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Retirement Options for Small Business Owners

Retirement Options for Small Business Owners bowman & company

As a small business owner, it can be challenging to navigate the complexities of choosing the right retirement plan.

If you are a small business owner, it can be challenging to navigate the complexities of choosing the right retirement plan. It is essential to find a plan that serves your and your employees’ interests without incurring restrictive costs that negatively impact your business’s bottom line. It can be easy to put off planning for retirement, especially when so much uncertainty surrounds the future. But, getting your retirement plan in order now will benefit you in the long run. Here are a few retirement options for small business owners.


If your business is relatively small and you don’t plan on expanding, the simplified employee pension plan may be right for you. The SEP plan is available to companies with any number of employees, including those who are self-employed. In addition to being easy to set up, this retirement plan comes with high contributions. In fact, employees can make pretax contributions of up to 25% of income. The SEP IRA is also an excellent option for business owners since you can decide whether or not to make contributions each year.

Individual 401k

If you are self-employed and want to generate as much retirement savings as possible in a short period of time, or if you make enough income that you can afford to contribute more, an individual 401k may be right for you. This type of retirement plan is contingent on the fact that you are both the employer and employee. Since any 401(k) plan allows both the employer and employee to contribute to an employee’s retirement account, the solo 401(k) provides very lucrative savings possibilities.

Simple IRA

A simple IRA incorporates the simplicity of a SEP IRA while allowing both employers and employees to contribute funds. However, keep in mind that the Simple IRA is usually for small businesses with 100 or fewer employees that don’t have another retirement plan. This plan is easy to set up and allows you to defer up to $12,500 of an employee’s salary.

Payroll Deduction IRA

If you want to give your employees a retirement plan option, but don’t want to handle the responsibilities yourself, then consider choosing a payroll deduction IRA. As the business owner, you establish the deduction plan with the financial institution of your choice and then give your employees the choice to contribute. This allows you to reduce administrative fees and does not force you to make employer contributions.

Contact Bowman & Company Today

Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim to decrease your taxes and increase your net worth through responsible, timely, and accurate record keeping. We offer our services to clients throughout the Washington, D.C., metropolitan area, including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter,  Linkedin,  Facebook, and  Youtube.

This entry was posted on Friday, October 1st, 2021 at 8:54 am. Both comments and pings are currently closed.