Unexpected Capabilities. Unmatched Service.

Small Business Owners: Are You Setting Yourself Up for Financial Success?

Small business owners have hundreds of things on their mind at any given time – the health of their business, the growth of their employees, the satisfaction of their clients and the betterment of the community.

You notice who’s missing from that equation? You – the small business owner.

It’s hard enough to find time for yourself to maintain that all-important work-life balance that often goes out the door when you’re trying to grow your business. But it can be even more difficult to set aside time for some long-term planning when it comes to your finances.

Yet saving for the future and for retirement is especially important for small business owners – so you have to make it a priority. To help you do that, we’re giving you the scoop on some retirement plans for small business owners.

4 Retirement Plans for Small Business Owners

When it comes to saving for retirement, small business owners typically can choose among four options:

1. Traditional 401(k): Technically speaking, you could set up a traditional 401(k) plan for your business. However, they can be costly for employers thanks to one-time setup fees, as well as regular fees to cover account support, maintenance and other necessities. It makes little sense to even consider this kind of setup if you have fewer than 50 employees. That said, 401(k) plans allow you to defer up to $18,000 of your pay as of 2017, and $24,000 if you’re age 50 or older.

2. Self-Employed 401(k): This acts exactly as it sounds. This is a 401(k) plan, but it’s designed for self-employed business owners who have zero full-time employees, and can also include a spouse. While a self-employed 401(k) still will be more expensive to set up than other retirement plans, it should be much cheaper than a traditional 401(k).

3. Savings Incentive Match Plan for Employees (SIMPLE IRA): A SIMPLE IRA plan is available to any small businesses, but typically is meant for those that employ 100 or fewer people. You, as the employer, must choose to either match contributions of up to 3 percent of compensation, or provide a 2% nonelective contribution for each eligible employee. As of 2017, employees may contribute up to $12,500, or $15,500 if you’re age 50 or older.

4. Simplified Employee Pension Plan (SEP IRA): A SEP IRA is essentially a regular IRA that’s designed for small business owners and self-employed workers. You can open this type of account even if you’re not a small business owner and just generate freelance income. If you do own a small business, you can establish a SEP IRA regardless of your number of employees. In this system, the employer contributes funds to the IRA accounts – as of 2017, that’s the lesser between up to 25% of income or $54,000.

While some retirement plans are easier to establish than others, they all have some degree of difficulty, and can be especially onerous for small business owners. If you’re not sure what type of plan is right for you or your company, or if you need help figuring out how to implement a plan, we can help! McManamon & Co. offers a number of business consulting services covering everything from retirement plans to SBA loan packages to tax analysis.

Your small business is important, but so are you. Don’t sell yourself – or your retirement – short. Contact the small business experts at McManamon & Co. at 440.892.8900, or get in touch with us online, and we’ll help you determine the best retirement plan for you and your company.


Tags:  , , , | Posted in McManamon & Co., Retirement Planning, small business