Retirement Plans for Small Business

retirement solutions for small businesses

Small businesses may not be able match larger companies for the most capable employees.  One common factor in leveling the playing field is through employee benefits. In addition to the required benefits, employers who offer some form of a retirement plan make themselves more appealing to prospective employees.  Many employers shy away from offering retirement plans out of fear that they're too expensive and confusing to manage.  Fortunately for small business owners, if you know what to look for and what's reasonable, there's a good chance you'll find an option that works.  Check out this quick guide for a basic understanding of the most popular retirement solutions for small businesses.

On a recent business trip, I had a lively conversation with a small business owner who was on a mission to start a retirement plan.  He wanted a good place to save some money tax deferred and to take care of his key employees.  Great idea!! You know I’m a big fan of putting some money away for down the road.

Start A Small Business Retirement Plans

There is just one way to stay ahead: continuous improvement. It's the same with your company's retirement plan. It can be a valuable small business benefit, helping you attract and retain the best employees – creating a competitive edge and a way to keep your company on a strong growth track.

But even a well-designed retirement plan can become outdated or outgrow its original framework. That easily can happen when you are trying to balance your small business retirement plan with all your other priorities squeezed into 24-hour days. Without help in actively managing it, you may find that either your plan or your business is not getting the attention it deserves.

Follow these tips to plan a comfortable retirement solution:

Start Early

Start setting money aside when your business is generating sufficient cash flow. You don’t necessarily have to be profitable, but you should be generating enough to cover expenses and still put money aside. “It’s never too early to save,” Koblin says.

Map Your Future

Create a retirement plan when you start the business, and revisit it often. A comprehensive plan can help you address investments, risk, insurance planning, employee benefits, estate planning, tax planning, pensions, profit sharing and succession planning. “A well-designed financial plan will help a business owner understand how much he or she needs to save outside the business for retirement,” Koblin says.

All About Taxes

Investing in qualified plans such as IRAs and 401(k)s can provide tax-efficient methods to save for retirement. Consider a SEP IRA, a SIMPLE-IRA, a traditional 401(k), a Solo 401(k), a traditional IRA or a Roth IRA. You’ll be able to make tax-deductible contributions or pre-tax contributions, depending on the plan you select.

Diversify

It’s crucial to have a broad diversification of investments. You should not only have a blend of stocks and bonds, but you should also consider investing in real estate, commodities or private equity, for example. Diversifying your investments will provide more flexibility in the future when you need to access your money, Koblin says.

Protect Assets

Protect your assets with a buy-sell agreement. This outlines the actions that will take place when you retire or in the event that something unexpected occurs, such as a death, divorce or disability. “A business owner can help accomplish a harmonious transition with a properly designed and funded buy-sell agreement,” Koblin says. 

We are Chartered Accountants  helping small to medium businesses with a specialty of understanding the space that relates to the Building and construction industry. For more information about our services contact us on 9597 9966, or visit our location at 563 North Road Ormond Victoria 3204 Australia