Because so much of a business owner’s personal finances are tied up in their companies, much of their focus is on today’s cash flow. However, it is at least equally important to focus on future finances. What will your financial situation look like when you retire? BBB reminds business owners that just as you set goals for your business, it is likewise important to set goals for your retirement.
“Most business owners take the time to create business plans and strategic plans for their companies”, said Mechele Agbayani Mills, president and CEO of BBB serving Central East Texas. However, many do not have a strategic plan in place for their personal lives.”
BBB provides the following overview of retirement plans for small business owners to consider:
• Owner-only 401(k). Also known as an individual or a “solo” 401(k), this plan is available to self-employed individuals and business owners with no full-time employees other than themselves or a spouse.
• SEP IRA. Businesses who have a small number of employees or if you are self-employed with no employees might consider a SEP IRA. Contributions are tax-deductible, and all eligible employees must be covered. (And you can fund your SEP IRA with many different types of investments. Plus, you can establish a SEP IRA for 2016 until April 17, 2017.
• Pension plans. Also known as defined benefit plans, have very high contribution limits, which are determined by an actuarial calculation, and as is the case with other retirement plans, your contributions are typically tax-deductible.
• SIMPLE IRA. These are easy to set up and maintain, and can be a good plan if your business has fewer than 10 employees. For 2016, your annual contributions are generally limited to $12,500, or $15,500 if you’re 50 or older by the end of the year.
Creating a succession plan – essentially planning your exit – may not be the most pleasant topic for discussion, however preparing for the unexpected is also essential for a company’s survival. According to U.S. Trust’s Wealth and Worth Survey, nearly two-thirds of business owners do not have a succession plan in place. You will likely need to involve legal, tax, and financial professionals, in planning any financial transitions and insurance issues.
Chris Hazelip, a financial advisor with Edward Jones Investments will discuss these topics in more detail at the upcoming BBB Lunch.Learn.Lead lecture series which will be held on Monday, September 13 at TJC West Campus. Please call (903)581-5888 or email firstname.lastname@example.org to reserve your seat. The workshop and luncheon are free for BBB Accredited Businesses. If your business is not BBB Accredited but you would still like to attend, tickets are $10.
Edward Jones Investments serves nearly seven million investors and is ranked number 23 on the list of top 50 companies to work for. Mr. Hazelip’s office has been a BBB Accredited Business since 2011.
For additional resources on how to build a better business and to find out how to network with other businesses, go to bbb.org.
Mechele Mills is the President|CEO for the Better Business Bureau Serving Central East Texas. Prior to her role at BBB, she led and consulted organizations of all sizes, managing operations, sales marketing, and personnel for both the public and private sector. She holds a Bachelor’s in Journalism/PR from the University of Texas at Tyler and a Master’s in Business Administration from Baylor University.