Owning your own business can be a gratifying experience, but it can present challenges that people who work for others typically do not experience. For example, business owners usually have to plan for their retirement differently than people who work for other individuals or entities. It is in their best interest, then, to take the time to examine their options for making sure they are financially secure when they retire. If you own your own business and are interested in learning more about your retirement options, it is wise to confer with an experienced retirement planning lawyer as soon as possible.
Retirement Planning Options for Business Owners
There are numerous retirement options business owners can employ to ensure that they and their employees have the opportunity to save for their future. Some business owners opt to forego traditional retirement funds and instead intend to liquidate their company when they want to retire. There are risks associated with this strategy, though. For example, the value of the business may decline, which means that the sale of the business would leave the owner with inadequate funds for retirement. Further, it requires a party interested in purchasing the business, which, depending on the nature of the business and its fair market value, could take years.
As such, it is prudent for business owners to consider more traditional retirement options. The plan that best suits a business owner’s needs will depend on the size of their company and their overall goals. Some business owners choose to set up IRAs, or individual retirement accounts, for themselves. With Roth IRAs, parties contribute income that has already been taxed, but they are not taxed if they make withdrawals after the age of 59 ½. In traditional IRAs, parties can contribute pre-tax income, but they will be taxed when they make withdrawals.
Business owners can also set up SIMPLE IRAs, which means their employees can make retirement contributions as well, or a SEP IRA, to which both the business owner and their employees can contribute. Finally, business owners can set up 401ks. If they have other employees, they can opt for a small business 401k, but if their spouse is the only other person that works at their company, they can set up a solo 401k. There are pros and cons for each retirement planning tool, and which tool is most appropriate will depend on the business owners’ overall goals.
Meet with a Skilled Retirement Planning Attorney
People that own their own businesses have the freedom to craft a career that suits their needs, but they often lack the security and retirement planning options that come with working for someone else. As such, it is smart for anyone that owns their own business to assess their retirement planning options as soon as possible. If you own your own business and want to learn more about how you can plan for your retirement, it is smart to meet with a skilled retirement planning attorney to assess your options. The Law Offices of Louis P. Lepore can help; call our office at 718-354-8646 and we would be happy to schedule a meeting.
