Are You One of the 65% of Business Owners Making This Financial Mistake?


I talk to at least a dozen business owners a week.  The crux of our conversations is around how they may want to look at the finances within their businesses a little differently.  It could be about items that could be legitimately expensed but aren’t, getting money out of their businesses tax effectively, how they can use their business to create a retirement plan for themselves, fixing employee benefit plans so they’re sustainable and cost certain, or coaching on employee retention and engagement ideas.  Whatever the reason or the hotpoint for our discussions, at least one opportunity is certain to arise or we can identify an opportunity that a business owner has overlooked.  Conservatively, I say that 65% of business owners are making this one mistake, (but my experience puts it at closer to 80%)

These numbers specifically pertain to businesses that are incorporated and have 50 employees or fewer.  The trend for companies that have more than 50 employees is less than the above numbers but still have a significant number of business owners not taking advantage of this opportunity.

The number of business owners that are not submitting all their families’ health and dental expenses through their business is overwhelming.  This could be the result of not having a benefit plan or having a benefit plan that is limited in it’s offering.  Deductibles and co-pays are also considered an eligible expense to be submitted for reimbursement.

So if a business owner isn’t submitting their personal health and dental expenses, they are paying in after-tax dollars.  Depending upon what the business owner pays him/herself that could translate to more than 50% in tax savings!

You Can Claim These Expenses on Your Personal Income Tax Return, Right?

You are limited in what you can submit on your personal income tax return.  In 2020, you are eligible to claim the lesser of 3% of your NET income (after tax and deductions) or $2,397.  If you bought glasses, had any major dental work done, had a child with braces or any other number of medical and dental expenses, or have a family with a significant amount of usage, you likely would be able to write-off only a small percentage of the actual expense.  Whereas if you had a benefit plan, or better still, a Health Spending Account, you would be able to write off the entire amount as a business expense. 

You do the math and determine what you would prefer?!

Benefit Plans are Expensive

I rarely push companies towards a fully insured benefit plan, especially if they’ve never had a benefit plan before or are relatively small.  Dollar for dollar, the insurance companies and the benefits advisor make a lot more money.  Benefit advisors push clients in the direction of insured plans because they make a lot more commission.  At renewal, the client is subject to a significant increase and the clients are forced to make a difficult decision; renew at the new rate, reduce the number of benefits or attempt to change benefit providers.  Neither of these options is acceptable or necessary, but it’s been done for years and clients have been forced to make this difficult decision.

Want to Try a Smarter Alternative?

There are smarter alternatives to the above scenario.  If you’re tired of feeling like you’re in a lose-lose scenario with your benefits provider, send me an email at I’ll show you a smarter, more flexible and cost-certain benefit solution that will keep more money in your pocket, cover your family and your employees for any health and dental coverages and give you a predictable line-item cost on your income statement for years to come.

Chris Coulter is the Founder and President of The Finish Line Group.  He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms. 

Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing many opportunities within his business to create significant wealth.  Chris found out the difficult way and now educates business owners on avoiding many of his former oversights and ultimately controlling where their finish line ends.

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