As a small business owner, you may be overwhelmed by the many different types of retirement plans available. While you want to offer your employees this essential benefit to help them accomplish their goals and encourage loyalty to your organization, choosing retirement plans can be a tricky process for a small business owner. Take a look at the pros and cons of retirement plans, as well as the different types of retirement plans before making a firm decision.
The Pros
Retirement plans are a good investment for small business owners because they have the potential to save money in the following ways:
- By offering retirement plans to your employees, your business becomes eligible for a variety of different tax breaks and incentives.
- If you choose a performance-based retirement plan, it may increase the level of employee productivity and motivation in your workforce.
- When you recruit new employees, you will notice a significant increase in the quality of applicants if you offer retirement plans as a benefit.
- Small business owners are also eligible to save for their own retirement when retirement plans are included in their company.
The benefits of offering retirement plans are indeed great. Small business owners can capitalize on tax incentives while building a high-performing workforce. These two benefits have the potential to transform your business into a steady, profitable venture.
The Cons
Along with the pros of retirement plans are also several cons. First, the startup and administrative costs for retirement plans can be a burden. You will have to invest a great deal of time and money in sorting through the different types of retirement plans and implementing a program for your small business.
Secondly, you may not have the necessary knowledge and skills to support such a program inside your business. This means you may have to hire a professional consultant or pay fees to a financial institution in order to offer retirement plans to your employees.
In addition, can your bottom line support matching 401(k) contributions to each of your employees?
As you make decisions regarding retirement plans, you need to carefully consider these cons against the pros listed above. It may in fact take some time before you begin to reap the benefits of retirement plans.
Don’t Forget About Yourself
There are, of course, many different types of retirement plans that you could instate for your small business. It is very important, however, that you don’t forget about setting up a retirement plan for yourself. The easiest way you can do this is by opening a Roth IRA. Self-employed individuals who meet certain requirements can set up a Roth IRA which allows for tax-free investments. Roth IRAs can be opened in a matter of minutes at just about any financial institution. If you are unable to take part in the types of retirement plans you are looking at for your employees, be sure to explore your own possibilities with a Roth IRA.
Retirement plans are important for you and your employees. No matter what path you choose, remember that you must plan for the future, and this means taking action in the present.
