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Retirement Tax Planning — Retirement Plans for the Sole Proprietor
Many of the same tax advantages perceived as being only available with entity taxation are also available to Schedule C sole proprietors and that includes funding retirement plans. It’s perfectly OK to start and continue to run a business as a sole proprietorship filing a Schedule C for when it makes financial and administrative sense to do so. There are a number of advantages to having a retirement account. Of course, when you contribute to a retirement account, you can deduct your contributions from your taxable income. This can result in significant savings come tax time. Additionally, the money in your retirement account grows tax-free. This means that you can potentially earn a lot more on your investment than you would if it were subject to taxation. A retirement account gives you the peace of mind that comes with knowing you have a cushion to fall back on in retirement. No matter what happens in the markets, you will always have access to your retirement savings. This can provide a great deal of security during uncertain economic times. While retirement accounts can be a great way to save for the future, there are also some potential drawbacks to consider. For one thing, retirement accounts often come with strict penalties for early withdrawal. This means that if you need to access your savings before retirement age, you may be subject to significant fees. Additionally, retirement accounts can be complex and confusing, making it difficult to keep track of your progress. While retirement accounts can be a helpful tool for saving, it’s important to be aware of the potential drawbacks before you decide as a sole proprietor whether or not to open one. Click here to explore the different types of retirement plans available to sole proprietors and the pros and cons of each.
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CURRENT EDITION
Leaving the United States, Part III: Dual Citizenship
In Part I of this three-part series, we discussed the implications and taxes for American expatriates. In Part II we turned our attention to renouncing citizenship. Here in Part III, we will consider the halfway point of dual citizenship. And as you would expect, taxes are a serious consideration.
Reflecting On Rothing
I have been dissatisfied with most of the articles that I have read about what I call Rothing, i.e. foregoing a deduction for retirement savings with the prospect of tax-free distributions in the future or taking the tax hit on a deferred account to convert it to a tax-free account. The articles generally have a pro-Roth bias. Suze Orman, for example, swears by Roths. They also tend to not have numbers in them. What I am going to do here is to reflect on the idea of Rothing and discuss what I see as some key numbers. I’m not going to dive deep into technical issues.
Considering a Historic Building for Your Business? These Tax Credits are Good News
Historic buildings make a beautiful location for doing business. Unfortunately, many of them may seem out of the price range of small business owners. But, that’s not necessarily the case. The state and federal governments have an interest in preserving these properties, and they are willing to give you tax credits for buying and restoring a historic building. The credits reimburse a large proportion of your restoration costs. This really is a great incentive to go for a building that will give your company a unique and professional feel.
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Think Outside the Tax Box provides tax reduction strategies along with practical
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