16In the midst of building your home based oils business, it’s easy to lose sight of the long term goal of eventually retiring. Previously posted articles have covered how home based businesses are unique when it comes to taxation, they are also very unique when it comes to retirement options. Its never too early or too late to begin taking advantage of retirement options of a home based business. Did you know that contributing to a retirement fund can actually save you money when it comes to paying taxes? There are many ways a retirement plan for your business can actually save you money in the long run. Let’s review a few of the options you have as a self employed individual when it comes to saving for retirement.
SIMPLE IRA stands for Savings Incentive Match Plan for Employees Individual Retirement Account. This plan is great for small businesses with less than 100 employees. As an oil business owner, you may only have one employee, just yourself. If you have grown your oil business to a point where you are employing personal assistants, secretaries, marketing agents etc, this might be a good plan for you.
SEP IRA stands for Simplified Employee Pension Individual Retirement Account. These accounts are ideal if you only have one or two employees. The great thing about a SEP IRA is all contributions from you the employer (including contributions to yourself) are tax deductible, and you can contribute up to 25% of your income or $51,000, whichever is less.
A Solo 401(k) is a great way to include your spouse in retirement contributions. Also, contributions are very flexible, you don’t have to contribute a set amount each year. Solo 401(k)’s are more complicated however than IRA’s and require a plan administrator to set up.
These are just a few options for retirement when owning a home based business. For a complete list of pros and cons with each option previously discussed, visit:
This is a fantastic article done by US New and World Report contributor Robert Berger, and where the content for this blog post came from. Also, consult your tax professional for further information on how setting up a retirement account can benefit your home based business.