Can Small Business Owners Ever Retire?

Financial planner Steve Koch knows firsthand the financial pressures of owning a small business.

Koch, who founded Koch Financial Services 12 years ago, is a small business owner himself, with two children in college.

Small business owners don't have a pension to look forward to, nor can many afford to put money aside in a 40(1)k plan. There is no big corporation to provide a match for savings.

While communities such as Dunedin support the idea of locally owned businesses, the 24/7 financial pressures owners face can be enormous.

"There are so many costs that small business owners have – rent, utilities, a support staff," Koch said from offices next to the ICOT Center in Clearwater. "It's hard to make a reasonable profit."

But Koch said that there are easy steps that small business owners can take to reduce taxes and risk by tapping into "tax advantage programs" that help build that nest egg for retirement.

"You have to have a plan," said Koch. "You can't survive on Social Security," as a retiree.

Koch's company motto is: "The best way to make money is to prevent losing money."

Koch, an area resident since 1976, offers these 5 tips for small busines owners in the Tampa Bay area trying to save for retirement.

1.) Be aware of hidden costs and fees when investing in funds toward retirement. Do research, and ask questions. "Fees can decimate a fund," Koch said. "Fees may be built into a fund's performance, for example."

2.) Reduce taxes when possible. "Don't pay taxes on excess revenue when possible," Koch said. "Realize taxes are going up, and plan for that." A solution may be to invest in "tax advantage programs," he said. "There are ways to put aside unlimited yearly funds that allow for tax-free withdrawls in the future." 

3.) Reduce risk. "The first rule of making money is not to lose it," Koch says. It's harder to regain ground. "A 50 percent loss requires a 100 percent gain to recover. There is no such thing as getting back even. You lose time."

4.) Make sure there is cross-communication between you, your tax preparer and your financial planner. "Create synergy between your tax preparer and your tax planner, or your financial planner," Koch said. "If your financial planner is not getting information from your tax preparere, you will not be able to take advantage of opportunities to reduce taxes in the future."

5.) Be aware of conflicts of interest. Before accepting the advice of a financial planner, make sure it is in your best interest and not their best interest. Understand fees and compensation. Don't be afraid to ask questions.

For more information

Koch Financial Services is located at 13575 58th St. North, Clearwater. Phone 727-526-6859. Visit SteveKochFinancial.com.