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Whether you're just entering the workforce as a newly minted entrepreneur or freshly self-employed after years of being in the traditional workforce, there's no doubt that you have a laundry list of things that need to get done.From the daily machinations of setting up computer systems and phone lines for your business to the big picture plans for your new company, it probably seems as though there are not enough minutes or hours in the day.Offering a solid retirement plan can be a key component when it comes to attracting and retaining good employees.
While you won't have a company plan to help make your decisions, there are a number of retirement account options for self-employed workers and small business owners.
Not only do these choices offer everything you need for your retirement plan, but there are a couple of options that you can utilize if you're a small business owner with employees.
“This is important, because business owners are the least prepared of all people for retirement, even less so than their employees, according to studies.” Another advantage of offering a retirement plan is helping the owner attract, retain and motivate employees, Kalish says.
Depending on your answers, a retirement specialist can steer you toward the appropriate small business retirement plan options.
A study by LIMRA showed that only 42 percent of small businesses offered retirement plans – despite the fact these plans not only help employees but offer great benefits to the employer, too.
“From the perspective of the employer/business owner, it’s the ability to put money away for retirement on a tax-advantaged basis,” says Jerry Kalish, a small business benefit services consultant in Chicago. Decisions on health care plans, retirement plans and other benefits are often left solely to the owner.Offering a small business retirement plan to employees isn’t always on the radar.Contributions: Administration: The SEP IRA is easy to establish and maintain. Good to know: This plan is good even if the employer has a non-family member as an employee, says Cutter.Learn more about Nationwide retirement plan options and the benefits they can offer your small business.It’s possible to wait until after you’ve filed your taxes to fund the account, so if your income is higher than you thought, you can make a larger contribution and lower your tax bill.If you have employees, they cannot contribute to the SEP IRA, but they can make their own contributions to a traditional or Roth IRA.However, when you are setting up your new business, one important piece of the pie is to set up your retirement account.If you are a young entrepreneur in your 20’s or 30’s, retirement is probably the last thing on your mind.It’s an easy account to open and annual account fees are low or even non-existent.The rules on contributions are also simple – you can invest as much as 25 percent of your net income up to a cap that changes periodically to keep up with inflation. Contributions are tax-deductible and the SEP IRA also offers some funding flexibility.