If you are a small business owner, you possibly push a lot of focus on your efforts with the day-to-day tasks to keep the business going. You may not have thought about how you could save for retirement, even if it is fast approaching. More than two-thirds of small business owners do not plan for retirement, either for themselves or for their staff.
While some workers profit from a pension plan or a supplemental pension plan, this is not the case for many small business owners. It is you who has to plan your future and decide how you will finance your retirement. Here are some questions that will help you build a retirement plan even though the business is small.
How soon would you like to retire?
It is a good starting point for planning your outlook when it comes to your retirement. Even if you have only an ambiguous idea of when you will retire, the important thing is to have a goal to achieve. This will help you think about the number of years you want to continue working, what you would like to do after retirement. It will also help you determine how much you can save by then.
There are many factors to consider, such as your physical and financial health, when determining the date that is best for you, your family, or anyone else with whom you plan to retire.
What lifestyle do you want to have in retirement?
It is important to consider the lifestyle you want to have in retirement when determining the amount you will need to take full advantage of it. Consider how often you would like to travel and ask yourself if you would like to volunteer or stay home. Retiring does not mean that you have to stop working completely. You could delegate specific responsibilities, work part-time, or act as a consultant while your successor becomes familiar with the business’s inner workings.
How will you finance your retirement?
The good news is that you can choose from many options to finance your retirement. Government programs such as the Pension Plans, the Old Age Security Pension Plan can provide you with basic income. And during your working years, you can take advantage of the tax benefits offered by the registered retirement savings plan and the tax-free savings account to save for retirement.
The individual pension plan and the retirement agreement are also options available to business owners who finance their retirement themselves.
If some owners count on their business’s sale to finance their retirement, this strategy is not without risks, the unknowns being numerous. An important question is whether someone will be ready to buy your business when you put it up for sale. It would help if you also had it appraised to find out its fair market value before you start looking for potential buyers.
What future do you want for your business?
Every owner has to leave his business sooner or later. However, to be in good financial health at retirement and protect your assets, establishing a succession plan is important.
Here are some scenarios to consider:
- Transfer or sell the business to a family member
- Sell to a partner or employee
- Sell to a third party
Even if you know who will take over your business, it will take time – perhaps a few years – to help them prepare to take over. Your successor may need to acquire specific skills and build relationships beforehand, in addition to having to become familiar with all aspects of the business.
It would help if you did not answer all these questions alone: your advisor, accountant, and lawyer can help you with your planning, be it estate planning, tax-efficient investments, or retirement savings plans.
Knowing that you are ready for various situations can save you many worries and focus on your business. Even if retirement is still far away, having a plan means that you can cope with any eventuality. It is merely a good business strategy.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.