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You own a small business. Maybe you’re self-employed, a sole proprietor with just yourself and perhaps your spouse on the payroll, or a company with a handful of employees. Congratulations! Even in trying economic times like the ones we’re in now, businesses like yours are the backbone of this country’s economy.
The positives about starting and owning your own business are many — being your own boss, creating a product or service your way and seeing it to fruition, building something to pass on, and more. But one disadvantage for small business owners that doesn’t bedevil larger companies is not having the funds to offer perks and benefits like gym memberships, health insurance, HSAs, and the increasingly popular unlimited PTO.
The same goes for retirement savings accounts like 401(k)s, IRAs, and other savings vehicles that larger companies can and do offer employees. If you have employees, are you offering them retirement savings accounts? If you’re self-employed, have you started one for yourself?
The answer to that last question is likely “no.” Why? Let us count the reasons many small business owners don’t have retirement accounts, and offer reasons why you should.
3 common reasons small business owners don’t have retirement accounts … and the reality behind them
Reason 1: You’re investing in your own business
You’ve probably been pumping every last dollar back in your own business in an effort to get yourself on a solid foundation. Many self-employed people do the same. It’s a mistake. You’re prioritizing your present over your future. Balance is the key here.
Reality: Is that still necessary? It’s great to pump every last nickel into your business when you’re a startup, but is it really necessary now? Can’t you take some money off the top and sink it into a retirement account each month? Your future self will thank you
when you’re living the good life in your golden years.
Reason 2: You anticipate selling your business when it’s time to retire
Dreaming of that golden parachute when just the right investor comes along at just the right time? That’s a gamble. When the day comes, there’s no guarantee you’ll find someone to carry on your legacy.
Reality: Will it sell for what you need? Hoping to sell your business down the road? We hate to raise this specter, but technology is evolving faster than Alexa can tell you what the weather is like outside. What if technology makes your product or service obsolete tomorrow? We’re pretty sure the person who invented Wite-Out or the business model for Blockbuster or the BlackBerry didn’t anticipate the tech evolution that would put those products on the “Remember When” shelf.
Reason 3: You’re too busy to think about it
Running a small business, even if it’s just you on the payroll, can be a 24/7 job. You may have been so caught up in the everyday flurry of keeping things humming while you put out fires that you haven’t had a moment to think about retirement. Also, it’s complicated. Tax implications and advantages, 401(k)s, IRAs, and more. It’s hard to know which option is right for you, your business, and if applicable, your employees.
Reality: It’s easier than you think. With a good financial advisor to explain the ins and outs of different retirement account options, you can find the plan that’s best for you and your employees in no time. After that, it’s not exactly set-it-and-forget-it, but the administration time won’t eat into your day.
The best course of action is to invest a little in yourself now to see dividends down the road. But how do you know which retirement account to choose? That’s where we can help. At Equity Trust, we specialize in helping people who are self-employed small business owners lay a solid foundation for their retirement amid the chaos that can come with running a business.