If you own a business, even as a side business while also an employee of someone else, you can deduct significant amounts of income by contributing to a retirement plan. Whether or not you have w-2 employees, there's a low cost plan you can implement. However, if you don't have w-2 employees then costs drop all the way to $0 and contribution limits sky rocket with an Individual(k).
In 2019, Individual(k) plans allow for deferrals of up to $19,000 of pretax income plus additional profit sharing contributions based on a percentage of self-employed earnings. Here’s how Individual(k) plans outpace the competition1:
Let's talk about your circumstances if you own a business of any kind. We suspect you'll be able to reduce your tax burden significantly!
If you're a tax professional with self-employed clients, make sure they have a discussion with us to review their retirement plan needs. It's highly likely we'll be able to reduce their costs and taxes.