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How Can A Business Owner Save Money?

Through the creation of a captive insurance company, businesses can cut their taxes and increase the value of their estate. A business creates a captive insurance company to insure its risk; the captive can issue property and casualty insurance. It can also collect and invest premiums, as well as pay claims. To be sure, the business can also use the captive for pretax wealth accumulation, to protect assets, for efficient estate planning and to retain key employees. The business determines the policy terms, whether to write new or renewable policies and the types of insurance coverage to write. The strategy works best for companies that generate at least $1 million in annual net income, making it viable for physician groups, associations, franchisees and other businesses. For instance, Stan and Joan Smart, 60 and 55, respectively, own ABC manufacturing company. They seek better risk management and estate planning. After meeting with their financial adviser, Stan and Joan decide to retain an ...

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