| Embarking on independent business ownership is a | | | | each year, based on the individual's desires, which |
| challenging, yet thrilling experience for many. Gaining | | | | helps in years where cash flow is a problem. An SEP |
| the freedom to determine the type, conditions and | | | | may be established as late as the date of any |
| manner of one's work, can have great appeal. Those | | | | income tax return extension received, and no annual |
| bold enough to undertake such and endeavor are | | | | IRS reporting is ever required. |
| often characterized by great drive, determination and | | | | Similar in design to typical corporate retirement plans, |
| diligence. However, the sharp focus that enables such | | | | another of the self employed retirement tips to |
| individuals to build successful businesses does not | | | | consider is that of the Keogh plan, whether of the |
| always translate into conscientious attention to | | | | profit-sharing or the defined benefit type. These |
| retirement planning. It is wise, therefore, for such | | | | plans provide tax benefits as long as they are |
| entrepreneurs to avail themselves of several self | | | | established prior to the end of the tax year. Once in |
| employed retirement tips. | | | | place, contributions are allowed up until the date of |
| Self employed individuals are saddled with a | | | | any tax filing extension received by the taxpayer. |
| substantial amount of additional taxation in the form | | | | Profit sharing Keogh plans permit contributions of a |
| of self employment assessments that must be paid | | | | percentage of income earned from self employment |
| throughout the evolution of their business enterprise. | | | | or as compensation from one's own company, up to |
| However, as a counterbalance, self employed men | | | | $49,000. Plan documents are necessary, and annual |
| and women can take advantage of several | | | | reports must be filed with the IRS. |
| advantageous self employed retirement tips and | | | | Defined benefit Keogh plans are intended to yield a |
| plans that can help them save far more for | | | | predetermined benefit amount each year during |
| retirement than typical employees or wage earners | | | | retirement and can be as large as $195,000. Plan |
| would ever deem possible. Such tips and tricks include | | | | documents must be drafted in the first year, and the |
| wise use of simplified employee pensions (SEPs), | | | | filing of an annual report with the IRS is a necessity. |
| Keogh plans, Roth IRAs and solo 401(k) plans. | | | | Actuarial services will also be necessary to help |
| The simplified employee pension (SEP) is a stripped | | | | determine the required contribution for each year, |
| down, basic plan, and one of the most frequently | | | | and factors will include income level, desired annual |
| mentioned self employed retirement tips worth | | | | retirement benefit, age before retirement, and |
| consideration. This plan permits a self employed | | | | others. Keogh plans are desirable because they |
| person to contribute and deduct up to 20% of their | | | | permit larger contributions than the other types of |
| income earned through self employment endeavors | | | | plans, and thus may be a wise choice for older |
| or 25% earned as an employee of their own | | | | individuals. |
| company. The amount contributed may fluctuate | | | | |