3 Big Retirement Mistakes Small Business Owners Make

 

Retirement is one of life’s most important milestones, yet retirement planning can be a complex and confusing process. As a small business owner, it’s even more difficult to navigate retirement because you also have to consider the future of your business. Unfortunately, many entrepreneurs make big retirement mistakes that put their retirement in jeopardy. Here are three retirement mistakes commonly made by small business owners.

 

First, some small business owners fail to start retirement planning early enough. Even if retirement feels like a lifetime away, it’s important to begin retirement planning as soon as possible. The earlier you start saving and investing, the more time your retirement funds have to compound and grow. Establishing retirement goals and contributing to retirement accounts are two key components of early retirement planning.

 

Second, some entrepreneurs don’t understand the tax implications that come with retirement savings. When contributing to retirement savings plans such as 401(k)s or IRAs, it’s important to consider the tax benefits associated with these retirement accounts. Making retirement contributions can provide a tax break, as well as help reduce your overall taxable income.

 

Finally, many small business owners mistake retirement planning for estate planning. Although retirement and estate planning have some similarities, they are two distinct processes that should be considered separately. Retirement planning involves methods of preparing for the retirement phase of life such as investing in retirement accounts, while estate planning involves strategies for distributing your assets after your death.

 

By avoiding these three retirement mistakes, small business owners can ensure that their retirement plans are on track and secure. Retirement planning is an important part of any entrepreneur’s financial strategy and should not be taken lightly. Understanding retirement goals, being aware of tax benefits, and distinguishing retirement from estate planning are just some of the key elements to retirement success. With retirement planning, small business owners can set themselves up for a secure retirement.

 

If you’re thinking about hiring a bookkeeper for your small business, contact us at BBS Accounting CPA today. We would be happy to discuss your specific needs and how we can help you take your business to the next level.