How Important Is A Retirement Plan For Small Business Owners?
March 20, 2019
Every decision that you make as an employer can be an important one, especially when you have a budget to stick to, employees to provide for and laws to adhere to, and planning for the long term often gets put aside in favor of staying afloat and staying within budget. However, there are some long-term planning decisions that may be critical to the success of both you and your business and should be given careful consideration no matter how busy budgeting you are. One such decision concerns your retirement, and without the luxury of an employer offering you a 401(k) or a pension plan, you have no choice but to consider your options for yourself and ensure that your future is well protected.
In a recent survey, over a third of the more than 2,000 small business owners spoken to, admitted that they don’t have a retirement plan, with most of those stating that they simply weren’t making enough money to pay for one. Some of those business owners went on to tell surveyors that they were considering selling their business as their retirement plan. Similar surveys in recent months found that a third of those spoken to admitted that they built their businesses up in order to fund their retirement and that many others were relying on income generated from their small business to enable them to plan for their retirement.
Relying on being able to sell a business to fund retirement is a dangerous and highly unpredictable method, as a business will only sell if it can continue to function as a going concern, and if there is no succession plan in place, how will this happen? Volatile markets can make the plan even more unreliable, with a business not always being sold at an attractive price.
Of course, new tax laws that have now come into play are making the issue of retirement funds even more complex and daunting, and if you’re a small business owner without a retirement plan, then there is no better time to schedule an appointment with a payroll or retirement specialist to discuss your options.
However, it’s not all doom and gloom and there are several retirement solutions that can help you to secure your future and the futures of your employees, they just require careful consideration and a lot of weighing up the pros and cons. Again, speaking to a professional payroll or retirement firm can help you to narrow down your choices and decide what would be the best decision to make considering your specific circumstances. Some questions that you might want to give thought to before speaking to an advisor about your retirement plan options are listed below:
- Do you currently pay any employees, or plan to in the future?
- How important is that workers are given the option to contribute to a retirement plan?
- What are your main priorities: higher contributions or ease of administration?
- Should retirement plan contributions be deductible as a business expense?
Once you’ve carefully considered the above questions, you’ll be in a better position to discuss matters further with a professional payroll advisor, and if you want to retire in comfort and keep your employees satisfied with a plan that they are happy with, then don’t waste any time in scheduling a consultation.