December 28th, 2015

TAX TIP OF THE DAY...  you still have 4 days for tax planning!!! 

It's not too late for a 1 person business to set up a quick and easy retirement plan: 1) SEP pension or 2) Solo 401k.  Both can be set up with most banks, financial advisors or online.  

The SEP pension is my favorite for most businesses due to its flexibility.  You can set it up and contribute after the fact...  after 12/31.  Set up must be complete as late as March/April for the plan to count toward the prior year.  The maximum contribution is 20-25% of owner wages or profit.  Your tax advisor can tell you how different contribution amounts affect your refund.  The general rule of thumb is 25% of your contributions come back to you in tax savings.  For S-corps... make that 39%!!!    

If you would like to turbo charge your contributions, you can upgrade to the Solo 401k which allows approximately $18k more in annual contributions.  BUT YOU WOULD NEED TO SET UP A 401K BY 12/31.  You can make the contributions after year-end... as long as you meet the 12/31 set up deadline.

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