How to start your small business retirement planning.
Business owners are notorious for focusing on the day-to-day operations of their business. However, retirement planning is vital for business owners. Not only is it wise when planning for your golden years but it also offers you immediate tax deductions for your business entity. In fact, unlike employees, the business entity has until their tax return due date to make contributions that create deductions for the previous tax year. However, as a business owner operating as an S corporation with one owner, you are required to have your small business retirement accounts in place by December 31st to have deductions for that calendar year.
Is a traditional IRA better than a Roth IRA?
- Generally, with the Roth IRA, there are no taxes if you decide to withdraw any money from that account. However, there may be times when there are taxes due on earnings. Also, there may be a penalty for early withdrawals and you could find restrictions when withdrawing during the first five years.
- There is not a required minimum distribution on a Roth IRA plan after 70 years old. You can continue building that Roth IRA until you pass away.
- In the case of a traditional IRA, you deposit pre-tax dollars into that retirement account. Therefore, when any monies are dispersed, taxes will need to be paid on the dispersed amount. Also, you cannot withdraw the money from your traditional IRA until age 59 and a half, with a few exceptions.
- A traditional IRA has a required minimum distribution after age 70. Therefore, you’ll have to account for taxes when you take a monthly withdrawal. Hopefully, your tax bracket is smaller at age 70 than at today’s tax bracket for your earnings.
- If you qualify, the Traditional IRA is tax deductible on state and federal level for the year you are making contributions.
Your small business retirement plan
can begin TODAY!
A financial planner can provide you with the best solutions for your small business retirement plan. The most important key is to begin TODAY. Make it a priority to set your retirement plan in motion & begin taking advantage of the tax deductions.
Please remember these are general guidelines for retirement planning. Every situation is different & therefore, it’s important for our CPA firm to know all the details about your retirement planning. At Paragon Accounting and Tax Solutions, we value your small business and we want to see its success! That means we care about your monthly accounting, your payroll obligations and your tax burden. Let us guide you to get the most from your small business with future planning and immediate tax benefits. We specialize in small businesses in Milton, GA; Acworth, GA; Canton, GA; Woodstock, GA; Marietta, GA; Alpharetta, GA; and Kennesaw, GA.