Small Business Retirement Plan – When and How

“Every beginning has an end”

Small business owners, after dedicating a lifetime to their business, are entitled to a hassle-free and comfortable retirement, which they often fail to work on, owing to several reasons. Despite understanding the pressing need of systematically planning for their retirement most small business owners are not seriously inclined towards it.

Small business owners must start thinking about retirement planning

According to, there are approximately 28.8 million small businesses in the USA out of which only a certain percentage have active retirement plans. This was demonstrated by The Kaufman Foundation report that revealed that more than half the small businesses are being initiated by baby boomers yet retirement planning is not on their agenda as their prime concern. The MANTA survey 2017 clearly showed that among the 1960 small business owners taken as case studies, only 66% had retirement savings plans.

What keeps small business owners away from retirement planning?

Managing a small business can be a full-time job for the owners until the ball of success gets rolling. Every intricate detail of the business calls for their attention until it is well- established. While raising their business like their babies, small business owners often forget to plan for the time when they would have to retire.

Time runs out and business owners often forget to plan their retirement properly

A recent study of 500 small business owners revealed that they had not drawn a personal salary from the business for several months so that they could put it back into the business. A large percentage of them even consider their business as their retirement.

When to begin planning for retirement?

“Plans are nothing; planning is everything” – Dwight D. Eisenhower

Experts estimate that ideal retirement savings for small business owners are at least 70% to 90% of their pre-retirement income. This retirement savings requires methodical and consistent planning. Small business owners are often well versed with numerous options available for them, but few choose to act.

Financial strategists assert that small business owners should begin contemplating on their retirement portfolio as soon as their business is over the initial setup phase otherwise strategically they will never be able to take out retirement savings from the business. Something else will always find priority!

start planning for retirement savings

How to plan for retirement?

Business owners who have been holding back on their retirement savings plan are usually skeptical about which retirement plan would be best for them and their employees, owing to costs and contribution limits. If you are one of them then you can discover an optimal retirement strategy by following the viable tips mentioned here:

Knowing your options: They should be well-versed with the retirement saving plans available. The plans facilitating retirement savings for small business owners are:

·        SIMPLE IRA

·        SEP IRA

·        Solo 401(k)

·        Roth IRA.

Legal heir or Successor: Small business owners should plan their legal heir or successor ahead of time. The assurance that their business would be taken care of by capable hands when they retire is also an important part of retirement planning.

Diversify Investment: Besides investing in retirement savings plans, small business owners should diversify their investment portfolio as part of their retirement savings strategy.

Diversifying Investment should be part of retirement strategy

Set the Date: Setting up a date to retire make retirement day more tangible. This allows the planning to start and move forward. It’s necessary for small business owners to set a date or else there is never a right time for the small business owner to retire.

If you are a small business owner and haven’t given a thought to retirement plans, well now is the time. Make your retirement planning a priority now to enjoy your golden years in peace.

If you are a small business looking for professional assistance with your retirement plan, contact the experts at FFPCT here and book a free consultation – FFPCT Business Finance Consultants.

Five Retirement Planning Tips for Business owners

The life of small business owners revolve around their business and their passionate involvement in it often leaves them preoccupied and casual about planning for the future  According to most small business owners, their business is their retirement plan.

In a survey conducted by Manta, it was revealed that more than one-third of small business owners do not have retirement plans whereas another wealth survey by the BMO concluded that the 75% of business owners who are trying to plan their retirement have only $100,000 or less saved for it.

Five Retirement Planning Tips for Business owners

How should retirement be planned?

“Planning is bringing the future into the present so that you could do something about it now” – Alan Lakein

The first thing to clearly understand is that your business is not your retirement plan. Small business owners can work on several strategies to enable a smooth retirement.  The most feasible and easy tips adopted by the entrepreneurs could include:

Plan on future living expenses

Planning for retirement can begin by some simple calculations. The calculations should be about the future living expenses of the business owners when they are no longer working. The questions they need to answer are how much they will need to live comfortably and how will they meet that requirement when they retire? Will they have saved enough until then?

When planning your retirement Plan on future living expenses

Engage the skills of a financial planner

Financial planners are proficient at understanding the financial situation of a business and draw up a plan accordingly. By engaging the services of a financial advisor, small business owners can formulate plans for their present as well as their future.

Invest in retirement plans

The small business owner can begin by investing small chunks of money into retirement plans. The benefits are two-fold. One, it reduces tax burden for the present, and two it helps grow tax-deferred for future, until it’s time to retire.

Small business owners Should start investing money into retirement plans

Here are four simple and popular retirement plan types for business owners to start investing in:



3. Solo 401(k)

4. SIMPLE 401(k).

Diversify investment portfolio

Other than investing in the retirement plans, small business owners also have the option to invest funds in low-risk investment schemes such as investing in the stock or the bond markets. This shall not only diversify their investment portfolio but will also enable them to withdraw funds when the time is appropriate i.e. at the time of retirement.

Diversify investment to protect your retirement plan

Plan a business exit strategy

A well-planned business exit strategy can help small business owners to derive maximum remunerative returns from their businesses when it is time to retire or pass on the business as a legacy. Without a well-planned business exit strategy, the business owner may have sell their business short or make last-minute decisions that may not be as lucrative.

Small business owners should not procrastinate their retirement planning for it is only through their present efforts that they can safeguard their future. If you need professional assistance to start planning your retirement contact the experts at FFPCT and book a free consultation:
FFPCT Business Finance Consultants

Why to Keep your Business and Personal Finances Separate

A business despite being shaped and nurtured by the owner like its own baby has its own distinctive identity. The owner and the business cannot be considered one. But in cases of small businesses, important financial separations, being governed by the same person, are brushed off unnoticed. Personal and business finance become intertwined.

 Keep your Business and Personal Finances Separate

Record of income and expenditures is the factor which indicates the performance of the business and thus should be kept separate from personal financial records. The money line between the two should not be blurred otherwise it could create an unpleasant financial situation.

What could go wrong if your finances are intermixed?

Your business has its own identity and there are several reasons why their finances should not be interwoven with personal finances. If the thin line between them is crossed the consequences could be severe.

Risking personal assets

mixing finances can put business owner's personal assets at risk

If small business owners mix their finances, their personal assets could become prone to risks. An outsider may claim personal assets for business liability and the business owner may not be able to evade it.

Complicated tax dues

If personal and business finances are intermingled, the business owner may have difficulty in calculating their taxable income. This may result in complications and the owner may have to pay penalties, fines, or higher taxes that can otherwise be avoided.

Messed accounts

In certain cases, small business owners may assign personal assets under business assets to reap the benefits of depreciation and lower their tax liability. The case may be vice-versa also. This practice can be unhealthy for the business as the owner will never be able to apportion the assets separately.

An Unprofessional Approach

separate personal and business finances is a sign of a healthy financial practice and professionalism.

Clients, creditors and vendors hesitate to develop work relationships if they sense a lack of professionalism in the company Having separate personal and business finances is a sign of a healthy financial practice and professionalism. This gives assurance of the legitimacy and competence of the business allowing them to build a long term professional relationships.

Doubtful creditworthiness

When business cash and personal cash are not mixed, it is easier to manage the cash flow into the business and the creditworthiness of the business is more perspicuous. Since the financial investors can tell if both the finances are mixed up, credit agencies retreat in providing loans to businesses that do not have separate assets and liability checklist.  

 businesses need to have separate assets and liability checklist

Maneuvering techniques to keep the finances apart

  • Small business owners have to keep separate financial records for their business and their personal investments and expenditures.
  • The bank account for the business should be separate and so should the debit and credit cards, so that payments and deposits of both the accounts go into and from the appropriate account.
  • Drawing out a salary from the business account every month shall enable both the business account and the personal account to exhibit debit and credit accordingly.
  • Services of a skilled financial accountant are mandatory as they can help give the right accounting treatment, categorizing expenses and preparing clear books of accounts.

Small business owners often muddle up between the two finances.  They overlook that keeping separate accounts is rudimentary to success. To learn more about how you can keep your business and personal finances separate. Contact the experts at FFPCT here – FFPCT Business Finance Consultants and book a free consultation.