Business owners how do you invest?

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Polarice

New member
I have ran my own business for about 5 years now. I have been putting money aside in a SEP fund directly from the business account for me. Now that I have an employee for 3 of the past 5 years I would have to give them the same percent as what I take.

I feel that this is utter bs. Why should I give my employee 15% if that's what I want to take? Not that I don't want to give the employee something, but I do not feel they deserve the same percent that I do. I take all the risks and work way harder. They just have to punch a time clock and do what they're told at a fraction of the responsibility. This is plain and simply not fair government crap.

Is there a way that I can invest in mutual funds and the like without it coming out of my net wage that I pay myself? The government already gets almost half of what I make. That is no exaggeration!

Sorry to be longwinded but I'm looking for some good conservative advice. Feel free to pm me if you don't want to broadcast what you do over the internet.
 
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polarisrider1

New member
I invest right back into the company. Shed the single employee, they cost way to much to fund. I would never do a single employee unless it is your wife. How about sub contracting the help? No workers comp, no with holding and matching social security. How about temp service for your 1 person?
 
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ezra

Well-known member
polarisrider1 said:
I invest right back into the company. Shed the single employee, they cost way to much to fund. I would never do a single employee unless it is your wife. How about sub contracting the help? No workers comp, no with holding and matching social security. How about temp service for your 1 person?
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sub workers were ez in MN in the past now it is almost imposable to have a guy as a "sub" that works for you you can only leagaly hire them to do a job at a time and then they have to be regesterd with the state to do that work as a sub contractor then I have to fill out the paper work per job IT IS NANNY STATE BULL SHIP! they (the state)makes it harder and harder to do legit biz I think they want us to all go off the books.for a small guy like me it is cheeper to make my right and left hand guys 10% partners for as long as they work for the llc
 
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skeeter2010

Member
I listen to Clark Howard once and a while an if I remember correctly the limits for Roth IRA is much higher than for individual accounts. I think individual accounts are limited to 5K and business owner accounts can have much more, I think up to 25K
My business never makes enough money to envest so I really havn't really looked into it and my full time employment has a 401K

Here is the link I did not take the time to check it all out
http://www.irs.gov/retirement/article/0,,id=202510,00.html

Try this one also
http://www.sepira.com/
 
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big_motor_guy

New member
I've talked to a buddy about this some time ago. Same situation, he wanted to invest but not match for his employee, he ended up dropping his contribution down to 5% and that was matched for his employee, he is also investing in land right now. buying a few small plots of land in the last 4 years he thinks the land had increased in value by 25% in 4 years and 10% in the last year and a half. 8% or so isn't bad, and with land not too much risk, just a thought.
 
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Polarice

New member
I think I'm going to go with a 'simple ira.' It seems that will meet my needs for now.

PR1,

I don't think I can technically do what you're saying. Something about if a contractor is required to be there at certain times then they have to be an employee. I actually have 2 employees that are required to be there. Government has their dirty little fingers in the small business man's business for every little thing. Uncle Sam needs his for the 'progressive' agenda.
 
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Dave_B

Active member
I would do some more research on contracting the positions out. It is becoming more and more common. Years ago, I worked for the State of Mi but I was a contract employee. My wife currently works for the local school district but through a company that they contract with.

Certain types of businesses are more regulated on this such as mine. As a mortgage broker, the state doesn't allow me to hire contact commission sales people. They must be actual employees and earn W-2 wages. I can, however, hire contract office staff and pay them 1099 income.

Look into it some more. Your primary goal should be investing in the business especially these days. You can always set up your staff with a good financial advisor and let them handle their own affairs.

Dave
 
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polarisrider1

New member
Polarice said:
I think I'm going to go with a 'simple ira.' It seems that will meet my needs for now.

PR1,

I don't think I can technically do what you're saying. Something about if a contractor is required to be there at certain times then they have to be an employee. I actually have 2 employees that are required to be there. Government has their dirty little fingers in the small business man's business for every little thing. Uncle Sam needs his for the 'progressive' agenda.
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In the construction trades the sub contracting works pretty good for me. As far as the original question, I invest in myself. It puts me in a sink or swim situation and I like the pressure, makes me swim well.
 
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jts

New member
There are many variables. Firms who handle retirement plans will, many times, perform an analysis for you, to determine which plan is best for your particular situation. If your company is small, your accountant should be able to handle your questions.
 
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mr_fusion_ho

New member
I am a financial advisor and you really have three other choices besides a SEP plan, which I would not do if I had non-family employees.

The choices are:

Simple IRA:
Contributions are made by employer and employees.
Employees may defer up to 100% of their compensation up to the following:
$11,500 for 2010
Employees age 50 and older are able to make catch-up contributions of the following:
$2,500 for 2010
The employer may contribute 2% of compensation to each eligible employee, or make a matching contribution for each employee who makes a deferral contribution. The matching limit is dollar-for-dollar up to 3% of the employee's compensation. Must be made available to employees who earned at least $5,000 in any two preceding years and are reasonably expected to earn $5,000 in the current year.

Profit Sharing Plan:
Contributions are made by the employer.
Employers may contribute up to 25% of compensation paid to eligible employees. An employee’s total contributions cannot exceed $49,000.
You can also set a vesting schedual to help retain good employees. This plan also allows a higher contribution which may help you tax wise.

401k:
Employees generally make contributions; however, the employer may also make contributions.
Employees may defer 100% of compensation up to the following:
$16,500 for 2010
Employees age 50 and older are able to make catch-up contributions of the following:
$5,500 for 2010
Employers may contribute up to 25% of compensation paid to eligible employees.
Aggregate contribution for each employee cannot exceed $49,000 + catch-up contributions.
There are management cost for this plan.

I hope this helps in your decision making process.
 
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Polarice

New member
mr_fusion_ho said:
I am a financial advisor and you really have three other choices besides a SEP plan, which I would not do if I had non-family employees.

The choices are:

Simple IRA:
Contributions are made by employer and employees.
Employees may defer up to 100% of their compensation up to the following:
$11,500 for 2010
Employees age 50 and older are able to make catch-up contributions of the following:
$2,500 for 2010
The employer may contribute 2% of compensation to each eligible employee, or make a matching contribution for each employee who makes a deferral contribution. The matching limit is dollar-for-dollar up to 3% of the employee's compensation. Must be made available to employees who earned at least $5,000 in any two preceding years and are reasonably expected to earn $5,000 in the current year.
Click to expand...

The simple is going to be the best option at this point.
 
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