While the year is quickly drawing to a close, there is still time to save on business taxes. Getting you to think about how you can save on taxes is my job, and I'm here to help. Over the next 10 weeks, I'll give you
a tax-saving tip each week. 10 tips in 10 weeks for 2010.
This week: Fund a Retirement Plan
I know you're going to say, "It takes money to fund a retirement plan," but it doesn't have to be much. Any extra money can be put into the plan, but you will need the help of a retirement expert to make sure your plan meets requirements. If you have employees, you must consider them and possibly allow them to contribute. You don't have to give them money (although you can), but you will have to provide the account and investment choices through an investment provider.
Make sure any retirement plan you create is a qualified plan; otherwise, it won't be eligible for tax savings.
Tax Benefits of 401(k) plans and other Qualified Plans:
- You can claim a tax credit for your business for the cost of setting up and administering the plan, up to $500 a year for each of the first three years the plan is in existence.
- The amounts you set aside from your business for yourself and employees are deductible as a business expense (up to specified limits)
- The individual employees receive this money tax-deferred, if they put it into a qualified plan; the money isn't taxable until it is taken out.
There are many details to work out and hoops to jump through, so if you want to do this, start now.
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