Small Business Retirement Advice

in Retirement

There is a myth commonly heard of in the financial and business circles that, successfully running a small-sized concern is tough. On the contrary, the fact remains that while setting up a small business is rather easy, you can also enjoy considerable finance-related benefits if you run the business in a prudent, informed fashion. There are certain basic factors, which, if heeded to properly, can automatically boost up the potential profitability of your company. Primary among them are the small business retirement plans, which are often spelt out by professional financial planners. This type of planning (including profitable 401K small business plans) is, in fact, crucial to the overall success of a small business concern.

When designed by expert corporate finance experts, business retirement schemes can offer significant tax advantages, and that too, both for the workers and the owner. Let us now look at some of the basic guidelines that need to be followed while drawing up these retirement plans. These tips for successful running of a small company can be listed as under:

1. Helping The Employees To Save More - Ideally, the owners of small businesses need to be all the more pro-active in encouraging the saving habits of the workers. These plans come in extremely handy since they help the employers to set aside a fixed portion of their income as savings, on a regular basis. Researches show that, for a comfortable life after retirement, a person needs about 70%-90% of his/her pre-retirement income. Thus, you should encourage the employees of your business to start savings early, and to contribute regularly to retirement funds,

2. Keeping The Tax-Benefits Into Account - When money is saved in the retirement schemes, the savings are totally exempted from taxes. Both the owner(s) as well as the workers need to contribute to the retirement funds, and no taxes have to be paid on the amounts contributed by either of them. In addition, the contributions of the owner(s) are deductible as well,

3. 401K Plans For Small Businesses - If you are looking for a profitable retirement plan for your small-scale company, you should go in for suitable 401K plans. Via these 401K schemes, the workers of the company can opt to divert a portion of their current income to employee-specific 401K funds. These funds are sponsored by the owner(s) of the company, and as such, are exempted from taxes as well, and

4. Additional Features of Retirement Plans - In small businesses, the workers are generally allowed to contribute in excess of the average savings limits to their retirement funds. Employees who are over 50 years old also can enjoy the special 'catch-up plans', through which they can put away a significantly large portion of their regular income as savings amounts. In addition, when operating in the private sector, small businesses also offer the advantages of Individual Retirement Arrangements (IRAs) to the employees as well.

As is evident from the list above, there are considerable financial benefits to be had, if the retirement plans are laid out in a suitable way. The employees, with the help of the owner(s), can derive significant tax-benefits from these plans. In these companies, properly setting up 401K schemes are also necessary, since they can help to boost up employee savings (which would also be tax-free). Keeping in mind the importance of these retirement schemes, it is ideal that you should properly design these plans for the success of your company.

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Sambit Sahoo has 1 articles online

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Small Business Retirement Advice

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This article was published on 2010/03/30