Do You Own a Small Business? A Retirement Plan Could Help You Pay Less in Taxes

Many small business owners think retirement plans are only for large companies. However, there are options designed specifically for self-employed individuals and small businesses.

How Can a Retirement Plan Help You?

It May Reduce Your Taxable Income

Depending on the type of plan, contributions made during the year may reduce the amount of income on which your taxes are calculated.

It Helps You Save for Your Future

By contributing to a retirement plan, you may reduce your current taxes while building savings for the future. Generally, you will pay taxes when you withdraw the money during retirement.

Some Business Contributions May Be Tax-Deductible

If your business contributes to its employees’ retirement plan, those contributions may qualify as a deductible business expense, subject to applicable rules.

Your Business May Qualify for Tax Credits

Some small employers may receive tax credits for the costs of establishing and administering a new retirement plan. Additional credits may also be available for employee contributions and automatic enrollment.

Common Retirement Plan Options Include:

🔹 SEP IRA: Often a simple and flexible option for self-employed individuals and small businesses.

🔹 Solo 401(k): May be a good option if the business has no employees other than the owner and possibly the owner’s spouse.

🔹 SIMPLE IRA: Designed for small businesses that want to offer their employees a retirement benefit.

🔹 401(k) for small businesses: Offers more options but also requires more administration and planning.

Important: Contributing to a retirement plan does not mean everyone will reduce their taxes in the same way. The best option depends on your income, number of employees, legal business structure, and cash flow.

Do not wait until the last minute. Some plans must be established by specific deadlines to take advantage of their tax benefits.

Would you like to know which plan may work best for your business? Contact us to evaluate your situation before making a decision.

This content is for informational purposes only and does not constitute tax, financial, or investment advice.

Are You Ready to Explore the Right Retirement Plan for Your Business?

Choosing a retirement plan depends on your income, legal business structure, number of employees, and financial goals. We can help you understand your options and determine which type of plan may be appropriate for your small business.

Contact Lifaver Trujillo, CPA, PLLC today to schedule a consultation and begin planning for your financial future.

919-590-3610 or info@ltrujillocpa.com