How to Achieve Financial Independence With Your Small Business?
By Dmitriy Fomichenko, President and Founder of Sense Financial
Owning and operating a small business is a popular trend in the U.S. According to a report, more than 28 million small businesses operate in the country out of which, 22 million are self-employed, with no additional employees.
When it comes to self-employment, a lot of people consider financial independence as one of its biggest perks. However, not all the small business owners pay enough attention towards saving for their future. A survey conducted by BMO Wealth Management found that three-quarters of small business owners had retirement savings below $100,000. Financial obligations of the business often come in the way of retirement savings. The good news is that there are saving options that can help them achieve financial freedom while having the authority to take their investment decisions, such as a self-directed Solo 401k plan.
How Your Small Business Can Set You Up for Financial Independence?
As a small business owner, you will always have multiple priorities competing for your financial resources. The key is to lay down a plan that you can follow. Here are a few things your plan should include:
Choose a Retirement Plan that Offers Investment Freedom
Self-directed Solo 401k Plan
If you operate an owner-only business, a self-directed Solo 401k is an excellent option to begin with. The only requisites for opening a Solo 401k plan include the presence of self-employment activity and the absence of full-time employees. This type of plan offers:
SEP IRA or Simple IRA
If you're a small business with employees, start an SEP IRA plan or Simple IRA to contribute towards retirement.
With SEP IRA, you can contribute up to $54,000 in 2017. While an SEP IRA plan doesn't offer catch-up contributions, Roth savings, or a participant loan, it still allows a sizeable contribution towards your retirement.
A Simple IRA is another retirement option, allowing you to contribute up to $15,500 in 2017, inclusive of catch-up contributions of up to $3,000. The plan allows tax-deferred savings and higher contributions as compared to a traditional IRA.
As a small business owner, you have an immense opportunity to enjoy financial freedom in your future; all you need is to get started and stay on course.
Dmitriy Fomichenko is President and Founder of Sense Financial, a leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. To learn more about the Solo 401k plan, please visit sensefinancial.com or email us at firstname.lastname@example.org.
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