With unemployment figures sitting at 9% and large businesses downsizing in this battling economy, it comes as no surprise that many people are starting their own businesses, buying an existing business or purchasing a franchise.
According to Martin Pucci, Paychex president and CEO. “After several extremely difficult years for small businesses, 2011 is shaping up as a year when indicators of progress and growth appear to be moving in the right direction for many categories of small business.” Because of Paychex dealings with hiring and payroll at small businesses analysts see Paychex as a viable resource with regards to the small business economy.
Have you left your job or retired, or have you always dreamed of operating your own business? Financing has always been one of the biggest hurdles in getting a business off the ground, and besides SBA loans there is very little available to small businesses to get the start they need.
Believe it or not, an existing IRA, a 401k from a previous employer or other pension or retirement funds might just be a great way to finance or fund your new business. But, you’ll need to roll the funds into a new Self Directed IRA or 401k in order to do it the right way.
If you handle the set up properly, you’ll preserve the tax-deferred (or tax free) status of your retirement plan and won’t incur any taxes or penalties when you rollover your funds.
You have two choices for setting up Self Directed plans depending upon whether you’ll have full-time employees or not.
If there are no full time employees other than yourself or a spouse, you can set up a Solo 401k and use the personal loan provision in the plan to loan yourself up to 1/2 of the value of the assets to a maximum $50,000. In many cases this amount is all that’s needed to get your business established.
If you want to buy or start a business that already has full-time employees or you plan to hire full-timers, or you need more funds than a Solo 401k can provide, you’ll want to set up a Business Funding IRA.
This type of plan requires that you be an officer in the company, draw a salary and work at least 1/2 time in the business. But, if you meet these qualifications, you can use your retirement funds for any and all start up or initial expenses needed.
In the event you don’t need all the retirement funds to finance your business, you can also use the plan for investing outside the stock market into alternative investments such as income producing real estate or a variety of other options.
The key to successful execution of this business funding strategy is to utilize professionals who are specifically trained in setting up Self Directed IRA & 401k plans that meet the rigid criteria set forth in the Internal Revenue Code governing qualified retirement plans.
Safeguard Financial’s expert Advisors and Attorney/CPA are uniquely qualified to assist you, and are available for advice or information about small business funding and set up. Call 877-229-9763 for more information. Or visit our website at www.ira123.com.