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Helpful Tips for Economy-Proofing & Growing Your Business in 2025
Planning for a Resilient 2025
As the economy continues to fluctuate, there’s never been a better time to secure your business’s future. By taking a strategic approach—like building multiple LLCs, diversifying your revenue, and creating a strong safety net—you’re positioning your business for growth and stability no matter the market.
Here are key tips to guide you on this path to resilience!
1. Diversify with Purpose: Multiple LLCs for Stability and Growth
A single LLC may feel straightforward, but it also leaves you exposed. By creating multiple LLCs with complementary functions, you can:
Reduce Tax Liability: Each LLC allows for unique deductions, potentially lowering your overall tax bill.
Protect Assets: Isolate each LLC’s liabilities so a problem in one won’t affect the others.
Expand Revenue Streams: Offer new services to your existing clients or enter a new market with a separate LLC, increasing your income sources and mitigating risk if one revenue stream slows.
Example: If you own a closet installation franchise, consider forming an LLC that handles post-installation wall repairs and painting. This adds value for clients while creating a second income stream.
2. Protect Your Business with a Strong Safety Net
Risk management is essential, especially when the economy is uncertain. Here’s how to start building a protective framework:
Separate Business Banking: Open individual accounts for each LLC, making it easier to track finances and ensure clear lines of separation.
Insure Each Entity: Make sure each LLC has its own insurance policy, from general liability to specialized coverage based on the service offered.
Use Contracts to Limit Liability: Craft separate agreements for each LLC, limiting cross-liability and protecting your assets in case of legal issues.
3. Position Your Business for Maximum Tax Efficiency
As the end of the year approaches, preparing your tax strategy now is key to taking advantage of deductions and structures that can lower your tax burden. Here’s how:
Plan for Deductions Across LLCs: Think about expenses each LLC will incur and how to maximize tax write-offs for supplies, travel, and operational costs.
Evaluate Your Tax Structure: LLCs that generate higher income should consider electing an S-Corp status to save on self-employment taxes.
Year-End Moves: Before December 31st, ensure you’ve recorded all expenses and organized your finances to capture maximum tax savings.
4. Diversify Revenue Streams with Low-Risk Additions
Add complementary services that increase client satisfaction while creating passive or recurring income. Think about what would enhance your primary business:
Create Digital Products: Online courses, eBooks, or consulting packages can serve current clients and draw in new ones without physical inventory.
Offer Maintenance Plans or Retainers: For service-based businesses, retainers or ongoing maintenance contracts provide stable monthly income.
Expand into a New Market: If you operate in one industry, look into related sectors with high demand. Using a separate LLC can help you test the waters without risking your primary business.
Example: A fitness studio might create a separate LLC to offer virtual nutrition coaching, which would provide more value to clients and diversify its income.
5. Get Started Now for 2025 Success!
Time-sensitive Steps to Take by December 31st:
Organize Your Accounts: Open separate bank accounts for each LLC and record all expenses.
Set Up Your New LLCs: Register any new LLCs now so they’re in place before tax season.
Review Tax Strategy with a CPA: Meet with a tax advisor to make sure you’re taking advantage of multi-LLC tax benefits.
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By taking these steps, you’re building a business that’s not only set to grow but also designed to withstand economic shifts. Get started now, and set your business on the path to resilience and success in 2025!
Special Note for Franchise Owners: Ensure Compliance with Your Franchise Agreement
If you own a franchise, it’s crucial to review your franchise agreement before setting up additional LLCs or offering complementary services outside your primary business. Here are some key points to consider:
Review Non-Compete Clauses: Franchise agreements often include non-compete clauses that restrict owners from providing similar services independently. Ensure that any new LLC or service won’t conflict with these terms.
Clarify Service Boundaries: Double-check if the franchise agreement limits the types of services you can offer. For example, while adding a wall repair service might enhance a closet installation franchise, make sure the agreement allows you to operate this additional service separately.
Obtain Written Approval if Needed: Some franchise agreements require you to get written consent from the franchisor before launching a separate LLC that could be perceived as related to your franchise business. Contact your franchisor for clarity if you’re uncertain.
Use Separate Branding: To avoid potential conflicts, make sure any complementary LLC operates under distinct branding, which separates it clearly from the franchise’s trademarks and identity.
Consult Legal Counsel: Before you proceed, it’s wise to consult with a franchise attorney to ensure your new venture is fully compliant with your franchise agreement.
By taking these steps, you’ll be able to diversify and grow confidently, without risking any conflicts with your franchise obligations.