players. Done correctly,y this can be a key building block to your retirement planning as a professional athlete . I have seen players spend years in the big leagues and fail to understand the key details of the MLB 401(k) plan. That, my friends, is the quickest way to take a key benefit and waste it. If you are a current or former Major League Baseball player looking for help understanding the MLB 401(k) plan, schedule a call with our team . If you are looking for more on retirement planning as a professional athlet,e check out this video on how we think about this. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Where is the MLB 401(k) plan held ? The plan is held at Vanguard and can be accessed using their website. What is the maximum contribution a player can make in 2025? The maximum contribution allowed in 2025 is $70,000. This includes both team and player contributions. Do players have to do anything to receive team contributions? All players who achieve at least 43 days of MLB service time in 2024 will receive team contributions. A player maxes out team contributions with a full year or four quarters (43 days) of MLB service time. Are players' 401(k) contributions automatically invested? Yes, contributions are automatically invested into a Vanguard conservative investment fund. Players can then elect to change future or current contributions based on their goals. Can players move their MLB 401(k) plan after retiring? Yes, a player can roll over their MLB 401(k) to an Individual Retirement Account if they choose. While there are no tax consequences for this there are several tax considerations players should understand before doing this. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

You started your business with a vision. You took the risk. You put in the work. You’re seeing the rewards. But here’s the problem —making money is just step one, managing it is step two. You see, it’s not just about how much you make—it’s about how much you keep and how well you use it. That’s where budgeting comes in. It is the foundation of financial planning for business owners. In this guide, I’m going to break down the key steps to building a budget that will give you clarity, control, and the confidence to scale your business Let’s dive in… The Budget Problem Many business owners run their operations without a defined financial strategy. Everyone knows their top-line revenue (it is good coffee shop conversation). Yet nearly no one knows their expenses like they should. They reinvest in the business but fail to monitor their profitability. They anticipate having leftover funds at the month's end but do not actively plan for it. The result? Cash flow issues, unnecessary debt, and missed opportunities for growth. If this sounds familiar, don’t worry—you’re not alone. But the good news is that fixing it is simpler than you think. The Three Buckets of a Business Budget Think of your business finances in three buckets: Fixed Costs  – These are your non-negotiable expenses like rent, payroll, and insurance. They don’t change much month to month. Variable Costs  – These are expenses that fluctuate, like marketing, advertising, and materials. The key is to control these so they align with your revenue. Profit & Distributions – This is what’s left over. The mistake many business owners make is treating profit as an afterthought. Instead, you need to build it into your budget from the start. You have to know more than just your baseline expenses. You need to know what expenses are set in stone (fixed) and what expenses could be cut at any time (variable). Understanding that provides the framework to know what needs to stay in your business and what can come out as distributions. Step-by-Step: How to Build a Budget That Works Know Your Numbers Start with your revenue: What are you bringing in each month? Track every expense: Where is your money actually going? Identify trends: Are expenses growing faster than revenue? Set a Profit First Mentality Instead of waiting to see what’s left at the end of the month, set a fixed percentage of revenue for profit and pay yourself first. Plan for Taxes Taxes are often a business owner’s biggest surprise expense. Allocate a percentage of revenue each month so you’re never caught off guard. Create Spending Limits Set clear limits for categories like marketing, office supplies, and software. This keeps spending intentional and aligned with your goals. Review & Adjust Monthly A budget isn’t static—it’s a living document. Review it each month and adjust based on your business performance. Common Budgeting Mistakes Mistake #1: Not Separating Business & Personal Finances Keep your business and personal accounts separate. Mixing them creates chaos and makes budgeting nearly impossible. Mistake #2: Overestimating Revenue, Underestimating Expenses Be conservative with revenue projections and realistic with expenses. Hope is not a financial strategy. Mistake #3: Ignoring Emergency Funds Every business needs a buffer. Aim for 3-6 months of expenses in an emergency fund to protect against slow periods or unexpected costs. A strong budget doesn’t limit you— it empowers you : To Reinvest To Scale Further To Take Out Distributions To Feel Confident In Your Next Move Let me be clear ~ You cannot grow a great business without first knowing your numbers. Whether your business is just starting out or already thriving, taking the time to create and maintain a solid budget will be one of the best decisions you make. If you are a business owner doing more than $1,000,000 in income and looking for a team that specializes in you schedule a call  with   our team. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding budgeting for business owners: 1. How much should I pay myself as a business owner? There’s no one-size-fits-all answer, but a good rule of thumb is to start with at least 30% of your profit and adjust based on business performance. 2. What percentage of revenue should I allocate for taxes? Set aside 25-30% of revenue for taxes to ensure you’re covered, especially if you don’t have automatic withholdings. 3. How often should I review my budget? At a minimum, review your budget monthly. A quarterly deep dive can help adjust for major shifts in revenue or expenses. 4. What if my revenue is inconsistent? If your income fluctuates, create a baseline budget based on your lowest revenue month to ensure essential expenses are always covered. 5. What’s the best tool for budgeting my business finances? There are great options like QuickBooks, Xero, or even a simple Google Sheet. The key is to choose one and use it consistently. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Running a business is demanding, and managing taxes can feel overwhelming. But with smart tax strategies, you can lower your tax bill, keep more money in your business, and grow wealth efficiently. Below are key tax strategies every business owner should use to maximize savings and avoid costly mistakes. Are you looking for a comprehensive blog on wealth management? Check out this Blog. Why Tax Planning Matters for Business Owners For business owners, taxes are often the biggest expense. Without a solid tax strategy, you could be paying tens of thousands of dollars more than necessary each year. The good news? With the right planning, you can minimize your tax burden and maximize your business’s growth potential. Avoiding Common Tax Mistakes Many entrepreneurs make the mistake of thinking tax planning is something to consider only at the end of the year. In reality, effective tax planning is a year-round strategy. Business owners who neglect tax planning often find themselves facing unexpected tax bills, penalties for underpayment, and missed opportunities for deductions and credits. Why Tax Planning is Essential: Keeps More Money in Your Business : Every dollar saved in taxes is a dollar that can be reinvested in your business to fuel growth. Helps Avoid IRS Penalties : Failing to pay estimated taxes or misreporting income can lead to hefty fines. Provides Financial Stability : Knowing your tax obligations in advance helps you manage cash flow more effectively. Prepares You for the Future : Smart tax planning doesn’t just reduce your current tax bill; it also helps you build long-term wealth. By understanding and applying tax strategies, business owners can reduce their liabilities, optimize cash flow, and focus on growth. Let’s explore how. 1. Choose the Right Business Structure Your business structure has a huge impact on your tax liability. Choosing the right one can help you minimize self-employment taxes and qualify for special deductions. Common Business Structures: Sole Proprietorship : Easy to set up, but offers no tax separation between business and personal income. LLC (Limited Liability Company) : Provides legal protection and allows flexible tax options. S-Corporation : Let owners avoid self-employment taxes on distributions and qualify for the Qualified Business Income (QBI) Deduction. C-Corporation : Best for businesses planning to scale but subject to double taxation. How the Right Structure Saves You Money: S-Corps can help you save on self-employment taxes by allowing you to pay yourself a reasonable salary and take additional profits as distributions, which are not subject to payroll taxes. LLCs offer flexibility to be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp, depending on what’s most tax-efficient. Example:  James restructured his business as an S-Corp, reducing his taxable income by $200,000 annually using the QBI Deduction, saving $70,000 per year in taxes. 🔗 Learn about tax-efficient business structures . 2. Maximize Deductions Tax deductions reduce your taxable income, helping you keep more of your profits. Key Deductions for Business Owners: Home Office Deduction : Deduct a portion of your rent, utilities, and internet. Section 179 Depreciation : Deduct the full cost of business equipment in the year of purchase. Travel & Marketing Expenses : Deduct business trips, advertising, and client entertainment. Health Reimbursement Arrangements (HRA) : Reimburse yourself for medical expenses tax-free. How to Maximize Deductions: Track Every Expense: Use accounting software to capture every deductible cost. Document Thoroughly: Keep receipts and detailed records to substantiate deductions in case of an audit. Bundle Expenses: If possible, make large purchases before the end of the fiscal year to increase deductions. Example:  James claimed $130,000 in deductions annually, saving $45,500 per year at a 35% tax rate. 🔗 Explore business deduction strategies . 3. Contribute to Retirement Accounts Retirement accounts are a powerful tool to reduce taxes and build wealth. Best Retirement Plans for Business Owners: Solo 401(k) : High contribution limits for self-employed individuals. SEP IRA : Contribute up to 25% of net earnings. Defined Benefit Plan : Ideal for high earners wanting to maximize tax-deferred savings. How Retirement Contributions Save Taxes: Contributions to these accounts are tax-deductible, reducing your taxable income for the year. Additionally, the investments within these accounts grow tax-deferred, allowing your money to compound faster. Example:  By contributing $100,000 annually to his Solo 401(k) and Defined Benefit Plan, James saved $35,000 per year in taxes while growing his retirement fund. 🔗 Learn about tax-efficient retirement planning . 4. Utilize Tax Credits Tax credits offer a dollar-for-dollar reduction in your tax bill, making them incredibly valuable. Top Tax Credits for Business Owners: R&D Tax Credit : For businesses investing in innovation and development. Work Opportunity Tax Credit : For hiring employees from targeted groups. Energy Efficiency Credits : For adopting sustainable practices in your operations. How to Leverage Tax Credits: Keep Detailed Records : Documentation is key to claiming credits. Consult a Tax Professional : Some credits require complex calculations. Stay Updated : Tax laws change frequently, and new credits may become available. Example:  James claimed $27,000 in tax credits annually, including the R&D Tax Credit and Work Opportunity Tax Credit. 🔗 Discover tax credits for business owners . 5. Pay Estimated Taxes Quarterly Paying estimated taxes helps avoid IRS penalties and keeps your business finances on track. Estimated Tax Tips: Make payments quarterly (April, June, September, January). Base payments on expected income to avoid penalties. Use accounting software or a tax professional to stay organized. Why Quarterly Payments Matter: Missing quarterly payments can result in underpayment penalties. Regular payments also help you manage your cash flow by spreading out your tax obligations throughout the year. Example:  James paid his taxes on time every quarter, avoiding $10,000 per year in penalties that Eric faced due to late payments. 🔗 Get help managing estimated taxes . Case Study A Tale of Two Business Owners: Tax Planning vs. No Planning Meet James and Eric: Two Entrepreneurs, Two Different Outcomes James and Eric both run successful businesses, earning $1,000,000 per year. James owns a manufacturing company, while Eric runs a marketing agency. Both have strong profits, but their approach to tax planning makes all the difference. By age 60, James has $12.5 million in wealth, while Eric struggles with $3.2 million and high tax debt. Here’s how tax strategies changed their financial future. James: The Business Owner Who Used Tax Strategies James understood that taxes were his biggest expense and took a strategic approach to managing them. Step 1: He Chose the Right Business Structure James structured his company as an S-Corp to minimize self-employment taxes. He also took advantage of the Qualified Business Income (QBI) Deduction, allowing him to deduct 20% of his business income, reducing his taxable income from $1,000,000 to $800,000. At a 35% tax rate, this saved him $70,000 per year. Step 2: He Maximized Deductions He deducted $50,000 annually for home office expenses, travel, and marketing costs. He wrote off $80,000 per year for vehicle and equipment purchases using Section 179 depreciation. Total deductions of $130,000 lowered his taxable income to $670,000, saving $45,500 per year in taxes. Step 3: He Contributed to Retirement Accounts James used a Solo 401(k) and Defined Benefit Plan, contributing $100,000 annually. At a 35% tax rate, this saved him $35,000 per year in taxes while building a multi-million-dollar retirement fund. Step 4: He Claimed Tax Credits James took advantage of: The R&D Tax Credit, saving $15,000 annually. The Work Opportunity Tax Credit for hiring employees, saving $12,000 per year. Step 5: He Paid Estimated Taxes James avoided penalties by paying estimated taxes every quarter, preventing surprise IRS bills and saving $10,000 per year. Final Outcome: Financial Success By 60, James had accumulated: Retirement savings: $6M Investment portfolio: $3M Real estate holdings: $2M Cash & liquid assets: $1.5M Total Wealth: $12.5M 🔗 Learn about tax planning for business owners . Eric: The Business Owner Who Didn’t Plan Eric assumed that paying high taxes was just part of being a business owner. He didn’t plan ahead, and it cost him millions over his career. Mistake 1: He Chose the Wrong Business Structure Eric remained a sole proprietor, paying self-employment taxes on all profits. He never took advantage of the QBI Deduction, losing $70,000 in annual tax savings. Mistake 2: He Missed Deductions Eric didn’t track expenses properly, missing out on $45,500+ per year in tax savings from deductions. Mistake 3: He Ignored Retirement Contributions Without a retirement plan, Eric paid taxes on his entire $1M income each year instead of sheltering it in tax-deferred accounts, losing $35,000 annually in potential tax savings. Mistake 4: He Didn’t Use Tax Credits Eric missed out on $27,000+ per year in available tax credits, including the R&D Tax Credit and hiring incentives. Mistake 5: He Paid Taxes Late Because he didn’t plan for quarterly taxes, he was hit with IRS penalties and interest, costing him $10,000 per year. Final Outcome: Financial Struggles By 60, Eric had accumulated: Retirement savings: $1M Investment portfolio: $700K Real estate holdings: $1M Cash & liquid assets: $500K Total Wealth: $3.2M 🔗 Get expert tax planning to avoid these mistakes . The $5.7 Million Tax Planning Gap (Adjusted for Real Tax Savings) Tax Strategy James' Annual Tax Savings Total Over 30 Years Eric's Tax Savings Total Difference QBI Deduction $70,000/year $2.1M $0 +$2.1M Deductions Used $45,500/year $1.365M $0 +$1.365M Retirement Contributions $35,000/year $1.05M $0 +$1.05M Tax Credits $27,000/year $810K $0 +$810K Avoided Penalties $10,000/year $300K $0 +$300K Total Tax Savings $5.7M $0 +$5.7M Because James planned ahead, he ended up $5.7 million wealthier than Eric, giving him financial freedom in retirement. Lessons from James vs. Eric ✅ Start Tax Planning Early – The sooner you start, the more you save. ✅ Use Every Deduction – Track expenses and claim every tax break available. ✅ Maximize Retirement Contributions – Shelter income from taxes while growing wealth. ✅ Claim Tax Credits – These directly reduce taxes and add up over time. ✅ Work with a Tax Professional – Expert guidance pays for itself in savings. 🚀 Want to avoid Eric’s mistakes? Schedule a tax strategy session today . James' tax planning allowed him to retire comfortably at 60, while Eric's lack of preparation forced him to delay retirement and struggle financially. By implementing the tax-efficient, diversified strategies outlined in this blog, entrepreneurs can ensure long-term financial security and avoid a retirement crisis. Want to start planning today? Contact us for a personalized tax strategy. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Frequently Asked Questions (FAQ) – Tax planning for business owners 1. What are the best tax-saving strategies for small business owners? The best strategies include choosing the right business structure, maximizing deductions, contributing to retirement accounts, utilizing tax credits, and paying estimated taxes quarterly. 2. How does an S-Corp save business owners money on taxes? An S-Corp allows you to pay yourself a salary while taking additional profits as distributions, which are not subject to self-employment taxes, potentially saving thousands annually. 3. What is the Qualified Business Income (QBI) Deduction? The QBI Deduction allows eligible business owners to deduct up to 20% of their qualified business income, reducing their taxable income significantly. 4. What business expenses are tax-deductible? Common deductible expenses include home office costs, vehicle expenses, marketing, travel, office supplies, and health insurance premiums. 5. How can retirement contributions lower my tax bill? Contributions to accounts like a Solo 401(k) or SEP IRA reduce your taxable income, saving you money on your current tax bill while building future wealth. 6. What tax credits are available to business owners? Popular credits include the R&D Tax Credit, Work Opportunity Tax Credit, and Energy Efficiency Credits, which directly reduce your tax liability. 7. Why is it important to pay estimated taxes quarterly? Paying estimated taxes helps avoid IRS penalties and interest charges while ensuring you don’t face a large tax bill at year-end. 8. Can I deduct health insurance premiums as a business owner? Yes, self-employed business owners can deduct health insurance premiums for themselves, their spouses, and dependents. 9. How do I choose the best business structure for tax purposes? Choosing the right structure depends on your income, business size, and goals. Consulting a tax professional can help you decide between LLCs, S-Corps, and C-Corps. 10. What happens if I don’t plan for taxes properly? Failing to plan can lead to overpaying taxes, missing deductions, and facing penalties for underpayment. Proactive tax planning helps avoid these costly mistakes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Your largest lifetime expense will be your tax bill. Take a moment and let that sink in. The biggest bill you will ever pay will be the one you pay to the IRS. That is the bad news. The good news is you can and should be planning around it. You see tax planning for professional athletes is critical given you have one shot to do this right. In this guide, I am going to give you 7 tax planning strategies for professional athletes. Let's dive in... Professional Athletes - Tax Strategies Consider the earning arc as a professional athlete. You are earning a lifetime worth of income in 3-10 years. Most can see that, but here is what most miss… The uniqueness of your tax bill as you're earning that money. You can go from high income (signing bonus)⬆️ to low income (minor leagues)⬇️ to high income (top league)⬆️ to low income (post-playing)⬇️ all in a decade. That means two things: Your tax planning is going to be unique. You will overpay the IRS without proper planning. Consider me, a professional athlete for 10+ years ~ I estimate that I have overpaid the IRS by a few hundred thousand dollars during my playing career. This was due to me not understanding the two concepts above. I failed to have experts in tax planning for professional athletes and I failed to think proactively about this. I thought, I made money so I will owe taxes on it. While on the surface this is correct, I didn’t think to the next level that there could be (and are) ways for me to legally reduce my lifetime tax bill. So, let’s dive into 7 ways that professional athletes can reduce their lifetime tax bill. 1) Qualified Accounts The easiest and most accessible way for professional athletes to reduce their lifetime tax bill is to maximize their qualified accounts. A qualified account is simply a retirement account. All that means it is a special type of account that the government provides you with either a current-year tax benefit or a future-year tax benefit. Here are my three favorite ones for professional athletes: Roth IRA - A Roth IRA is an individual retirement account that provides you no tax benefit on the money you contribute yet provides tax-free growth and distributions in retirement.   Example: A player can contribute up to $7,000 in 2025 into a Roth IRA. If this money grows to be worth $50,000 at retirement age (59.5) that entire $50,000 amount can be withdrawn tax-free. ***We often implement a backdoor Roth IRA strategy to avoid income limitations.   401(k) – A 401(k) is the most common form of qualified account. There are three versions professional athletes should be aware of. The traditional 401(k), the Roth 401(k), and the Solo 401(k). Depending on the type of income (W2 vs 1099) and a player’s current tax rate should determine which of these three options an athlete should focus on.   Example: In 2024 a player can contribute up to $23,500 as an employee and potentially up to another $46,500 as an employer contribution. This means an athlete could see $70,000 in tax-optimized retirement savings.   HSA – An HSA or Health Savings Account is a special type of account designated for qualified medical expenses. So no it is not a typical “retirement” account but it is an extremely powerful qualified account. It is the only triple tax benefit account, meaning the contribution, growth, and distribution (for qualified medical expenses) are tax-advantaged.   Example: A player needs to be on a high deductible health care plan (common for players post-playing). This provides them eligibility to contribute up to $8,550 as a family to an HSA. This $8,550 contribution gets deducted from their taxable income, grows tax-free, and can be distributed (for qualified medical expenses) tax-free.   2) Tax Loss Harvesting   Consider for a second the fact that an athlete has an opportunity to save far and beyond the limits in just qualified accounts (retirement accounts).   This means you as an athlete will have significant money in taxable accounts. These accounts provide you with the opportunity for further tax planning.   One key element to consider is tax loss harvesting and here is how it works:   Example: You buy a share of a stock for $10 and that stock falls in price to $8. You can sell that position, capture the $2 loss, and immediately rebuy a similar position. This allows you to take your $2 loss and deduct it against your income (saving you money in taxes) while keeping your investment portfolio fully invested.   3) Charitable Giving   Giving is about the heart, not the tax benefit. Yet I have never met anyone who wants to give more money to the IRS and less to their favorite charity.   Remember how we talked about an athlete's earning arc ~ sharp spikes and steep drops?   One way to further take advantage of this is to be strategic about your charitable giving. In short, the most optimal time to give away money is during your playing career when your tax rate is high. Yet, you might want to spread that giving out over decades, long after your player career ends.   This is where a Donor Advised Fund comes in and here is how it works:   Example: A Donor Advised Fund (DAF) is a special type of account that allows someone to give a large sum of money in a given year, get the full tax benefit in that year, and then provides the optionality to distribute that money to charity over time (often years or decades).   ***Pro Tip: You can further maximize this strategy by giving away appreciated stock to get a double tax benefit. If possible, never give away cash as this is the least efficient way to give away money. 4) Tax Efficient Investing   Remember how I talked about as an athlete you have the opportunity to save far more money than qualified accounts allow. Because of this opportunity, you will have significant money in a taxable brokerage account.   Well, this is where tax-efficient investing comes in and plays a key role in reducing your tax bill as a professional athlete. Here is how it works:   Example: If you invest in certain ways, you can defer (push out) the gains from your investments longer. Consider an investment of $5 that grows to be worth $6 at the end of one year. If you can avoid taxes on your one-dollar gain you will have the opportunity to grow your money quicker than if you had to pay 25 cents in taxes that year.   In short, tax-efficient investing is the art of building a portfolio that allows you to control your tax bill, compound your money quicker, and let you keep more of your hard-earned money.   If you are interested in a deeper dive into how we think about investing you can check the Moment Guide to Investing for Professional Athletes.   5) State Residency   Taxes hit you in a few ways as a professional athlete. The first bite goes to the federal government (top tax rate of 37%). The next bite goes to the state in which you either earned the money or you are a resident. This can range from 0% (Florida) to 13.3% (California).   One of the single biggest tax planning moves as a professional athlete is to plan around state residency.   It works like this:   Example: If you can establish residency in a low or no state income tax state such as Florida or Tennessee this could save you hundreds of thousands if not millions of your lifetime tax bill. Consider an athlete receiving a $5,000,000 signing bonus. If that bonus is taxed in FL no state income taxes are due. If that bonus is taxed in California you would owe $665,000.   ***Pro Tip: To navigate and establish state residency work with a qualified financial team that understands the nuances around multi-state taxation and athlete residency.   6) Income Shifting   You either plan now or you will regret it later. That has certainly been true for me with my tax bill and still rings true for nearly every professional athlete we serve.   One of the most proactive ways to plan is to always be running multi-year tax projections.   In short, this means we are working to project what an athlete’s tax bill will be this year, next year, and into the future. When this is done correctly in coordination with an athlete's on-field team (Agency) athletes can potentially look to save big money on their taxes.   Here is how it works:   Example: If an athlete receives a signing bonus of $500,000, the standard payout could be all at once or 50% year 1 and 50% year 2. Yet, what that athlete should be doing is having a qualified team run projections to see if we allocated a specific amount of income in year 1 vs year 2 could save them money on their tax bill.   ***Pro Tip: There is more nuance to this not covered in this blog but just know that if you are blindly allocating income to certain years chances are you will be leaving money on the table.   7) Tax Deductions The Trump tax cuts in 2017 significantly reduced the amount of tax deductions professional athletes could take.   Yet that doesn’t mean there are zero deductions for professional athletes.   The key here is to understand which expenses you incur reflect the type of income you are earning.   Example: All of your off-the-field money (1099 income) and the expenses that incur with that have the ability to be deducted. This is things like travel, food, and agent fees. Your on-field money (W2) does not allow for those same deductions.   ***Pro Tip: Make sure you get an itemized bill from your agent reflecting agency fees for on-field income versus off-field income.   The seven strategies above are level one tax planning. Every professional athlete should be considering these moves. Depending on your situation tax planning as an athlete can significantly reduce your lifetime tax bill.   Yet what is most important is that you are considering (and planning) what ways you can implement to reduce your lifetime tax bill.   After all, it will be your largest lifetime expense.   If you are a future, current, or former professional athlete looking for help reducing your tax bill, let’s talk.   Moment was built to serve the specific needs of professional athletes.   You can book a call today and speak to a founder. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: How does Moment help professional athletes with tax planning ? For us, it is all about presenting strategies to athletes that might make sense for them and then determining what is worth pursuing. What is the biggest tax mistake you see with professional athletes? The biggest mistake we see is not planning in advance. There is a big difference between tax planning and tax preparation. How does Moment work with CPA firms? We work hand in hand with CPA firms that specialize in professional athletes. This way our clients are getting specific advice regarding their tax planning moves. What is unique about tax planning for professional athletes? The short earning arc, multi-state taxation, and income fluctuations provide athletes with circumstances often unique to them. We must account for all of these factors when looking at tax planning for professional athletes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Designed specifically for retired players, this program offers more than just a safety net. The NFL Annuity program is a game plan for long-term financial stability. In this blog, we will break down how the NFL Annuity Program works, why it's a game-changer for your post-football life, and how you can make the most of it. Before diving in, it is important to understand, retirement planning for professional athletes  doesn't have to start after you stop playing the game. In fact, the sooner you start taking advantage of this benefit, the sooner your financial future will take shape. NFL Annuity Program The National Football League is one of the few employers that continues to include an annuity benefit as a part of its retirement plan. Before specifically diving into the NFL Annuity Program, it is important to understand the basics of an annuity and how it works. An annuity provides a series of regular payments over a set period of time. Essentially, you make an initial investment, and in return, the annuity pays you back with regular payments. The NFL Player Annuity Program helps players save for retirement, just like any annuity. However, the money in these accounts comes from the teams (called "Clubs"), not the players themselves. Said another way, it is a retirement savings plan funded solely by team contributions. Sounds great, but who can participate? Who Can Participate? The NFL Player Annuity Program does have specific requirements for those who can participate. It is open to: Active players with at least one credited season from a previous year. Former players with money in their Tax-Qualified Account. Former players with money in their Non-Qualified Account. NFL Annuity Program Process There are 4 steps to the NFL Annuity Program Process: Money Is Put In: The club contributes money into an account on your behalf. Money is Invested:  The money is then invested and managed by investment professionals. You Become Vested:  After  three or more  Credited Seasons, you become vested. This means you are the full owner of the money and the NFL cannot take it back from you. You Take the Money Out:  When you are no longer an active player and age 45 or older, you can take out the money. *Note: money withdrawn prior to turning 59.5 years could result in a tax penalty. Seems simple enough. But before going any further, I want to better explain what a "Credited Season" is and how a player becomes "vested." Credited Season A Credited Season means you were on one of the following rosters for three or more  regular or post-season games: Active Roster Inactive Roster IR (Injured Reserve) PUP (Physically Unable to Perform) Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season. Once a Credited Season is earned, you become eligible for most NFL benefits. However, to be entitled to those benefits, you need to earn three or more  Credited Seasons. Simply put, three or more Credited Seasons means you are now "vested." Think of it like levels to a game. -First, you have to make the 53-man roster. -Second, you have to be on said roster for 3 or more games. -Third, you have to earn 3 or more Credited Seasons. With that in mind, we need to further discuss the types of accounts involved and what club contributions include. NFL Annuity Program Accounts and Club Contributions NFL Annuity Program Accounts NFL Players may have money in two types of accounts: Tax-Qualified Account Nonqualified Account This is all dependent on how long a player has been in the NFL and earned their Credited Seasons. A tax-qualified account is an account that holds money that has yet to be taxed. It is the responsibility of the player to pay the taxes once the money is taken out. A non-qualified account is an account that holds money that has previously been taxed, meaning a player won't need to pay taxes on this money when they take it out. The Annuity Program helps players save extra money for retirement, and the way it’s taxed depends on which account the money is in. Additionally, your Club can put money into one or both of your accounts according to your Credited Seasons. But, there are specific rules as to which account you start receiving these Club contributions in. To start, you begin receiving Club contributions to your Tax-Qualified Account once you earn your second Credited Season. Once you earn your fifth Credited Season, you start receiving Club contributions to your Nonqualified Account. Said again, for players with two, three, or four Credited Seasons, you only receive a contribution to your Tax-Qualified Account. This is known as a Qualified Addition . If you have five or more Credited Seasons, you will receive Club contributions to both your Tax-Qualified and Nonqualified Accounts. This is known as a Non-qualified Allocation . NFL Annuity Program Contributions Let's break down the contribution schedule for the 2018-2020 NFL Season. Contributions to the Annuity Program are based on the number of Credited Seasons: One Credited Season: $0 Two-Three Credited Seasons: $2,500 (Tax-Qualified Account) Four Credited Seasons: $50,000 (Tax-Qualified Account) Five or more Credited Seasons: $45,000 (Tax-Qualified Account) + $15,000 (Nonqualified Account, subject to taxes) *Note: These amounts are before taxes are taken out. Of a $15,000 Nonqualified Allocation, $7,200 is withheld to cover income and payroll taxes. It is important to note, the NFL suspended both Qualified Additions and Nonqualified Allocations from any Club for seasons 2020 through 2023. NFL Annuity Program Distributions The Annuity Program was set up so you could take advantage of the money contributed by your team (Club). With that, I want to briefly explain how you can take the money out of the Annuity Program. The four ways to do so include: Single Lump Sum - this is a one-time payment for the entire balance. TQ - available as soon as you are eligible NQ - only after age 45 Partial Lump Sum - this means you receive payment of part of the balance. TQ - available as soon as you are eligible NQ - only after age 45 Installment Payments - this means you will receive the payments in equal installments. TQ - available as soon as you are eligible NQ - annual payments until you reach 45 (or a date of your choosing after that date) Annuities - the balance is used to purchase an annuity from the insurance company. With the annuity, you have a bunch of options Annuity for Your Life Only Qualified Joint and Survivor Annuity Qualified Optional Survivor Annuity Joint and Survivor Annuity To complete one of the above transactions, you must submit a Distribution Form to the NFL Player Benefits Office. Lastly, the amount you receive will depend on the value of your account, but also, how you choose to take your money out. It is important to understand how you will receive your annuity before selecting an option to take the money out. What Next? Father time is undefeated and you will be faced with the reality of your last game sooner than you ever imagined. Before you unbuckle your chinstrap for the last time, make sure you understand your benefits, including the NFL Annuity Program. The NFL Annuity Program can be a game-changer for your post-football life. It is up to you to make the most of it.  Before making any decisions, be sure to consult your financial team and read through the NFL Benefits Package at NFLPlayerBenefits.com or call the NFL Player Benefits office at 800.638.3186. At Moment Private Wealth we are specialists in athlete wealth management ensuring you maximize your league benefits. I also highly suggest checking out the NFL Retirement Plan (2024 Edition) . The NFL Annuity Program is just one of the many benefits afforded NFL players. ___________________________________________________________________________________________________________ If you are in the National Football League and want to better understand the NFL Pension Plan, schedule a call with a Moment Founder . Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Who can participate in NFL Annuity Program?   Active Players with at least one Credited Season in a Prior Plan Year. When can I start receiving contributions to my NFL Annuity?   You begin receiving Club contributions to your Tax-Qualified Account once you earn your second Credited Season . When can I start receiving my NFL Annuity contributions into my Non- qualified Account ?   This begins if you have five or more Credited Seasons. When do I become vested in the NFL Annuity Program?   You become vested after earning three Credited Seasons. Are there multiple ways to take out my NFL Annuity benefits?   Yes, there are multiple options. Be sure to consult your financial team for the best option for you. ___________________________________________________________________________________________________________ *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Selling your business is one of the most significant financial decisions you'll make. Whether you’re planning for retirement, starting a new venture, or simply moving on, the process requires thoughtful strategy, clear organization, and expert advice. In this guide, we’ll walk you through the key steps to successfully sell your business and maximize your outcome. If you are looking for a comprehensive wealth management blog for business owners - Check it out here. Why Selling a Business Requires Strategic Planning Selling a business isn’t just about finding a buyer and signing papers. It's about optimizing your business's value, preparing financials, minimizing tax liability, and ensuring a smooth transition. Without a strategic approach, you could leave substantial money on the table. Key Benefits of a Thoughtful Exit Strategy: Maximize the sale price. Minimize tax consequences. Preserve business continuity and legacy. Ensure a stress-free transition. 🔗 Learn how our team can guide your exit strategy 1. Get a Business Valuation Understanding what your business is worth is the foundation of a successful sale. A professional business valuation assesses revenue, profitability, growth potential, market conditions, and assets. Valuation Factors to Consider: Revenue and EBITDA Industry benchmarks Customer base and contracts Intellectual property 📌 Tip:  Hire a certified business appraiser or advisor to get a realistic, market-based valuation. 2. Organize Your Financials Buyers want to see a clear, accurate financial picture. Organized books increase buyer confidence and streamline the process. Documents You’ll Need: Profit & Loss statements (3–5 years) Balance sheets Tax returns Cash flow statements 📌 Tip:  Clean up your financials well before you list the business. 3. Optimize Business Operations A business that runs smoothly without the owner is more appealing. Show buyers that your systems and team are capable. Operational Enhancements: Delegate daily tasks Document SOPs (Standard Operating Procedures) Retain key employees 📌 Tip:  Reduce owner dependency—your role shouldn’t be irreplaceable. 4. Prepare for the Tax Impact Taxes can take a significant bite out of your sale proceeds. Structuring the sale properly can help reduce the tax burden. Key Tax Considerations: Capital gains vs. ordinary income Asset sale vs. stock sale Installment sales for tax deferral Qualified Small Business Stock (QSBS) exclusions 📌 Tip:  Work with a tax advisor to create a tax-efficient deal structure. 🔗 Learn more about tax planning 5. Identify the Right Buyer Finding the right buyer is about more than price. The ideal buyer aligns with your goals, whether that's preserving your brand or rewarding loyal employees. Types of Buyers: Strategic buyers Private equity firms Management buyouts Individual entrepreneurs 📌 Tip:  Consider your legacy and long-term vision when selecting a buyer. 6. Negotiate the Deal Negotiations determine more than just the sale price—they shape your exit terms, liabilities, and future role. Key Deal Elements: Purchase price and earnouts Payment structure (cash, stock, installments) Non-compete agreements Transition timelines 📌 Tip:  Hire a legal and financial team to protect your interests during negotiations. 7. Plan Your Life After the Sale Selling your business marks the beginning of a new chapter. Consider what’s next for your life and wealth. Post-Sale Planning Areas: Investment strategy for sale proceeds Estate and legacy planning Philanthropic goals Entrepreneurship or advisory roles 📌 Tip:   Develop a comprehensive wealth plan before you close the deal. A Tale of Two Business Owners: Planning vs. Winging It Let’s look at two business owners— Susan  and Tom —both preparing to sell their businesses after 20 years. Susan: The Strategic Seller Susan ran a successful marketing firm. When she began thinking about an exit, she followed the exact steps outlined in this guide: She hired a professional to value her business. She cleaned up her financials, showcasing steady growth and profitability. Susan optimized operations by training her management team and documenting processes. She worked with a tax advisor to reduce her liability, opting for a stock sale with capital gains tax treatment. She marketed her business strategically and attracted multiple offers. With a strong team in place, the buyer was confident in taking over with minimal disruption. Result:  Susan sold her business for $4.5 million, paid $700,000 in taxes, and invested the rest into a diversified portfolio and retirement accounts. She exited with peace of mind, financial security, and a continued legacy. Tom: The Reactive Seller Tom owned a similar-sized business in the same industry. But he didn’t plan ahead: He relied on guesswork for pricing and skipped a formal valuation. His financial records were disorganized, making due diligence difficult. Tom handled most operations himself, and the buyer viewed this as risky. He accepted the first offer out of urgency—an asset sale with a lower valuation. Without proper tax planning, he faced higher ordinary income tax liability. Result:  Tom sold for $2.8 million, paid $1.1 million in taxes and fees, and walked away with significantly less despite having a comparable business. The process was stressful, rushed, and left him with regrets. Takeaway: Planning matters. A few smart moves can mean millions more in net proceeds—and a much smoother transition. Want to start planning today? Contact us for a personalized exit plan. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. 1. How do I know when it’s the right time to sell my business? When you’ve achieved your goals, market conditions are favorable, and your business is well-positioned. 2. How is my business valued? Valuation considers financial performance, growth potential, industry factors, and market trends. 3. What documents do I need to sell my business? P&L statements, tax returns, balance sheets, and contracts are key documents. 4. Can I sell my business and still be involved? Yes, many deals include consulting or transition agreements. 5. What taxes will I owe when I sell? You may owe capital gains tax, income tax, or alternative minimum tax depending on deal structure. 6. Should I sell my business assets or the entire entity? It depends on your goals and tax situation—each structure has pros and cons. 7. How long does it take to sell a business? It can take 6–12 months depending on market conditions and deal complexity. 8. Do I need a business broker? A broker can help find qualified buyers, negotiate deals, and market your business. 9. How do I prepare my business for sale? Organize financials, optimize operations, and reduce reliance on the owner. 10. What should I do with the proceeds after selling? Work with a financial advisor to create a long-term wealth management plan. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Entrepreneurs build businesses. But many forget to build their own retirement plan. Without a 401(k) from an employer, you need a strategy. If you wait too long, you might end up working forever. This guide breaks down easy steps to retire rich. If you aren't looking to retire but still want to maximize your finances as an entrepreneur check out our complete guide to wealth management for entrepreneurs here. Why Entrepreneurs Must Plan for Retirement Unlike employees, entrepreneurs get no automatic retirement benefits. You must: Save for your own future. Use tax-smart investment plans. Balance business growth with personal wealth. Protect yourself from financial risks. Without a plan, you may run out of money in old age. But if you start now, you can retire on your terms. 5 Steps to a Strong Retirement Plan 1. Open a Retirement Account Entrepreneurs have powerful savings options: Solo 401(k)  – Best for business owners with no employees. Max contribution: $70,000/year. SEP IRA  – Good for business owners with employees. You can contribute 25% of net earnings. SIMPLE IRA  – A low-cost plan for businesses with fewer than 100 workers. Defined Benefit Plan  – Best for high-income earners. Allows the largest tax-deferred savings. Smart Savings Tips: ✅ Over 50? Make catch-up contributions to grow your money faster. ✅Contributions lower taxes while boosting wealth. ✅ Choose a plan based on income, business size, and future goals. Example:  Lisa, a consultant, started saving $35,000 a year in a Solo 401(k) at age 35. She stayed consistent, never missing a year. By 60, with 7% average growth, her savings had grown to $2.7M. When she decided to retire, her investments provided $100,000 per year in passive income, allowing her to enjoy life without financial stress. Learn more about retirement accounts . 2. Invest Beyond Your Business Relying only on your business is risky. You need other investments. Where to Put Your Money: Stocks & Index Funds  – Grow wealth with dividends and capital gains. Real Estate  – Rental income covers expenses in retirement. Tax-Free Accounts  – Roth IRAs and Roth 401(k)s let you withdraw tax-free later. Example:  Mark, a restaurant owner, invested $500,000 in stocks and real estate over time. He purchased two rental properties worth $250,000 each and invested in low-cost index funds. By age 60, his rentals had appreciated to $1 million total, and his stock portfolio had grown to $500,000. With passive rental income covering 60% of his expenses, Mark was able to retire without relying on business income. Read about investment strategies . 3. Plan Your Business Exit One day, you will leave your business. A solid exit plan ensures you get paid well. Your Exit Options: Sell the business  – Cash out to fund retirement. Transfer ownership  – Pass it to family or employees. Merge with another company  – Get paid while staying involved. Steps to a Smooth Sale: ✅ Get a business valuation so you know what it's worth. ✅ Structure a tax-friendly sale to keep more money. ✅ Plan early so you don’t have to sell in a rush. Example:  Jake, a tech entrepreneur, built his company over 20 years. At 50, he worked with a financial planner to increase profitability before selling. At 55, he sold the company for $3M, keeping $2.5M after taxes. He reinvested the funds into stocks and annuities, creating a steady retirement income of $150,000 per year. Explore exit planning strategies . 4. Use Smart Tax Strategies Taxes can eat into your savings if you don’t plan well. Here’s how to keep more of your money. 3 Tax Moves for Entrepreneurs: Max out retirement contributions  – Reduces taxable income today. Roth Conversions  – Pay taxes now for tax-free withdrawals later. Deferring Income  – Delay taking profits in high-tax years. Example:  Sarah, a marketing agency owner, learned about Roth conversions in her 40s. She moved $500,000 from her traditional 401(k) into a Roth IRA in lower-income years. By 65, her Roth IRA had grown to $1.2M, and she never had to pay taxes on withdrawals. Because of this strategy, she saved $250,000 in future taxes, letting her keep more of her wealth. Learn about tax-efficient retirement planning . 5. Protect Your Wealth from Risk Your retirement savings need protection from lawsuits, business failures, and accidents. Shield Your Retirement Savings With: ✅ LLC or S-Corp  – Keeps business debts from touching personal wealth. ✅ Asset Protection Trusts  – Protects savings from lawsuits. ✅ Insurance Policies  – Cover business risks so savings stay untouched. Example:  John, a consultant, was sued for business-related issues. Luckily, he had set up his business as an LLC and had an umbrella insurance policy. His $2M in retirement savings stayed safe, and he continued to live comfortably in retirement. Without these protections, he might have lost half of his savings to legal fees. Read more about asset protection . Case Study A Tale of Two Entrepreneurs: A $7 Million Retirement Gap Meet James and Eric: Two Business Owners, Two Different Futures James and Eric both started businesses at 30 years old. James built a software consulting firm. Eric ran a construction company. Each made $250,000 per year. James planned for retirement. Eric didn’t. At 60, James had $7.6 million in retirement savings. Eric had $550,000 and had to keep working. Financial Metric James (Planned) Eric (Did Not Plan) Difference Solo 401(k) Savings $3.1M $0 +$3.1M Investment Portfolio $700K $0 +$700K Real Estate Value $1M $0 +$1M Business Sale Proceeds $2.8M $500K +$2.3M Total Wealth at 60 $7.6M $550K +$7M Let’s break down why. James: The Entrepreneur Who Planned for Retirement James knew his business wouldn’t last forever. He took four smart steps to secure his future. Step 1: He Used Tax-Advantaged Retirement Accounts He started a Solo 401(k) at 30. He contributed $25,000 per year, increasing to $35,000 after 50. His 401(k) grew to $3.1 million, assuming a 7% return. Step 2: He Built Income Beyond His Business He invested $10,000 per year in stocks and index funds. He bought two rental properties worth $250,000 each. His investments reached $700,000. His real estate grew to $1 million. Step 3: He Had a Business Exit Strategy At 50, he hired a consultant to increase profits. At 58, he sold 40% of his business for $1.5 million. At 60, he sold the rest for $2 million, walking away with $2.8 million after taxes. Step 4: He Used Smart Tax Strategies He converted $500,000 into a Roth IRA for tax-free withdrawals. He saved $300,000 in taxes by using Roth conversions and tax-loss harvesting. James’ Final Wealth at 60 Solo 401(k): $3.1M Investment portfolio: $700K Real estate: $1M Business sale proceeds: $2.8M Total Retirement Wealth: $7.6M James retired early, debt-free, and stress-free. His rental income and dividends covered his living expenses. Eric: The Entrepreneur Who Didn’t Plan Eric assumed his business was his retirement plan. He reinvested all profits back into the company but saved nothing. Step 1: He Ignored Retirement Accounts He never opened a Solo 401(k) or IRA. He missed out on 30 years of compound growth. If he had saved $25,000 per year, he’d have $3.1 million like James. Step 2: He Didn’t Invest Beyond His Business He never bought stocks or real estate. His only asset was his company. When business slowed, he had no backup income. Step 3: He Struggled to Sell His Business At 55, he tried to sell but couldn’t get his asking price. By 60, the value dropped to $700,000. After taxes, he walked away with only $500,000. Step 4: He Had to Keep Working Without passive income, he had to keep withdrawing savings. He delayed retirement until 67. He downsized his lifestyle to stretch his money. Eric’s Final Wealth at 60 Business sale proceeds: $500K Personal savings: $50K Real estate assets: None Investment portfolio: None Total Retirement Wealth: $550K Eric had to take a part-time job to cover expenses. The $7 Million Retirement Gap Financial Metric James (Planned) Eric (Did Not Plan) Difference Solo 401(k) Savings $3.1M $0 +$3.1M Investment Portfolio $700K $0 +$700K Real Estate Value $1M $0 +$1M Business Sale Proceeds $2.8M $500K +$2.3M Total Wealth at 60 $7.6M $550K +$7M James ended up $7 million richer because he planned ahead. Eric relied only on his business, which left him financially stranded. Lessons from James vs. Eric ✅ Start Early:  Even small contributions grow over time. ✅ Diversify Investments:  Never depend only on your business. ✅ Have an Exit Plan:  A structured business sale brings security. ✅ Use Tax Strategies:  Maximize retirement accounts and Roth conversions. ✅ Create Passive Income:  Stocks and real estate provide stability. James' retirement planning allowed him to retire comfortably at 60, while Eric's lack of preparation forced him to delay retirement and struggle financially. By implementing the tax-efficient, diversified strategies outlined in this blog, entrepreneurs can ensure long-term financial security and avoid a retirement crisis. Want to start planning today? Contact us for a personalized retirement strategy . If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Frequently Asked Questions (FAQ) – Retirement Planning for Entrepreneurs What is the best retirement plan for self-employed entrepreneurs? The best plan depends on your business and income. A Solo 401(k) is great for those with no employees. A SEP IRA works well for business owners with staff. A Defined Benefit Plan allows the highest tax-advantaged savings for high earners. How can I save for retirement while reinvesting in my business? Set aside a fixed percentage of income in a retirement account each year. Keep investing in stocks, real estate, or tax-free accounts to build wealth outside your business. Never put 100% of your money into the company. What tax benefits do entrepreneurs get for retirement savings? Retirement contributions lower taxable income. Pre-tax plans like Solo 401(k)s and SEP IRAs grow tax-deferred. Roth accounts allow for tax-free withdrawals in retirement. How do I retire if my wealth is tied to my business? You need an exit plan. Sell to an outside buyer, employees, or family. Use sale proceeds to fund retirement accounts. Avoid waiting until the last minute to sell. What’s the smartest way to invest for retirement? Don’t rely only on your business. Invest in stocks, real estate, and tax-free accounts. Build passive income streams like rental properties or dividend stocks for stability. Can I use a Roth IRA for retirement savings? Yes! If you make too much, use a Backdoor Roth IRA. This moves money from a traditional IRA to a Roth IRA for tax-free withdrawals later. A Roth Solo 401(k) is another option. What happens to my retirement savings if my business fails? If your business shuts down, your retirement savings stay safe. Solo 401(k)s, IRAs, and Roth accounts are protected. Never mix business and retirement funds. How much should entrepreneurs save for retirement? Aim to save 15-25% of your income. Build multiple income sources like stocks, rental properties, and dividends to reduce risk. What insurance helps protect retirement savings? Get umbrella insurance, key person insurance, and disability insurance. These policies protect you if your business suffers or you can’t work. How do I make sure my savings last in retirement? Use a 3-4% withdrawal rule to avoid running out of money. Keep a mix of investments for stability. Plan tax-efficient withdrawals so you keep more of what you saved. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

As a business owner, understanding and implementing effective tax strategies can be a game-changer for your financial success. Tax planning is not just about compliance; it’s about strategically positioning your business to minimize liabilities and maximize savings. In this comprehensive guide, we’ll explore key tax strategies, real-world examples, and actionable insights to help you navigate the complexities of the tax landscape. Looking for a full tax planning guide click here. Why Tax Strategies Matter for Business Owners Effective tax strategies can: Reduce your tax liability, leaving more capital for growth. Ensure compliance and avoid costly penalties. Align your business structure with your financial goals. Provide peace of mind during tax season. Tax planning is not a one-size-fits-all approach. It requires understanding your unique business model, industry, and financial goals. Key Tax Strategies for Business Owners 1. Choose the Right Business Structure Your business structure significantly impacts your tax obligations. The most common structures include: Sole Proprietorship : Simple to set up but subject to self-employment taxes on all profits. Partnership : Offers flexibility but shares similar tax obligations as sole proprietors. S-Corporation : Allows for tax savings through reasonable salary and dividend distributions. LLC : Offers flexibility in taxation (can be taxed as a sole proprietor, partnership, or corporation). Choosing the right structure requires evaluating factors such as income, business size, and long-term goals. Each structure offers unique benefits, but improper selection can result in higher tax burdens or compliance risks. Example : A graphic design business earning $150,000 annually saved $15,000 in taxes by transitioning from a sole proprietorship to an S-corp, leveraging salary distributions and dividend income. This change also improved the owner’s ability to invest back into the business and enhanced financial stability. Learn more about choosing the right business structure . 2. Maximize Deductions and Credits Business deductions and tax credits are powerful tools to lower taxable income. Some common deductions include: Home Office Deduction : If you use a dedicated space in your home for business, you can deduct related expenses. Vehicle Expenses : Deduct mileage or actual expenses for vehicles used for business purposes. Professional Services : Costs for accountants, legal advice, and consultants are fully deductible. Employee Benefits : Contributions to employee health insurance or retirement plans can reduce taxable income. Deep Dive: Specialized Deductions and Strategies Startup Costs : Deduct up to $5,000 in business startup costs during your first year of operation. Technology Expenses : Software subscriptions, website hosting, and cloud services are eligible deductions. Research and Development (R&D) Tax Credit : Particularly valuable for tech and manufacturing businesses. Example : A marketing firm offering a 401(k) match for employees reduced its taxable income by $30,000 annually while retaining top talent. By reinvesting the tax savings into advanced analytics tools, the firm improved client results and increased revenue by 10%. Discover tax deduction strategies . 3. Leverage Retirement Contributions Retirement accounts provide dual benefits: reducing taxable income and securing your financial future. Options include: SEP IRA : Ideal for small businesses and allows contributions up to 25% of compensation or $66,000 (whichever is lower). Solo 401(k) : For sole proprietors, combining employee and employer contributions up to $66,000. Defined Benefit Plan : Offers the highest contribution limits, suitable for high-income earners. Deep Dive: Tax-Deferred Growth Tax Advantages : Contributions are made pre-tax, reducing current-year liabilities. Compounding Benefits : Earnings grow tax-free until withdrawal, maximizing long-term growth. Plan Customization : Defined benefit plans allow owners to adjust contributions based on income fluctuations. Example : A boutique owner contributed $50,000 annually to a Solo 401(k), reducing taxable income while growing a retirement nest egg. Over five years, these contributions, combined with investment growth, added $300,000 to their retirement savings, ensuring long-term security. Explore retirement planning options . 4. Optimize Depreciation of Assets Depreciation allows you to deduct the cost of assets over their useful life. Key depreciation methods include: Section 179 Deduction : Deduct the full cost of qualifying assets (e.g., equipment, vehicles) in the year of purchase. Bonus Depreciation : Deduct up to 100% of the cost of certain assets in the year they are placed in service. Deep Dive: Types of Assets Eligible for Depreciation Real Property : Buildings, warehouses, and office spaces qualify for depreciation over 39 years. Equipment and Machinery : Depreciation over 5-7 years. Technology : Computers and software can often be fully deducted under Section 179. Example : A construction company purchased $500,000 worth of equipment and claimed $400,000 in bonus depreciation, significantly reducing taxable income. The savings enabled them to hire additional staff, improving project completion times and increasing revenue. Learn about asset depreciation strategies . 5. Manage Self-Employment Taxes Self-employment taxes (Social Security and Medicare) can take a significant bite out of your income. Strategies to manage these include: S-Corp Election : Pay yourself a reasonable salary and take the remaining profits as distributions, which are not subject to self-employment taxes. Maximize Deductions : Reduce net income by claiming all eligible business expenses. Deep Dive: Advanced Techniques Retirement Plan Contributions : Reduce taxable self-employment income. Health Insurance Premiums : Deduct premiums directly from self-employment income. Qualified Business Income Deduction : Small businesses may deduct up to 20% of qualified business income. Example : An IT consultant earning $120,000 reduced self-employment taxes by $10,000 annually by transitioning to an S-corp and optimizing deductions. This allowed the consultant to reinvest in professional certifications, increasing billable rates by 20%. Find out how to manage self-employment taxes . 6. Plan Quarterly Estimated Payments Avoid penalties and interest by staying ahead of your tax obligations with quarterly payments. Calculate estimated taxes based on: Expected income. Deductions and credits. Previous year’s tax liability (safe harbor rule). Deep Dive: Streamlining Payments Automated Systems : Use tax software to calculate and schedule payments. Review Regularly : Adjust payments quarterly based on income changes. Safe Harbor Rule : Ensure at least 90% of current-year taxes or 100% of prior-year taxes are paid. Example : A restaurant owner who struggled with quarterly tax payments implemented automated systems to calculate and remit taxes. This reduced stress, avoided $3,000 in penalties, and improved cash flow management throughout the year. Read more about managing estimated tax payments . 7. Take Advantage of Tax-Free Benefits Some business benefits are tax-free, reducing your tax liability while providing perks for employees and yourself. These include: Health Savings Accounts (HSAs) : Contributions are tax-deductible, and withdrawals for medical expenses are tax-free. Education Assistance : Cover up to $5,250 annually in employee education costs, tax-free. Commuter Benefits : Provide tax-free transportation or parking benefits to employees. Deep Dive: Additional Tax-Free Opportunities Dependent Care Assistance : Offer up to $5,000 annually in tax-free childcare benefits. Wellness Programs : Provide fitness subsidies or wellness programs as tax-free benefits. Adoption Assistance : Support employees with tax-free adoption reimbursements. Example : A software company offering commuter benefits and HSAs saved $12,000 annually in taxes while enhancing employee satisfaction. This initiative also improved employee retention by 15%, reducing recruitment costs. Discover more about tax-free benefit options . Real-World Case Study: Tax Optimization in Action Maria’s Tax Makeover Maria owns a growing e-commerce business generating $500,000 in annual revenue. Despite her success, she found herself overwhelmed during tax season and paying more than expected. After consulting with the Moment team, she implemented the following strategies: Restructured Business Entity : Transitioned from an LLC to an S-corp, saving $20,000 annually in self-employment taxes. Maximized Retirement Contributions : Opened a SEP IRA, contributing $40,000 annually and reducing taxable income. Leveraged Depreciation : Claimed $150,000 in bonus depreciation for new warehouse equipment. Implemented Quarterly Payments : Set up automated quarterly payments, avoiding $3,000 in penalties. Expanded Insights: By separating personal and business expenses, Maria identified additional deductions, such as $10,000 in home office and software costs. Her proactive tax planning also allowed her to reinvest $50,000 into marketing, which increased revenue by 15% the following year. She also worked with a financial advisor to develop a three-year growth plan, focusing on scaling operations efficiently. Outcome : Maria reduced her overall tax liability by $63,000 in the first year while improving cash flow and peace of mind. Tax strategies are essential for business owners looking to maximize savings and minimize liabilities. By choosing the right structure, leveraging deductions, and staying proactive with tax planning, you can significantly improve your financial outlook. Ready to optimize your tax strategy? Contact us today  to schedule a consultation.   Schedule a call with our team here . Selling your business can be exciting, lonely, and challenging all at once. Connecting your personal goals to your finances can be challenging alone. Business owners turn to Moment Private Wealth  when they are looking for a financial advisor who has walked in their shoes. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Q: How do I know if my business structure is tax-efficient? A:  Consult a tax advisor to evaluate your current structure and determine if transitioning to an S-corp, LLC, or another entity could provide savings. Q: What deductions can I claim as a small business owner? A:  Common deductions include home office expenses, vehicle mileage, professional services, and retirement contributions. Q: How do estimated tax payments work? A:  Calculate quarterly payments based on expected income and deductions to avoid penalties and interest. Q: What’s the difference between a SEP IRA and a Solo 401(k)? A:  A SEP IRA allows contributions of up to 25% of compensation, while a Solo 401(k) combines employee and employer contributions for higher limits. Q: How can I reduce self-employment taxes? A:  Consider electing S-corp status and taking advantage of deductions to lower your taxable income. Q: Are employee benefits like health insurance tax-deductible? A:  Yes, contributions to employee health insurance plans are fully tax-deductible. Q: Can I deduct business travel expenses? A:  Absolutely, expenses for flights, hotels, and meals related to business travel are deductible. Q: What’s the benefit of using a Health Savings Account (HSA)? A:  HSAs provide triple tax benefits: contributions are deductible, growth is tax-free, and withdrawals for medical expenses are tax-free. Q: How does bonus depreciation work for my business? A:  Bonus depreciation allows you to deduct the full cost of qualifying assets in the year they are purchased. Q: What’s the safe harbor rule for estimated taxes? A:  To avoid penalties, pay at least 90% of the current year’s taxes or 100% of the previous year’s liability (110% for high-income earners). *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

When that wire hits your bank account everything will change. Many believe this to be true when they sell their business. From my experience selling your business is often one of the most anti-climatic events for business owners.  I would go as far as to say that for many owners it spins them into a place that feels like a rudderless ship in the ocean. Searching for the next big thing.  Well, I am here to tell you that you can avoid all of that by answering 3 easy questions. In this blog, we are going to break down mistakes to avoid while selling your business.  Already sold your business? Skip this blog and check out the blog we wrote on how to manage wealth for business owners after selling. The Guide to Selling Your Business Yes, all your problems can be avoided by answering these 3 easy questions. Here they are. What outcome are you looking to achieve? How will you spend your time? What to do with the money? Now that you know the questions.  Ready for the answers? Lucky for you we have helped countless business owners answer these questions and enjoy a successful exit. Let’s check out the most common answers we see from business owners. What outcome are you looking to achieve? When there is a big change in life I always encourage families to think about the outcome they are looking to achieve. Outcomes allow you to tune out the noise and make the situation personal to yourself. It helps you tune out the investment banker telling you it’s a great multiple. It helps you tune out the attorney telling you these are great terms. It helps you tune out the CPA telling you that this deal will save you millions in taxes. All of the examples you just read are not outcomes. These are attributes of a deal. These are outcomes. I want to spend more time with my family. I want to secure my family's financial future. I am tired of going all in and want to take chips off the table. These outcomes we can solve with the attributes of the deal. Many people work in reverse order. Let me show you. A private equity company sneaks into your inbox on a regular basis for 2 years. Probing to get enough information to provide you with an unsolicited LOI. It arrives after a long quarter of problem-solving where you are left exhausted. After a quick review of the offer letter, you see a line that notes a 10x multiple.  Your buddy just sold for 6x and immediately you are intrigued. After a quick review of your EBITDA on QuickBooks you determine this private equity company is going to write you a check for $20,000,000.  Wow. That is a lot of money I should probably give them a call. This is not the best approach to selling your business. Let me show you how an outcome-based approach can help. After a long quarter full of problem solving you are left exhausted.  You start contemplating what you want your life to look like moving forward. Quickly coming to the conclusion that the things you say you value are getting overlooked. Your Spouse Children Community But you also love what you do and have no desire to retire. This leaves you thinking is there a way to keep doing this and get back my time? After meeting with Moment Private Wealth to review the options to achieve this outcome it becomes clear that a strategic partner could help you get the outcome you desire. The decision is made that we need to focus on the right strategic partner vs the highest price tag. After all the outcome you want to get has less to do with the money and more to do with how you are spending your days. I will let you daydream about how this story ends. The goal in this story is that you understand approaching selling your business the traditional way is unlikely to get you the outcome you desire. You need to plan for the outcome you want. How will you spend your time? You can always make more money but you can’t make more time. I have yet to meet a successful business owner who doesn’t ruthlessly take care of their time. It is the most valuable resource you have and you must treat it accordingly. You have spent your entire life building your business. Day in and day out showing up early and staying late. Spending all of your TIME in one place. Now you magically have nowhere to go and all the time in the world. This often leaves business owners in a tough mental state. One day they are problem solving and the next day they are golfing 5 days a week.  There is only so much golf that one person can play. So how do you avoid this trap? Coming up with a plan prior to selling the business. Let's look at a plan we recently implemented for a business owner. This owner decided that they wanted the outcome of their business sale to be giving back to the community and buying a property for his family. Legacy was of the utmost importance. Now we needed to whiteboard what “giving back to the community” meant. For them it meant serving on two boards of charities they were passionate about. Well, they weren’t on those boards today. This became a project they worked on prior to selling the business. Let’s make sure you can get on the board and spend time doing things you want to do with those charities. Their eyes were opened when they started meeting with people at the charity and realized quickly that there was money being used in ways they didn’t agree with. Back to the drawing board. They found two additional charities to get involved in that they loved.  Turns out this took an entire year for them to work through this process and were grateful they didn’t sell their business before doing the proper research. The farm was an easier project. Why? They already owned the land and there was perpetual work that needed to be completed. Currently, they were outsourcing the majority of the work but they planned to move to doing it themselves. With time being the most valuable resource you ought to plan for how you will use it. Don’t jump into a deal without knowing where your time will be spent. What to do with the money? Shockingly most families struggle with what to do with the money.  I firmly believe this is due to past experiences. You have heard this disclaimer in investing. “Past performance doesn’t guarantee future results.” Well, the opposite is true for past experiences with money. “Past experiences with money will predict future decisions with money” Let me show you what I mean. This client grew up in the 70s in a middle-class family. Both parents worked jobs to make ends meet. Although there was always food on the table there was never extra money lying around.  Family vacations were road trips not first class. Now that you have $20,000,000 in your bank account you don’t magically become good at spending money. Rather we have seen the reverse be true. Fear that you will blow it all drives your decision-making. This is not a good outcome which is why we need to plan in advance and solve the math equations that are important to you.  Remember what is important to you may not be important to your buddy who just sold his business.  Just because he wants to charter a jet doesn’t mean that you should do the same. Planning for the money will give you confidence during your deal.  Too many times business owners sell their business hoping that the money they will get will be enough. Sometimes it is and sometimes it isn’t.  We help clients come up with a number.  That number encompasses all of the outcomes they hope to achieve. -          Giving their kids each $250,000 today. -          Paying for the grandkids college. -          Giving $1,000,000 to charity -          Spending $50,000 a month to live their ideal life in retirement -          Paying for health insurance before they reach Medicare at 65 All of these are math formulas that we can solve for you. Once we solve each math formula we add them together and subtract projected taxes and this gives us our north star. The north star is the amount of money you need to accomplish your outcomes. This gives crystal clear direction for how to approach your deal. It will give you the confidence to decide which deal is the right deal for you. Selling your business can be the highlight of your professional career. From experience the best way to make it that is to make sure you answer these 3 questions before you plunge into selling. What outcome are you looking to achieve? How will you spend your time? What to do with the money? There is no plan that is right for every owner, but there is a perfect plan for you. Not sure where to go from here? Schedule a call with our team here . Selling your business can be exciting, lonely, and challenging all at once. Connecting your personal goals to your finances can be challenging alone. Business owners turn to Moment Private Wealth when they are looking for a financial advisor who has walked in their shoes. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How much is my business worth? The value of your business is going to be determined by a number of factors. This will be determined by the amount of profit or EBITDA that your company generates on an annual basis multiplied by an industry multiple. Example = Profit x Multiple = Business Value $1,000,000 x 5 = $5,000,000. How to sell my business ? Selling your business is done best through an intermediary. These are financial professionals who help market your business. Depending on the size of your business this professional will be a business broker or investment banker. How much in taxes do I pay on my business sale? Businesses are taxed based on the terms of your deal. With the proper structure, deals are often taxed at long-term capital gains rates. These rates range from 0% - 20% in taxes. What is the cost of selling my business? The size of your transaction will determine the cost of selling your business. Intermediaries charge 5% - 10% of the transaction value to market and sell your business. They are worth their weight in gold. Who is going to buy my business? The buyers of business vary widely based on industry and company size. The most common buyers are strategic buyers and private equity. Strategic buyers are competitors in and around your industry who want to own your company. Private equity buyers will look to own your company for a period of time before reselling it at a higher price. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

When it comes to money and athletes, the questions are endless. Yet there is one question that rises above them all. I would argue that the answer to this question is the culmination of every athlete wealth management question: “Am I good?” or said another way “Can I keep spending what I am spending?” You see professional athletes face a dilemma ~ they have the biggest advantage of all time (time on their side) and the biggest disadvantage of all time (lack of experience). Compound that with an earnings window that is nearly always shorter than an athlete realizes. I think about financial planning for professional athletes on a scale of 0-10. A zero is someone that shows up on ESPN 30 for 30 “Broke”. They spent everything A five is someone who isn’t broke but doesn’t have nearly the money saved they should. They spent too much. A ten is someone who can live the same lifestyle post-playing career. They are good (see our question above). In this blog, I am going to break down the athlete spending problem, the key numbers to know, and how to fix this for professional athletes. Let’s dive in… Professional Athletes - Key Money Numbers Managing money comes down to numbers but not the complicated ones you hear about. No, it comes down to simple numbers that anyone can understand. Consider if you only knew these five numbers: Your current savings rate (as a percentage). Your current spending rate (as a dollar amount). Your future desired spending rate (as a dollar amount). Your projected investment return (as a dollar amount). Your safe withdrawal rate (as a dollar amount). You see every strategy you implement (planning, tax, insurance, estate, and investments) should be helping you get close to the outcome you want to the questions above. Strategies are fuel to reach your outcomes. Yet most professional athletes implement strategies before defining a successful outcome. Consider this analogy ~ You need to buy a new car. Instead of thinking about all of the things you want to be able to do with the car, like: Travel the country Have enough seating Provide good storage space Drive well in harsh conditions You just walk into the car dealership, listen to the salesman pitch, and buy the car that looks cool. That is what I see happen time and time again with financial planning for professional athletes . We act without defining the outcome. We implement with no clear plan for success. We stress because we aren’t sure if those strategies will achieve the outcome. You see the loop this creates? Ok, so instead of doing that let’s consider what happens if we know the five key numbers above.   1) Savings Rate Your savings rate is the backbone of both your current financial picture and certainly your future financial picture. Now consider, traditional financial planning would say you should save 15% of your total income. What I will tell you is if you are a professional athlete and only saving 15% of your gross income you are in trouble. Consider this example: $1,000,000 Salary + 15% Savings Rate Taxes + Agent Fees = $500,000 Savings = $150,000 Spending = $350,000 The average professional athlete's career lasts 3 years. In the above example, you would have saved $450,000 and maintained a lifestyle that costs $350,000. So you have less than 1.5 years of savings to maintain your current lifestyle (yeah not good). Instead, do this ⬇️⬇️⬇️  The best financial decisions start with the end in mind. Said another way ~ you need to be thinking financially about your post-playing career just as your playing career is beginning. The question I want professional athletes to consider is this, “What do I want my future lifestyle to look like?” The more specific the better. Then take that number to your financial team and ask how much money would be needed to live that lifestyle. Only then can you start to understand what your saving percentage should be. ***For most professional athletes their savings percentage should be 50% - 80% of their take-home pay (after taxes and agent fees). You must think about this not just as a dollar amount but as a percentage of your salary. This will help to build the habit of saving more when you are earning more. Example: You decide to save 80% of your take-home pay. Year 1 take home = $1,000,000 Year 1 savings = $800,000 Year 10 take home = $10,000,000 Year 10 savings = $8,000,000 This reinforces a concept that I preach ~ Build your lifestyle slowly . Remember, the goal is to be able to answer the fundamental question, “Am I good?”   2) Spending Rate You see how I put the spending rate after the savings rate? That is intentional. Your spending rate is tied to your savings rate. We want to start with the metric that feeds everything else first. That metric is your savings rate. Nail your savings rate (as a percentage) and you will find yourself with spending guardrails already in place. The next step is determining if your savings rate supports your spending rate (as a dollar amount). I am going to let you in on a little secret ~ nearly no one knows what they are spending. There are two types of athletes when it comes to spending (and planning). Athlete 1: “The Over Spender” They think they are spending $20,000 per month when in reality they are spending $40,000 per month. Athlete 2: “The Over Saver” They are spending $20,000 per month but tell you to plan for $30,000 (just to be safe). Now look, I would rather see you are athlete 2 than athlete 1 but neither of these athletes are optimizing their money. The goal of money is this ~ To use as much as possible while not sacrificing for the things we have and need. Professional athletes, you have to know what you are spending in dollars to live your lifestyle. If you don’t know this number the next three numbers we are going to discuss are meaningless. You are trying to plan to buy a car but have no idea what you need your car to do. *** Pro-tip is to track your expenses through software like Monarch Money It is a great tool I have personally used and recommend. Now onto step ⬇️⬇️⬇️             3) Desired Future Spending Remember how the average professional athlete's career lasts just three years? Well, the average professional athlete's career starts between the ages of 18-22. I have news for you, your life is going to change a lot from that time to when you are 30,40,50 years old. Yet, the decisions we make today will directly affect the lifestyle we are able to live then. So, we bridge that unknown by giving specific thought to what we want that lifestyle to look like. Yes, it will change....no this is not a perfect formula. Yet what I want you to do is take out a piece of paper and write down everything you think you want. A boat A millionaire dollar house Private school for your kids Yearly vacations for your family Make it specific and give serious thought to this. Remember when it comes to financial planning for professional athletes, the strategies we implement have to tie to the outcomes we are desiring. If we haven’t given proper thought to the outcome desired, how do you know the strategies are the right ones for you? Well…You don’t. So stop now, get your paper, and start mapping out your future life. Then take to your financial team and ask how much it would cost to live that life. Only then we can start talking more strategy ⬇️⬇️⬇️   4) Projected Investment Return Investments are fuel for the outcomes you desire. Say it with me… “Investments are fuel for the outcomes you desire.” Back to our car buying example: If your desired outcome is to go 0-60 in less than four seconds ~ You don’t need an SUV you need a sports car. If your desired outcome is to tow your boat, haul your family, and drive across the country ~ You don’t need a sports car you need an SUV. Your investments should act the same way. Investing for professional athletes is a complicated topic full of decisions, yet at its core it is simple. Desired Outcome = Investments to Reach That Outcome So the number you need to know is your projected rate of return. Now look, no one has a crystal ball and I always recommend being conservative with your estimates but you still need a number. What you need to understand as an athlete is the more risk you take, the higher your expected rate of return (projected investment return) should be. What you need to decide is how much risk you want to take and combine that with how much risk you need to take. Take this example: Two athletes have a $10,000,000 portfolio. Athlete 1 is spending $200,000 per year Athlete 2 is spending $500,000 per year The investment return needed to reach the outcome desired of athlete one than athlete two. So before you choose any investments, you need to understand what return you need to achieve. After all, investments are simply fuel to reach your desired outcome. Now let’s tie this all together ⬇️⬇️⬇️   5) Your Safe Withdrawal Rate   To recap our journey so far, we know now: Saving Rate (%) Spending Rate ($) Future Spending Rate ($) Projected Investment Return (% & $) Now we have to determine can the amount of money we have saved support the lifestyle we want to live. You see when I say “safe withdrawal rate” all that means is how much can I pull from my investment portfolio and not risk running out of money. The hardest part of building wealth is building the initial snowball. As an athlete, you have an opportunity to do that in your 20s (massive advantage). Now we have to navigate keeping that snowball intact (for decades) while supporting our lifestyle. Traditional retirement planning leans on 4% per year. Example: A $1,000,000 portfolio could support pulling $40,000 per year in retirement. For athletes, this takes more nuance. You need to consider: Longer time frame League retirement benefits Future income opportunities (second career) Compound that with a natural family spending curve that says you will spend more money from ages 30-60 than 60+. Athletes, this is why I can’t stress enough the value of having an expert in athlete wealth management on your team. My goal for our athletes is: Not for them to die with the most amount of money To use their money to support the things that matter to them. Yet we have to balance that goal with decades of future spending, high spending years of 30-60, and income uncertainty. There is no perfect formula for professional athletes to find their safe withdrawal number. It varies by player…heck it varies by year for players. Yet what you should know is what that number is for you. Knowing that number and living a lifestyle that supports that number is the single best thing you can do to reduce anxiety around money. There are countless money moves to consider for professional athletes. Compound that with endless strategies and sales pitches, it can feel darn near overwhelming. Yet at its core, every professional athlete needs to answer one question, “Am I good”? To do that you don’t need a fancy strategy, one-off investment, or another shiny object. You need to know your numbers. You need a financial team that can guide you. You need to be thinking about the end at the beginning. If you do that, I assure you a ten-of-ten outcome is possible. Moment was built with a mission to ensure more athletes achieve a 10 out of 10 outcomes. Yet, to achieve that outcome...you need the right team to help you. If you are a professional athlete looking for help securing your financial future schedule a call with our team . Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: How do you determine how much to spend ? For us, this is an ever-changing process that starts with understanding current spending and working off of that as our baseline. What is the biggest mistake you see with sudden wealth? Without a doubt, it is spending before getting educated. The key is building a roadmap before building a lifestyle. What role does budgeting play in avoiding money mistakes? We find this to be critical both in providing guardrails for spending and giving one permission to spend on the things they value. How should professional athletes think about investing? We use the analogy that you have hit the home run and now the key is finding a way to consistently hit singles and doubles with your investments. Our number one goal is protection and staying in the game. What can professional athletes do today to avoid money mistakes in the future? The one number thing to do is build a plan and understand what it costs to be you. If the checks stopped today could you support your current lifestyle? *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Cash flow is the lifeblood of any business. It's what keeps the lights on, the employees paid, and the operations running smoothly. Yet, for many business owners, managing cash flow can feel like juggling fire one misstep and the whole thing can come crashing down. Whether you're running a small startup or a growing company, understanding how to manage cash flow effectively is critical to your success. Cash flow is one of the key factors in creating a higher valuation for selling your business. Check out our blog on exit planning for business owners if you are considering selling your business. This blog will break down everything you need to know about cash flow management, from understanding its importance to actionable strategies that can improve your financial stability. We'll also answer frequently asked questions about cash flow planning and how to stay on top of it. Cash Flow for Business Owners When diving into cash flow we are going to focus on three key areas. 1)    What is Cash Flow? 2)    Why is Cash Flow Management Important? 3)    How to effectively manage Cash Flow? Keep reading to see the 7 actionable steps you can implement today. key areas. By implementing these strategies it will give you confidence that your business's cash flow is on the right track. What is Cash Flow? Cash flow is best described as money in vs money out. The tricky part about businesses is that this cash flow often doesn’t happen in a linear fashion. Managing cash flow includes protecting yourself from unforeseen situations like a client not paying or changing the terms of when they pay.  In the purest form cash flow is broken into two potential positions. Positive Cash Flow : More money is coming in than going out. This means your business can cover expenses, reinvest, and save for the future. Negative Cash Flow : There’s more money going out than coming in. This could indicate financial trouble and prompt you to evaluate your spending or revenue strategies. The success of your business relies on maintaining a positive cash flow, which ensures that you have enough liquidity to meet financial obligations. Why is Cash Flow Management Important? Cash is king. It is the one thing every business needs to continue operating. Managing cash flow is essential for the survival and growth of a business. Poor cash flow management is one of the top reasons businesses fail. Here’s what proper cash flow management enables you to do: Meet Financial Commitments : Pay wages, suppliers, and bills on time without scrambling for extra cash. Plan for the Future : Growth comes at a cost. Planning for that cost in your cash flow improves your odds of success. Weather Uncertainty : A strong cash flow acts as a buffer during unexpected downturns or emergencies. Improve Creditworthiness : Lenders and investors favor businesses with stable cash flow when assessing loans or funding. Cash flow is fundamental to running a business. Whether it is creditworthiness or planning for the future you will need cash flow to accomplish it. Now how to manage your cash flow effectively. How to Effectively Manage Cash Flow Now that you understand its importance, let's explore actionable strategies to manage your cash flow effectively. 1. Monitor Cash Flow Regularly The first step to effective cash flow management is understanding where your cash is coming from and where it’s going. Use a Cash Flow Statement : Review your cash flow statement monthly to assess inflows and outflows. This allows you to spot trends and issues. Leverage Accounting Software : Tools like QuickBooks or Xero can provide real-time cash flow tracking and make monitoring effortless. 2. Create a Cash Flow Forecast A cash flow forecast helps you anticipate cash needs and avoid surprises. Project Future Income and Expenses : Include sales revenue, recurring bills, seasonal expenses, and any one-time costs. Scenario Planning : Run “what-if” scenarios to understand how different situations, such as delayed payments or a drop in sales, could impact your cash flow. 3. Optimize Payment Terms How and when you receive or make payments significantly affects your cash flow. Shorten Customer Payment Terms : Ask customers to pay invoices sooner by offering incentives for early payment. Negotiate Supplier Payment Terms : Work with suppliers to extend payment deadlines without incurring penalties. 4. Build a Cash Reserve A cash reserve acts as a safety net, ensuring you’re prepared for unexpected financial challenges. Emergency Fund: Aim to save at least 3-6 months of operating expenses as a reserve. Start small and gradually grow your fund as revenue allows. 5. Control Costs Regularly audit your expenses to identify and eliminate unnecessary costs. Distinguish Between Needs and Wants : Essential expenses should take priority over discretionary spending. Renegotiate Contracts : Look for opportunities to renegotiate supplier contracts at better rates. Cut the Fat : Subscriptions or services that are underutilized should be canceled. 6. Improve Inventory Management For businesses with physical stock, inventory management is directly tied to cash flow. Excess Inventory:  Avoid stocking up unnecessarily, as excess inventory ties up cash. Inventory Monitoring:  Use inventory management tools to find the sweet spot between meeting demand and minimizing storage. 7. Explore Financing Options Even with the best cash flow plans, unexpected expenses or opportunities can arise. Quick access to funds can make all the difference. Business Credit Lines : These need to be setup in advance to avoid a need. Banks love to provide loans when clients don’t need them. Short-term Loans : Often higher interest options than credit lines and should only be used in absolute emergencies. Invoice Financing : If possible this should be avoided but if needed it can be used as a last resort. These can act as helpful inflow sources when you're in a tight spot, but remember to use them judiciously to avoid debt traps. Managing cash flow in your business will always be the lifeblood of profits. Those profits will roll into meeting your personal financial goals. Connecting your business finances and personal finances can be challenging alone. Business owners turn to Moment Private Wealth when they are looking for a financial advisor who has walked in their shoes. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. What is the difference between profit and cash flow? Profit is the amount of money left after deducting expenses from revenue, while cash flow measures the money moving in and out of your business during a specific period. A business can be profitable and still experience cash flow problems if it’s struggling to manage inflows and outflows.. How do I calculate cash flow ? Use the formula: Cash Flow = Cash inflows – Cash outflows You can gather this data from cash flow statements generated through accounting software or by manually reviewing income and expenses.. What is a good profit margin? A strong cash flow margin is generally above 10%. This means that for every dollar earned in revenue, your business generates at least 10 cents in cash flow. How often should I review my cash flow? The frequency depends on the size and complexity of your business. Most businesses benefit from reviewing cash flow monthly, while high-growth companies might monitor it weekly. What tools can help me with cash flow management? Accounting tools like QuickBooks, FreshBooks, and Wave offer real-time insights and automated cash flow reports. You can also use forecasting tools like Float for more advanced cash flow planning. How can I improve cash flow during a downturn? Focus on accelerating receivables, cutting non-essential expenses, and exploring short-term financing. Flexibility and resilience in financial planning are key. Why is a cash reserve important? A cash reserve provides a cushion for unexpected expenses or emergencies, helping you avoid financial strain or borrowing. Can cash flow issues kill a profitable business? Yes. Even profitable businesses can face insolvency if they don't have enough liquid cash to meet short-term obligations. How do I handle late payments from customers? Send reminders as due dates approach and follow up immediately if payments are overdue. Consider offering discounts for early payments or penalties for late payments. When should I seek financial advice? If you're experiencing persistent cash flow issues, major dips in revenue, or are unsure about your financial strategy, consulting a financial advisor is highly recommended. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

"How can someone blow all of that money?" Be honest, you have said it or thought it after seeing a professional athlete on the front page for poor financial decisions. Well here is how: You can do anything. You can buy anything. You can create the life you want. Yet that life will either be sustainable or could go up in flames when the checks stop. For professional athletes, the first three years will dictate much of the financial success achieved (or not) down the road. You see the athletes that retire in the best financial position are not always the ones that made the most amount of money. In fact, I would argue that the biggest indicator of future financial success can be traced back to the decision an athlete makes in the first three years of their career. Said another way, it is the ones that took wealth management as an athlete seriously. It is at that time when you feel invincible, the checks are coming in, and the end of your career is an afterthought that you need to understand the weight of your financial decisions. In this blog, I am going to walk through five money mistakes to avoid as a professional athlete.  Professional Athletes - The Money Mistake We have all heard the stories and seen the stats of professional athletes losing money that they earned. Yet, what those stories don’t show is the initial mistakes many of those athletes made that later pushed them to financial ruin. Consider the analogy of a snowball being pushed up a mountain. Once it reaches the peak of that mountain just a gentle nudge will send it flying down the other side. That snowball can be a cascading effect of good money moves (and collect positive outcomes) or poor money moves (and collect negative outcomes). Seems easy enough right? Well, remember as a professional athlete you are coming into a lifetime worth of wealth at the age of 18-25. A time when money is plentiful but experience is limited. The thing to realize is that snowball is starting to build from day one. 5 Money Traps for Professional Athletes 1) The Yes Man A good agent can make or break your career. A good financial team can make or break your entire life. Sounds dramatic but it is the truth. The number one thing any athlete should consider when hiring their team is who are they hiring. No, I don’t mean their experience or expertise (that matters too), what I mean is who is the person. In the financial services industry you can break every down into two buckets: Those willing to speak the truth, even when it is uncomfortable. Those who are more concerned about losing a client than sharing the reality. Athletes, I urge you not to hire a Yes Man. Hire a team that is willing to speak the truth. You will have enough people telling you how great you are, you don’t need another echo chamber. 2) The Entourage No athlete does it alone. Countless people have been and will be a part of your journey. It is natural to want to bring them along for the ride and at a certain level I think you should. Yet like many things in life, this requires moderation. Paying for a dinner, great. Paying for every dinner, not so great. Paying for a trip, great. Paying for every trip, not so great. See the theme…I want our athletes to support the people that helped them get there. Just remember, it is far more enjoyable to support in a sustainable way (every so often) than an unstainable way (every time). 3) Buying vs Affording Consider the normal financial arc ~ entry-level job, increase income over decades, earn peak income in your 50’s and 60’s. Now consider that as an athlete you are earning a lifetime worth of income in typically less than a decade. The window is shorter. The checks are bigger. The decisions are magnified. You can buy nearly anything (see the big checks)…yet that doesn’t mean you can afford anything. I want you to consider two frameworks: The first is understanding the difference between rewards purchases and lifestyle purchases. One happens one time while the other can happen on an ongoing basis. The second is understand your fixed costs vs your flexible costs. Fixed costs are lifestyle costs that can’t be shut off tomorrow (housing, food, insurance, etc..). Flexible costs can be dialed up or down (travel, reward purchases, etc..). Nearly every athlete that ends up in financial trouble, built an unsustainable lifestyle. Said another way they built a lifestyle full of fixed costs that could not be unwound quickly enough. 4) Back-to-Back Homeruns You know that contract you signed for millions of dollars? That is your home run. The good news is you don’t have to hit another homerun. The bad news is you will be tempted at every turn to try to. The world of athlete investing has turned into a status game . Don’t believe me...just follow the top sports business news for a week and it will be littered with athletes making shiny new investments. Now look, on the surface there is nothing wrong with an athlete making a front page investment. Yet the issue arises when you as an athlete think your investments should look like Lebron James' investments. Lebron has made hundreds of millions on the court and even more than that off the court. His ability to take risks (on shiny investments) is higher than yours. For every athlete, the first goal of your investment portfolio should be to support your lifestyle post-playing career. To do that, you need to invest in a way to hit singles and doubles ~ not home runs. For a deeper dive into how to build these investments, you can read our guide on investing for professional athletes. You see, being on the cover of Forbes should not be the goal of an athlete. No, no, no… I would argue the goal of an athlete is to build an investment portfolio that supports your lifestyle, stacks the odds in your favor, and allows you to sleep at night. Now once you have done that (this requires specific planning for you) only then should you consider taking a swing for the fences. 5) Dunning Kruger Effect The single most common trait among professional athletes is self-confidence. Consider how many people have doubted you or your dreams. Yet time and time again you have provided them wrong. That self-confidence, while a prerequisite for success in the athletic arena, can be a double-edged sword when it comes to your money. In short ~ just because you are good at being an athlete doesn’t mean you are a good investor (at least at the start). The key here is taking a walk before you run approach, remember hitting singles and doubles is a recipe for long-term wealth. So check your ego at the door, put your question hat on, and start educating yourself on how you are positioning your money.   My advice to all of our professional athlete clients is to have a laser focus on staying in the game. Consider the value of a dollar…now consider the value of that same dollar with additional decades to grow ~ a bit more valuable. Money doubles like this: Take 72 and divide it by your rate of return, let's use 8%. 72/8 = 9 years. For an athlete, that could mean 5 to 7 doubles for money invested in their 20s. $1M to $2M to $4M to $8M to $16M. Remember that snowball analogy? Well, if you can position that snowball to build (based on good money moves), you can create a life that far surpasses your expectations. Moment was built with a mission to ensure more athletes achieve a financial outcome they are proud of decades after their playing career ends. Yet, to achieve that outcome...the planning starts today. If you are a professional athlete looking for help securing your financial future schedule a call with our team . Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding athletes and money: How do you determine how much to spend ? For us, this is an ever-changing process that starts with understanding current spending and working off of that as our baseline. What is the biggest mistake you see with sudden wealth? Without a doubt, it is spending before getting educated. The key is building a roadmap before building a lifestyle. What role does budgeting play in avoiding money mistakes? We find this to be critical both in providing guardrails for spending and giving one permission to spend on the things they value. How should professional athletes think about investing? We use the analogy that you have hit the home run and now the key is finding a way to consistently hit singles and doubles with your investments. Our number one goal is protection and staying in the game. What can professional athletes do today to avoid money mistakes in the future? The one number thing to do is build a plan and understand what it costs to be you. If the checks stopped today could you support your current lifestyle? *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.