PODCASTS Archives - Centura Wealth Advisory

Ep. 105: Are You Leaving Money on the Table? Unlock Wealth You Didn’t Know You Had

If you’re a high-net-worth individual or a business owner, there’s a good chance you might be missing out on significant tax savings. These opportunities, often hidden within the complexities of tax codes and financial strategies, could add up to millions—especially if you own real estate or operate a thriving business.

So, how can you uncover these hidden savings?

This week’s episode of Live Life Liberated dives into the strategies you need to know. Derek Myron, Managing Director at Centura Wealth Advisory, sits down with Eric P. Wallace, a seasoned CPA and tax specialist, to discuss actionable methods that unlock substantial financial opportunities.

Here’s a closer look at the key strategies they explore and how they can help maximize your wealth.

Cost Segregation: Unlocking Immediate Deductions in Real Estate

If you own investment properties or commercial real estate, you’re likely aware of depreciation. However, traditional depreciation schedules often fail to maximize the tax benefits available to you. Cost segregation offers a powerful alternative.

By identifying and reclassifying components of your property—such as lighting, flooring, and HVAC systems—you can accelerate depreciation and unlock significant tax deductions. This strategy allows property owners to realize six- or even seven-figure deductions in the current tax year.

Example: A real estate investor who owns multiple apartment complexes was able to use cost segregation to increase cash flow, reinvest in new properties, and reduce taxable income by millions.

Whether you’re building wealth through real estate or optimizing your current portfolio, cost segregation is a strategy worth exploring.

Tangible Property Regulations (TPRs): Reclaim Missed Deductions

Have you ever wondered if you’re properly accounting for past business expenses? Tangible Property Regulations (TPRs) provide a framework for revisiting and correcting the treatment of expenses that may have been improperly capitalized. By “scrubbing” your depreciation schedule, you can identify and reclaim missed deductions retroactively.

This strategy is particularly effective for business owners who have made significant capital improvements or repairs over the years. By aligning your records with TPR guidelines, you can potentially unlock tens or hundreds of thousands in tax savings.

Why It Matters: The IRS allows you to go back and fix these errors, ensuring you aren’t leaving money on the table.

Change in Accounting Methods & Private Letter Rulings (PLRs)

Another overlooked area of tax strategy involves changes in accounting methods. If your business generates $50 million or more in revenue, these changes can help you achieve substantial tax deferrals.

The IRS provides a formal process for implementing these changes through Private Letter Rulings (PLRs). These rulings allow businesses to make IRS-approved adjustments to their accounting methods, creating opportunities to defer income and minimize taxes.

Real-World Impact: Companies in industries ranging from construction to fast food have successfully leveraged this strategy to defer taxes and improve cash flow.

If your business operates at scale, consulting a tax professional about PLRs could provide a significant financial advantage.

Why Collaboration with CPAs Matters

Many high-net-worth families and business owners already have trusted CPAs who help manage their finances. However, niche tax strategies like cost segregation, TPRs, and PLRs often fall outside the expertise of a generalist CPA. That’s where specialists like Eric P. Wallace come in.

By collaborating with niche professionals, you can complement the work of your existing CPA and uncover opportunities that might otherwise go unnoticed. This collaborative approach ensures that every aspect of your financial plan is optimized.

Tip: When working with specialists, look for professionals who prioritize communication and integration with your existing team to create seamless and effective strategies.

Why It’s Time to Revisit Your Tax Strategy

Tax laws are constantly evolving, and strategies that worked well in the past may no longer be sufficient to maximize your financial outcomes. Whether you’re a business owner, real estate investor, or high-net-worth family, it’s essential to periodically review your tax strategy and explore opportunities to enhance it.

By leveraging advanced strategies like cost segregation, TPRs, and accounting method changes, you can ensure you’re not leaving money on the table. More importantly, these strategies free up resources that can be reinvested into growing your business or portfolio, ensuring long-term financial success.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

January 6, 2025

NEWS, PODCASTS, TAX PLANNING

Ep. 104: How to Protect Wealth & Maximize Tax Efficiency for High-Net-Worth Families & Business Owners

In today’s unpredictable financial environment, high-net-worth families and business owners face unique challenges when it comes to protecting their wealth and maximizing tax efficiency. As markets fluctuate and tax laws evolve, finding strategies that both safeguard assets and optimize returns is paramount.

This week on Live Life Liberated, Sean Clark, Partner at Centura Wealth Advisory, and Chris Osmond, Chief Investment Officer, dive into a transformative approach: direct indexing. This personalized investment strategy not only provides flexibility and alignment with your financial goals but also unlocks the potential for significant tax advantages.

In this blog, we’ll explore the key insights from Sean and Chris on how direct indexing can help you navigate today’s markets while maximizing your portfolio’s efficiency.

What Is Direct Indexing?

Direct indexing is an innovative investment approach that allows investors to directly own individual stocks that replicate the performance of a specific market index, such as the S&P 500. Unlike traditional mutual funds or exchange-traded funds (ETFs), direct indexing uses Separately Managed Accounts (SMAs), which provide greater customization, control, and tax advantages.

In a typical mutual fund or ETF, an investor buys shares of a pooled portfolio of stocks. The downside of this approach is the lack of flexibility—it’s difficult to exclude stocks from specific sectors or adjust for personal values. However, with direct indexing, investors hold individual stocks within their portfolios. This offers several key benefits:

Tax Loss Harvesting: Direct indexing allows for efficient tax loss harvesting, which can offset capital gains and reduce taxable income.
Customizations for Values and Financial Goals: Investors can exclude industries or companies they don’t want to invest in (e.g., tobacco or fossil fuels) and tailor sector exposures to match their financial outlook.
Flexibility: Direct indexing allows for greater control over investment decisions, as investors can add or remove individual stocks at their discretion.

Let’s take a closer look at some of the primary benefits of direct indexing.

The Power of Tax Alpha

One of the key reasons that direct indexing stands out as a wealth management tool is its ability to generate tax alpha. Tax alpha refers to the incremental value that is added to an investment portfolio through strategic tax-efficient strategies, such as tax loss harvesting.

Tax loss harvesting is particularly beneficial in volatile markets, where the value of individual stocks can fluctuate dramatically. In these circumstances, investors can sell underperforming stocks at a loss, which can be used to offset other gains or income within their portfolio. This strategy can potentially add 0.5% to 2% to your annual returns.

Here’s a breakdown of how tax loss harvesting works in the context of direct indexing:

Identify Losses: The first step is to sell underperforming stocks to realize a loss. While it’s not ideal to sell stocks at a loss, this can be a beneficial move when it helps to offset taxable gains.
Offset Gains: The loss from the sale can be used to offset capital gains or reduce taxable income, lowering your overall tax liability.
Reinvest Strategically: To maintain exposure to the same sectors or industries, investors can replace the sold positions with similar securities (often referred to as “tax-efficient replacements”). This allows them to preserve their portfolio’s overall strategy without triggering the wash-sale rule, which prevents investors from claiming tax losses on positions they repurchase within 30 days.

For high-net-worth individuals, tax loss harvesting can provide a significant advantage, especially during periods of market turbulence. This proactive strategy helps investors reduce their tax burden and optimize long-term growth.

Personalized Portfolios for Unique Goals

Direct indexing isn’t just about tax optimization—it also offers exceptional customization options, allowing families and business owners to align their investment portfolios with their unique goals, values, and financial objectives.

Align with Your Values: Many investors want to ensure that their portfolios reflect their personal values. With direct indexing, you have the ability to exclude industries or specific companies that don’t align with your ethical or social principles. For example, if you prefer not to invest in tobacco or fossil fuels, direct indexing allows you to tailor your holdings accordingly.
Tailor Exposures to Your Financial Goals: High-net-worth families and business owners often have specific financial objectives—whether that’s prioritizing growth, minimizing risk, or investing in specific sectors. With direct indexing, you can fine-tune your portfolio to emphasize the sectors or companies that align with your investment strategy and outlook for the future.

Direct indexing enables a level of portfolio customization that traditional index funds and ETFs simply cannot match. Whether you’re focused on long-term growth or specific sector exposure, this strategy offers the flexibility to build a portfolio that is perfectly aligned with your financial goals.

Best Use Cases for Direct Indexing

Direct indexing has several key advantages, but it is particularly effective in certain scenarios. Here are the best use cases for this approach:

Maximizing Tax Benefits in Taxable Accounts: For high-net-worth individuals with taxable accounts, direct indexing is a powerful tool for maximizing tax benefits. The ability to conduct tax loss harvesting and strategically offset capital gains can have a significant impact on long-term portfolio growth. This is especially important for families and business owners who may face higher tax liabilities due to significant income or capital gains.
Preparing for Liquidity Events: Business owners who are approaching a sale or other liquidity events, such as an acquisition or IPO, can greatly benefit from direct indexing. The strategy can help optimize the management of newfound wealth after these events by offering greater tax efficiency and diversification. It also provides the flexibility to adjust exposures based on changing financial circumstances and goals.
Managing Concentrated Stock Positions: Many executives and business owners hold significant amounts of stock in their own company. Direct indexing offers a tax-efficient way to diversify these concentrated positions without triggering massive tax bills. By strategically selling portions of the company stock and reinvesting in a diversified portfolio, business owners can reduce risk and maintain tax efficiency.

Why Now?

In today’s volatile markets, wealth preservation and tax efficiency are more critical than ever. Global economic uncertainty, fluctuating interest rates, and ongoing market disruptions demand proactive and flexible wealth management strategies. Direct indexing offers a unique combination of personalization, tax optimization, and customization that traditional investment vehicles simply can’t provide.

For high-net-worth families and business owners, direct indexing is more than just a tool for tax efficiency—it’s an investment strategy that provides control, flexibility, and growth potential. By partnering with wealth management experts who specialize in direct indexing, you can take a hands-on approach to safeguard your wealth, manage risk, and optimize returns.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

December 4, 2024

Grantor vs. Non-Grantor Trusts: Tax Strategies for Wealth Preservation in wealth management office

NEWS, PODCASTS, TAX PLANNING

Ep. 103: Grantor vs. Non-Grantor Trusts: Tax Strategies for Wealth Preservation

Trust planning can be overwhelming, especially with tax laws that seem to change constantly. But understanding the ins and outs of grantor and non-grantor trusts is key to making smart decisions about your wealth and legacy.

In this episode of the Live Life Liberated podcast, Kyle Malmstrom from Centura Wealth Advisory and Adam Buckwalter from Wilson Elser break down the differences between grantor and non-grantor trusts, and how they can be used to optimize your income and estate tax strategies.

What Are Grantor and Non-Grantor Trusts?

At the most basic level, trusts fall into two categories when it comes to taxes: grantor trusts and non-grantor trusts. Both types of trusts are designed to move assets out of your taxable estate, but they handle taxes in very different ways.

A grantor trust is treated as if the grantor (the person who creates the trust) still owns the trust’s assets for tax purposes. This means that all the income generated by the trust is reported on the grantor’s personal tax return.

“A grantor trust is, in essence, invisible to the grantor. All income is reported on the grantor’s personal tax return, while the trust grows tax-free.” – Adam Buckwalter, Wilson Elser

While the grantor pays taxes on the income generated by the trust, the trust itself is not taxed on the money it earns. The key benefit here is that the trust can grow without being burdened by taxes, helping assets compound over time.

In contrast, a non-grantor trust is a separate tax entity. It gets its own tax identification number and must file its own tax returns. Non-grantor trusts are taxed at their own rates, which are generally higher than individual rates, and any income the trust generates is taxed within the trust.

The Upside of Grantor Trusts

Grantor trusts can be a great way to accelerate wealth growth, especially for those looking to pass wealth on to future generations without the drag of taxes.

“Because the grantor pays the taxes, the trust can grow faster without the drag of taxes. This payment is not considered an additional gift to the trust.” – Adam Buckwalter

By paying the taxes on the trust’s income, the assets in the trust are free to grow without being diminished. This can be especially helpful when you’re looking to pass down wealth to heirs, as it allows the trust to accumulate more value over time. It’s also a powerful tool in estate and asset protection planning.

That said, there are some things to keep in mind. Legislative proposals, like those in Senator Elizabeth Warren’s bill and President Biden’s Green Book, could change how grantor trusts are taxed. These changes might limit the benefits of grantor trusts, particularly for future contributions.

Why Go With Non-Grantor Trusts?

Non-grantor trusts offer a different set of benefits that can be especially helpful for individuals in high-tax states or those looking to maximize their tax efficiency.

“By domiciling the trust in a state like Nevada, where there’s no state income tax, you can save millions on transactions like the sale of a business or stock.” – Adam Buckwalter

For example, if you live in a high-income tax state like California, a non-grantor trust can help you avoid those state taxes by setting up the trust in a state with no income tax, such as Nevada or Delaware. This can lead to significant savings, particularly when selling assets like a business or stocks.

Non-grantor trusts also tend to be more insulated from changes in tax laws. While grantor trusts are more directly affected by tax law changes, non-grantor trusts are taxed as separate entities, which can provide more stability in the face of potential legislative shifts.

Why the Time to Act Is Now

Given the potential changes in tax regulations, now is the perfect time to consider your trust planning options. With proposals that could impact the tax treatment of grantor trusts, it may be wise to set up or fund your trust before any new legislation is passed.

“This may be your last planning opportunity. Talk to your advisors now to ensure your trust is set up properly and aligns with your goals.” – Kyle Malmstrom, Centura Wealth Advisory

Talking to your financial and legal advisors now can help ensure that your trust is set up in a way that takes full advantage of current tax rules. Whether you’re setting up a new trust or making changes to an existing one, getting proactive now can protect the benefits you currently enjoy.

Trust Strategies Tailored to Your Family

No two families are the same, and your trust planning should reflect your unique financial situation. Whether your focus is on minimizing taxes, preserving your wealth, or supporting charitable causes, it’s important to have the right strategy in place.

A custom trust strategy can help optimize your income tax savings, minimize estate taxes, and support your philanthropic goals. The right advisors will help you navigate the complexities of trust planning and ensure that your strategy fits your family’s needs.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

November 13, 2024

FINANCIAL PLANNING, INVESTING, PODCASTS

Ep 71: Inside Centura’s Elite Advisor Collaboration Program

At Centura Wealth Advisory, we believe that collaboration is key to achieving financial success for their clients.

In Episode 71 of our podcast, Live Life Liberated, we discussed our new program, the Elite Advisor Collaboration Program (EACP), which aims to help financial advisors achieve success by collaborating with other top-tier professionals.

Collaborating for Success

EACP Overview

The EACP (Elite Advisor Collaboration Program) is a program designed to help financial advisors find like-minded professionals who are collaborative and committed to achieving success. The program encourages transparency and openness to collaboration.

Benefits of Collaboration

Derek Myron, a 24-year veteran of the financial advisory business, believes that collaborating with other top advisors is the fastest way to grow and learn. Collaboration with estate planning attorneys, CPAs, and other financial advisors can provide better solutions for clients and elevate the quality of service.

Building a Culture of Continuous Improvement

Jonathan Freeman, from Intel Corporation, sees the value in building a real enterprise that is the best in the business in serving clients. By implementing a culture of continuous improvement, he believes that a competitive advantage can be achieved.

Collaborative Opportunities

The EACP offers various ways to collaborate, such as study groups and joint cases. The program is open to financial advisors who are committed to achieving success and providing the best solutions for their clients.

Iron Sharpens Iron

The EACP’s philosophy is that iron sharpens iron. By collaborating with other top-tier professionals, financial advisors can elevate their game and achieve success that would be difficult to achieve alone.

The Five Pillars of Financial Planning

In addition to the EACP, Centura Wealth Advisory has five pillars that we use to achieve their clients’ financial goals.

Pillar 1: Marketing and Business Development

The first pillar is marketing and business development, which involves getting new clients to the table.

Pillar 2: Financial Planning

The second pillar is financial planning, which starts by understanding the client’s current situation and their North Star, which is their future state of where we are headed.

Pillar 3: Investments

The third pillar is investments, which includes liquid and illiquid investments that will help clients achieve their financial goals and maintain their lifestyle.

Pillar 4: Insurance Solutions

The fourth pillar is insurance solutions, which provides tax-efficient vehicles to deliver estate solutions.

Pillar 5: Practice Management

The fifth and final pillar is practice management, which focuses on how to run the team, find and grow people, and run systems and processes efficiently.

Centura Wealth Advisory’s Financial Advisor Program

Centura Wealth Advisory also offers a program for financial advisors to learn more about their pillars and best practices. The program walks the advisors through a brief introduction of the program and the different elements of the pillars. We collaborate with the advisors, who choose one or two pillars that interest them the most and an area where we think we can teach the most. The program aims to build trust by exposing thoughts and solutions.

Building Trust through Collaborative Approaches

Centura Wealth Advisory values collaborative approaches to building trust and achieving financial success. We believe that partnering with other professionals or witnessing and participating in their process can be a great way to learn and build trust. For example, we share how an advisor introduced them to an ultra-high-net-worth client, and we worked side by side through their financial planning process, achieving a great outcome for the client. The advisor also learned about Centura Wealth Advisory’s approach and solutions.

Commitment to Financial Success and Freedom

Centura Wealth Advisory is dedicated to helping clients achieve financial success and freedom. We believe that financial success is not just about accumulating wealth but also about living life liberated. Their team of experienced professionals provides customized solutions to meet each client’s unique needs, whether we are just starting out or are already well-established.

Partnering with Centura Wealth Advisory

If you’re looking for a partner to help you achieve financial success and live life liberated, Centura Wealth Advisory may be the right choice for you. Their team of experienced professionals is committed to providing customized solutions that meet your unique needs and help you achieve your financial goals.

Learning More about Centura Wealth Advisory and Our Services

To learn more about Centura Wealth Advisory, our Elite Advisor Collaboration Program, and five pillars of financial planning, visit our website or listen to their Live Life Liberated podcast. By taking the first step towards financial freedom and partnering with Centura Wealth Advisory, you can start living life liberated today.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

March 8, 2023

wealth advisors discuss Pass through Entities

NEWS, PODCASTS, TAX PLANNING

Ep. 70: Everything You Need to Know about Pass-Through Entities

Pass-through entities are a popular business structure for small business owners that allow profits and losses to pass through to the owners’ personal tax returns instead of being taxed at the corporate level.

In Episode 70 of the Live Life Liberated podcast, Chuck Levun, a tax and business attorney with Levun, Goodman and Cohen, shares his expertise on pass-through entities with host Kyle Malmstrom. The podcast covers a range of topics related to pass-through entities, including S corps, LLCs, partnerships, and more. Chuck offers insights into the advantages and disadvantages of each structure and how to choose the right one for your business.

This blog highlights the limitations and drawbacks of S corporations compared to partnerships and LLCs, as discussed by Chuck and Kyle in the podcast, and emphasizes the importance of tax planning for small business owners. Whether you’re just starting out or have been running a successful business for years, there’s always more to learn about how to minimize your tax liability and maximize your profitability.

What Are Pass-Through Entities?

Pass-through entities are designed to “pass through” income, deductions, and tax liabilities to individual owners or partners. Unlike traditional corporations, which are subject to corporate-level taxes, pass-through entities avoid double taxation, simplifying the tax process and often reducing overall tax burdens.

Types of Pass-Through Entities

S Corporations (S Corps): Offer limited liability protection and avoid corporate taxation but come with strict ownership and operational rules.
Limited Liability Companies (LLCs): Combine liability protection with operational flexibility.
Partnerships: Provide flexibility in ownership, management, and tax deductions.

Each structure has its own strengths and limitations, making it critical for business owners to evaluate their unique needs before making a choice.

Comparing Pass-Through Entity Types

S Corporations

S corporations combine limited liability protection with the tax benefits of a pass-through structure. Shareholders report profits and losses on their personal tax returns, avoiding corporate taxes. However, S corporations come with notable limitations:

Ownership Restrictions: S corporations can only have up to 100 shareholders, and shareholders must be U.S. citizens, resident aliens, or certain types of trusts.
Loss Deductions: Loss deductions are limited to the shareholder’s basis, which excludes debt. This restriction can limit the ability to offset losses.
Compliance Requirements: S corporations face stricter rules regarding ownership structure and operational practices.

Partnerships and LLCs

Partnerships and LLCs offer significantly more flexibility in terms of ownership, management, and tax treatment. Key advantages include:

Broad Ownership: These entities allow for a wider range of investors, including individuals, corporations, and foreign entities.
Debt in Basis: Debt is included in the owner’s basis, allowing for greater loss deductions and more flexible debt management.
Adaptable Structure: Partnerships and LLCs are less restricted by regulations, making them ideal for businesses that need to pivot or grow quickly.

For businesses involved in real estate, partnerships and LLCs often provide smoother refinancing options and greater ease in managing cash flow without triggering additional tax liabilities.

Key Considerations for Business Owners

When choosing a pass-through entity, it’s important to consider several factors:

Ownership Flexibility: Partnerships and LLCs allow diverse ownership structures, making it easier to bring in capital or new partners.
Loss Deduction and Debt Management: Partnerships and LLCs provide better options for deducting losses and managing debt compared to S corporations.
Regulatory Simplicity: Partnerships and LLCs are less regulated than S corporations, offering more adaptable frameworks for businesses needing to pivot or scale.

Benefits of Tax Planning and Choosing the Right Entity

Careful tax planning is critical when selecting the right business structure. By evaluating the advantages and disadvantages of each entity type, business owners can minimize their tax liability and maximize profitability. For instance, partnerships and LLCs often allow for more strategic use of debt and losses, while S corporations may provide simplicity for smaller businesses with limited ownership needs.

Avoiding Common Mistakes with Pass-Through Entities

Mistakes in entity selection can lead to unnecessary tax burdens, compliance challenges, or operational inefficiencies. To avoid these pitfalls:

Understand Ownership Rules: If your business plans to bring in outside investors, partnerships or LLCs may be a better fit than S corporations.
Factor in Real Estate Holdings: For businesses holding real estate, partnerships and LLCs are typically more advantageous due to their treatment of debt and refinancing.
Plan for Future Growth: Choose a structure that aligns with your long-term goals, whether that means raising capital, expanding operations, or managing tax obligations effectively.

Why Professional Guidance Matters

The intricacies of pass-through entities require careful consideration, particularly for businesses with complex operations or growth plans. Working with a tax professional or business consultant ensures you fully understand the implications of your chosen structure and can plan effectively for the future. Their expertise can also help you navigate ever-changing tax laws and regulations.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

February 22, 2023

NEWS, PODCASTS

Ep. 69:The Importance of Passion and Professional Help in Starting a Business

Starting a business can be both exciting and challenging. Many entrepreneurs start their businesses out of passion, hoping to create something new, solve a problem or fill a gap in the market. However, passion alone is not enough to ensure the success of a business. A range of skills, including effective communication, problem-solving, and financial management, are also essential.

In this blog post, we discuss the importance of passion and professional help in starting a business, with a focus on Tony Chen’s journey from academia to entrepreneurship. We explore how his experience with planning and selling his business highlights the value of seeking professional help, finding passion in work, and taking on new challenges.

Learn From Our Client, Tony Chen: From Academia to Entrepreneurship

Tony, a lifelong entrepreneur and business owner, recently shared his story on the Live Life Liberated podcast. Let’s take a look.

From Psychology to Business: A Lifelong Entrepreneur

Tony’s story began in academia, where his focus was on understanding human behavior and psychology. However, as he progressed through his post-doctoral studies, Tony discovered a desire for a more dynamic and challenging environment. The business world offered precisely that, leading him to transition into entrepreneurship.

For decades, Tony built and managed successful businesses, learning valuable lessons along the way. His entrepreneurial journey was filled with highs and lows, as is often the case, but his passion for problem-solving and innovation kept him motivated.

One key insight Tony shared is the importance of adaptability in business. The ability to embrace change and tackle unforeseen challenges head-on was a cornerstone of his success. For entrepreneurs, this mindset is essential, especially when preparing for significant transitions like selling a business.

Passion in Business: Tony’s Insights

When asked about his transition from academia to business, Tony noted a significant difference between the two:

“In academia, one often repeats the same process and uses the same tools, while in the business world, each day brings new challenges that require different decisions.”

Tony’s story is a testament to the fact that successful entrepreneurs can come from diverse backgrounds and can have a wide range of experiences. His journey shows that it is possible to find success by following one’s passion and taking on new challenges.

Preparing to Exit: The Importance of Early Planning

By 2019, Tony decided it was time to sell his business. Knowing how complex the process would be, he sought guidance from Centura Wealth Advisory to ensure everything went smoothly.

Pre-LOI Planning

Before signing a letter of intent (LOI), Tony and his team focused on evaluating the company’s financial health, identifying potential buyers, and aligning the sale with his personal goals. Early preparation was critical to maximizing the business’s value and ensuring a successful outcome.

Post-LOI Planning

After the LOI was signed, the focus shifted to finalizing the sale. This stage required careful negotiation, tax planning, and a seamless transition for everyone involved. With Centura’s support, Tony was able to navigate these steps effectively.

The Liberated Wealth Process®

Centura’s Liberated Wealth Process played a central role in guiding Tony through the sale and preparing him for life afterward. This approach helped him clarify his goals, understand his options, and feel confident in his decisions.

Tony described the experience as smooth and rewarding, crediting Centura’s expertise for making a complex process manageable.

Building the Right Team

Tony’s story highlights the importance of working with professionals who bring specialized expertise. Selling a business involves complex financial, legal, and tax considerations—areas where having the right team can make all the difference.

Tony’s team included:

Wealth Advisors: To align the sale with his long-term financial goals.
Tax Professionals: To handle the tax implications of the transaction.
Legal Experts: To protect his interests throughout the sale process.

This collaborative approach allowed Tony to focus on what he did best as a business owner, leaving the technical details to his trusted advisors.

Managing Wealth After the Sale

Once the sale was complete, Tony’s focus shifted to managing his wealth. Centura helped him create a strategy to preserve and grow his assets, tailored to his goals and risk tolerance.

Exploring Alternative Investments

Tony also explored alternative investments, such as private equity, real estate, and hedge funds. These non-traditional options helped him diversify his portfolio and work toward achieving higher returns. With Centura’s guidance, he was able to make informed decisions that suited his financial objectives.

Advice for Entrepreneurs

For those considering selling a business, Tony had two key pieces of advice:

Start planning early: Early preparation can uncover opportunities to increase the value of your business and ensure a smoother transition.
Build the right team: Having experts in finance, tax, and legal matters is crucial for navigating the complexities of a sale.

Tony also stressed the importance of structuring the business to meet best practices well in advance. Taking the time to make these adjustments can significantly improve the outcome of a sale.

Key Takeaways

Tony’s journey offers practical lessons for business owners:

Adaptability and a willingness to embrace change are essential.
Passion is a great starting point, but success comes from preparation and strategic thinking.
Professional guidance can help business owners achieve their goals and avoid costly mistakes.

At Centura Wealth Advisory, we’re here to help entrepreneurs navigate major transitions, plan for the future, and take control of their wealth.

Connect With Centura

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

February 8, 2023