Who doesn’t dread the taxman? Everyone in their right mind shudders a little when they are filling out their tax returns each year. A large chunk of your hard-earned money goes flying out the window, never to be used or seen again by you. If you’re an employee or business owner with full-time employees, you will be used to this sort of thing. But if you’re an entrepreneur, you need not worry so much. There is an incredible amount of advantages you have, being self-employed and not having full-time employees when it comes to saving up for your own retirement. The government knows that innovation that moves the country forward usually comes from people like you. So they have made up some rules and benefits for taking your 401K plans into your own hands.
The advantage of freedom
What sets the self directed 401k plan apart from the others is you have a lot more options for where you can invest your money. The usual 401K plans will limit your income investment to just stocks and bonds. The company you’re working for will almost certainly give you stocks and bonds from themselves, thus you’re essentially stuck investing in the company you work for. However, with a self-directed plan, the IRS permits you to invest in real estate, stocks, bonds, precious metals and several asset classes. If you do so, you will lower your income tax rate and be given a tax deferral for all monies invested. This encourages self-employed entrepreneurs to do their own research and invest in long-term asset classes, which almost always provide a consistent growth pattern.
Revenue is savings
If you do not have to answer to anyone such as an investor, business partner or shareholders and you own the business outright, your revenue can act as a savings account. Essentially, whatever your business is worth, should be seen as your retirement plan. Not only do you keep your revenue but you will also make money from selling the business if you ever choose to do so. However, the revenue should be used correctly to invest in sound assets. Much like larger businesses, micro-businesses led by entrepreneurs should utilize the revenue to invest in other companies by buying stock and or in real estate; both residential and commercial. Your revenues should not be purely used for your business, but to invest.
Leasing intellectual property
You should never underestimate the power of intellectual property. This could be in the way of patents, designs or even content. You can utilize your IP in a multitude of ways. You can lease designs to other businesses that are searching to create their own. This might seem risky, but they must adhere to copyright laws and make their products different anyway. You can also lease patents so that other businesses can make and sell your products under their own brand. This is usually done with an older lesser product which is new to poorer economies.
Entrepreneurs have a plethora of advantages over normal employees and business owners. You own your success outright, so you can maximize your savings and retirement plan opportunities.