Retirement Strategy for Entrepreneurs + Hiring An Employee (Mini-Episode)

We work with a lot of entrepreneurs and here is the deal:
If you are an entrepreneur you might be wasting money right
now.

 


I'm amazed when I meet with entrepreneurs and see how much money
is consistently being given away. A lot of entrepreneurs are
missing out on their taxes they don't even know about. But, I'm
distracted before I even get started.


 


As an entrepreneur, hiring an employee changes a lot in regards
to taxes and retirement planning.


 
BEFORE:

Without an employee, entrepreneurs can open a solo 401k and can
make a full $18,000 contribution and the company can contribute
an additional $34,000 (totallying $52,000 to put away towards
retirement - BIG ADVANTAGE if you can afford that lifestyle.)
  AFTER:

When you hire someone you can no longer use a solo 401k and you
have to transition to a traditional 401k. (NOTE: if the employee
is full-time.)


 


In short, if you are an entrepreneur and are thinking about
hiring a full time employee, note that there may be dramatic
changes to your retirement strategy. However, don't scrap your
business model just yet!  You can still win
 by having a plan that accounts for the change in structure,
while maximizing the benefits of being and entrepreneur. 


Be sure you're taking advantage of all the tax savings you can as
an entrepreneur experiencing growth!