How Entrepreneurs Can Put Away More Than $200,000 a Year for Retirement -- Tax-Free

You work and you work and you work, and you save, but it never feels like you’re stashing away enough money. There are always so many expenses it can become overwhelming.

But fear not. There’s at least one way entrepreneurs can save a significant amount of cash for retirement. Let me explain.

There’s been a slew of legislation that is punitive to small-business owners, from minimum wage increases throughout the country to the so-called Affordable Care Act. The tax code isn’t much better, and with many entrepreneurs using pass-through entities that have them paying tax at a personal income tax rate (vs. corporate income tax rate), any future corporate tax reform is not likely to affect the average entrepreneur favorably.

However, there is one part of the tax code that is favorable for entrepreneurs and that’s around tax benefits for retirement savings. While many entrepreneurs understand the basics of 401(k)s, many of them don’t realize that they, depending on the earnings of their business, may be able to put away six-figures a year for retirement, tax free.

Here is some information to help you get started, directly from the experts that I myself use.

If a small-business owner isn’t happy with his or her existing retirement plan or doesn’t have a plan, the first step is, “to consider what their objective is for the retirement plan,” says Sam Schroeder, president of ARS, an Illinois-based third party administrator (TPA) that helps small- and mid-size businesses establish, test and manage compliance related to retirement plans (including that of my own firm). “Is it to save for themselves or to offer their employees a savings vehicle? This will help guide them to a retirement plan that is a fit for their objectives.”

Once you have a sense of your objectives, you can speak with your accountant and a TPA about what types of plans are a fit. While traditional 401(k) contributions are limited annually ($17,500 for 2014, plus a catch-up contribution of $5,500 if you are 50 or older, and $18,000 and $6,000 catch-up, respectively for 2015), other plan types can help you save far more. Schroeder says that using a 401(k) Profit Sharing Plan, you can put away up to $52,000 tax-free for 2014 (or $57,500 if you are over 50) and $53,000 for 2015, depending on the earnings of your business for the year (which, Schroeder notes, are limited to 25 percent of compensation).

Schroeder also says that if you use a Defined Benefit and/or Cash Balance Plan structure, the amounts that you can put away are much greater, noting that, “the total benefit that one person can receive for 2014 is $210,000,” tax-free.

Again, the amount that you can and should put away this year depends on a number of factors related to you and your business, and your desire to tie up that much money in a retirement account, but if you are going to have an investment account or save for retirement, these plans can be very helpful to you as an entrepreneur.

In addition to having your accountant guide you through tax implications and the third party TPA helping set up your plan and helping with compliances services -- such as filings with the government, required annual testing and distribution of other related written materials -- you may also need an investment advisor or investment company to help you allocate monies into ultimate investments.

Most entrepreneurs and small-business owners will most likely not have the services of investment companies, advisers and TPAs bundled together, and that you can benefit from the flexibility from being able to choose each of the service providers that best meets your needs, Schroeder says.

In choosing the best service providers, the TPA choice is particularly critical, as legislation relating to retirement plans changes frequently with the unfortunate whim of political tides. “Very valuable, but less well-known options under a retirement plan will go a long way in ensuring that a small-business owner receives as much benefit from their retirement plan as they can, while maintaining the qualified status of the plan,” Schroeder says. “One such option is a method of allocating a profit sharing contribution called cross-testing. This requires additional testing, but enables the contribution that the small business owner receives to be greater on a percentage basis than the contribution that the employees receive.”

Plus, Schroeder warns to check as you would with any other service provider to see who will be performing the work and to beware of low-cost fee traps that seem like a bargain today but may be costly at the end of the day. “Some TPAs have lower-level staff preparing important documents and testing, which increases errors and needed corrections…It would not pay off long-term to be short-sighted on fees. IRS and DOL audits can go back many years, even to plan inception if there are problems.”

Barry Itzkowitz, a CPA and director with Midwest-based accounting firm SS&G (whom I also work with personally), says that you need to be focused on timing. “In order to take advantage of tax deductions for the calendar year 2014, most retirement plans must be in place before December 31^st,” he says. “Planning before year-end will provide valuable insight about current tax savings strategies for your business while estimating future retirement benefits for both you and the employees. Also, recent IRS limits have increased the funding limits for both 401(k) and employer contributions for 2015, so future benefit options can be considered if the December 31, 2014 implementation deadline is not met.”

Focusing on your qualified retirement plan may not seem like the obvious place to spend your time in business, but it can be quite valuable to you and even to your employees. Make it a plan to check in on your “plans” for the future.

From Entrepreneur

Pro Tip for Startups: Document Your Processes

"Document your processes" is a B-school chestnut that's been pounded into upper-management training for decades. But here's the thing: That same nugget applies to your 1-month-old, one-person startup, as well. You may think that's crazy as you bounce between different roles and duties every five minutes, and your company's product, target market and business plan are still being worked out, but it's not. Simply put, if you know where you want to go as a business, the step-by-step processes you implement will tell you how to get there.

To explain what that means, Joe Worth, a CFO for both public and private companies and Entrepreneur's "Ask the Money Guy" columnist, recounts a story about a small high-tech machine tool manufacturer he worked for, where every single process in the company was written out and housed in a row of three-ring binders. "They even spelled out how to clean and stock the company kitchen," Worth says. "I asked the owner why she'd gone to this level of detail, and she told me, 'I want to act like the company I want to become.' On an operational level, it was fantastic. I was able to grab the accounting process book put together by the outgoing controller, and within five minutes I was in business."

As Worth's experience points out, the biggest benefit to documenting processes is the control it gives you over your company and its future. Once done, you can delegate tasks to new hires, partners or contract workers, or more easily move employees from one position to another, freeing you up to focus on growing your business. "In a startup, new people are joining the company all the time," Worth says. "When there's a specific process in place, everyone knows what their job is and what's expected of them."

But even if it's just you running your business, writing out a checklist (for, say, sales calls, accounts payable and accounts receivable) or a packing list (for trade-shows or conferences) will help keep you on top of your business. "This is what every Fortune 500 company does, and it's what every franchisor has to do to enable complete strangers to execute their business model," Worth says. "If you do the same thing on day one of your startup, you're going to be well ahead of the competition in creating a more valuable company."

From Entrepreneur

12 Facts About the Human Brain That Will Make Your Marketing More Successful (Infographic)

Humans will remember something longer if it made them feel rather than think. They gravitate towards provocative images -- think food, sex and danger. They’re drawn toward images of faces. The color yellow puts them on edge.

Understanding how the human brain works is fascinating, but it’s also good business.

Marketing campaigns rooted in neurology are more likely to get and hold attention. And in the attention economy we are living in, where consumers have access to more emails and tweets than they could ever manage to read and digest fully, being able to get and hold attention is what separates the wheat from the chaff. That’s what gets consumers to spend.  

If you are looking to get more of your marketing efforts seen, then have a look at this infographic, embedded below, generated by Nashville, Tenn.-based Emma, an email-marketing software provider. The infographic highlights 12 biological trigger mechanisms that make the human brain light up.

Have a look and use these insights to improve your marketing instantly.

From Entrepreneur

You'll Never Hear Successful People Say These 15 Phrases

If you want to become more successful as an entrepreneur or in your career, you can start by making a habit of talking and thinking more like the people you know or read about who are already successful.

Here are some phrases you’ll never hear a successful person say:

1. "We can't do that."

One thing that makes people and companies successful is the ability to make solving their customers’ problems and demands their main priority. If a need arises repeatedly, the most successful people learn how to solve it as quickly as they can.

2. "I don't know how."

Instead of automatically shutting down solution-finding, successful people learn what they can in order to succeed in a project or in their career. For example, you would never see a truly successful international business consultant who travels to Italy multiple times per year refusing to learn Italian.

3. "I don’t know what that is."

Pleading ignorance doesn’t make the problem go away. It just makes the asker find someone who is able to work with them to solve the problem. While’s it’s always good to be honest with those you interact with, finishing this phrase with “but I’ll find out” is a surefire way to become more successful.

4. "I did everything on my own."

The best people know to surround themselves with others who are smart, savvy and as dedicated as they are. What makes this work is always giving credit where it’s due, as due credit to you will always come back in hand. Recognize those that have helped you or made an impact and you’ll continue to earn success and recognition yourself.

5. "That's too early."

You would never hear Benjamin Franklin or someone such as Steve Jobs say, “that is too early for me to be there.” If there is a networking meeting, project launch or interview opportunity at the very beginning of the day, the most successful people do what it takes to be there. Part of being successful is being at the right place at the right time, no matter if you’re a morning bird or night owl.

6. "That’s too late."

Along the same lines, if you’re asked to a 9 p.m. dinner by a potential business partner, and you can make it, definitely go. You may be tired the next day, but the connections you will make during a small dinner or after-hours meeting can make all the difference when it comes to your career or next project.

7. "It's too bad we couldn't work together."

Truly hitting it off with someone can be a rare occurrence, but if you truly connect with someone and want to work with them, find a way to make it work. Finding people that you really enjoy communicating with don’t come along too often, so whether it’s a case study or a new business, successful people know that working with those who truly align with your personality and interests are the path to true success.

8. "Let's catch up sometime."

Many times, this phrase is said as filler, without any true follow up. Successful people know that if they really want to catch up with someone, they follow up to make it happen. This also builds on the idea that the most successful people have worked hard to build genuine connections and relationships within their network, without any hidden agenda. Nurturing your network means being thoughtful of others, while keeping your relationships with them on top of your mind.

9. "I'm sorry, I'm too busy."

If an opportunity comes their way, successful people do what it takes to make it happen. Sure, this might mean longer hours occasionally, but if you want something to work, that is what it takes. After all, according to Lao-Tzu: "Time is a created thing. To say ‘I don’t have time,’ is like saying, ‘I don’t want to.’”

10. "That was all my idea."

Again, as mentioned in number four, the most successful people spread the wealth when it comes to doling out praise from a successful project. No idea is truly one’s own -- it’s a sum of their experiences from interacting and building off of collaborative ideas with a team. Doling out praise and encouragement is a crucial part of building a successful company and culture.

11. "I never read books."

Tom Corley of Rich Habits found that rich people read (and listen to) books at a much higher rate than poor people: “63 percent of wealthy parents make their children read two or more non-fiction books a month vs. 3 percent of poor.” Also, “63 percent of wealthy listen to audio books during commute to work vs. 5 percent of poor people.” Reading non-fiction (as well as fiction) can help reduce stress, enhance creativity and boost your memory.

12. "I'm not good enough."

Part of being successful is having a high sense of self-worth. Being yourself is one trait that promises success in business and your personal life. Follow your true interests. What you would do in your life if you didn’t need money?

13. "It's OK." (over and over)

Successful people know when to walk away and stop taking excuses from others. If there is a bottleneck and something (or someone) is preventing you from completing a project on time, build up your business, or move you forward in your goals, then it’s time to set boundaries and decide to limit your involvement.

14. "If our competitors don't have it, then we don't need it."

Copying competitors is one of the many possible deaths for most companies. True innovation comes from the flip side: figuring out what competitors aren’t doing and fill that niche to answer a need in the industry.

15. "Time off is for suckers."

True success should be seen as a well-rounded approach, one with vacations, weekends with friends and family and hours of downtime on the weekdays. While workload varies for everyone at times, taking vacation can make you better at your job.

Sometimes to get to where you want to be, the best and easiest thing to do is to simply follow the examples that others set for you.

What phrases are you going to eliminate from your day-to-day conversations and thinking?

From Entrepreneur

20 Signs You’re Succeeding In Life Even If You Don’t Feel You Are

We all feel like failures from time to time. While this is a normal feeling, you have to find a way to see yourself and your life from a different perspective. Sometimes we ignore the “little things.” Just because you are not a millionaire, don’t live in a mansion, and you don’t drive a fancy car, that doesn’t mean you’re a failure. In fact, it’s quite the contrary.

Here are 20 signs that you are succeeding in life:

1. Your relationships are less dramatic than they used to be.

Drama is not maturity. As we age, we should develop maturity. So maybe your relationships were drama-filled in your past, but if you have moved beyond that, then you are successful.

2. You are not afraid to ask for help and support any more.

Asking for help does not equal weakness. In fact, it is a strength. No person has ever succeeded in isolation. It takes teamwork to accomplish goals. Asking or help is a sign that you have grown as a person.

3. You have raised your standards.

You don’t tolerate bad behavior any more – from other people, or even yourself. You hold people accountable for their actions. You don’t spend time with the “energy vampires” in your life anymore.

4. You let go of things that don’t make you feel good.

No, this is not narcissistic even though it might seem like it. Self-love is success. Love yourself enough to say ‘no’ to anything that doesn’t make you happy, doesn’t serve your purpose, or drags you down.

5. You have moments where you appreciate who you see in the mirror.

Ideally, you should appreciate who you see in the mirror at every moment. But even if that doesn’t happen, if you do it more than you used to, then that is success. Love yourself. You are awesome.

6. You have learned that setbacks and failure are part of self-growth.

Not everyone can have success 100% of the time. That’s just not realistic. Life is about victories and losses. So look at your setbacks as stepping stones to something better. In reality, there really is no such thing as as setback. It’s all just part of a wondrous journey.

7. You have a support system that includes people who would do anything for you.

If you have figured out the people who “have your back” and recognized the ones who only pretend that they do, then you have succeeded. This is a painful realization, but once you learn to see the signs of betrayal, you can stay away from those people.

8. You don’t complain much.

Because you know there really is nothing to complain about. Unless you really have gone through some horrific life experience and had unimaginable losses, most of what we all experience on a day-to-day basis is just mundane. And successful people know that. And they live in a space of gratitude.

9. You can celebrate others’ successes.

Just because other people succeed, that doesn’t make you a failure. Applaud the people who rise to the top. The more positive energy you give to other people’s victories, the more you will create your own.

10. You have passions that you pursue.

You are not stagnant. You know you have something wonderful to contribute to the world. You have unique talents and gifts. Not only do you know that, you pursue it.

11. You have things to look forward to.

If you don’t have exciting things going on in your life that you are eagerly anticipating, then you are slowly dying inside. Successful people create goals that they are passionate about pursuing. They let this excitement drive their life.

12. You have goals that have come true.

Even though “failures” are a part of life, you have stuck to your goals and dreams long enough to make them come to fruition. You have  some tastes of victory. It fuels you.

13. You have empathy for others.

A person without empathy is dead inside. Empathy equals spreading love and positive energy into the world. Successful people know this. They love others as if they are family.

14. You love deeply and open yourself up to be loved by others.

Love is risky, and sometimes scary for people. It’s the one thing we all strive for, but it’s also intimately tied to the one thing we fear the most – rejection. If you open your heart enough to love and be loved, then you are successful.

15. You refuse to be be a victim.

You know that life doesn’t always happen to you. Many times, you are a co-creator of your life experiences. Successful people know this and refuse to be kept down by life experiences. The rise up and conquer anyway.

16. You don’t care what other people think.

You know you can’t please everyone. You know that the standards with which society judges people is many times unrealistic. So you just keep true to yourself and love the person you are.

17. You always look on the bright side.

Life can be full of disappointments – if you choose to see them that way. Otherwise, they are learning opportunities. No negative experience is ever wasted as long as you learn from it.

18. You accept what you can’t change.

Let’s face it – there many things you can’t change in life. All you can change is how you view what happens. If you can change your negative perspective on situations to a positive one, then you are successful.

19. You change what you can.

And let’s face it again – there are many things you can change in life. Successful people don’t sit around accepting the negatives that are changeable. They get out there and do something about it!!

20. You are happy.

To me, this is the ultimate definition of success. It doesn’t matter what the balance is in your bank account, how big your house is,  or how many fancy vacations you take. If you are happy, then you are succeeding in life.

Even if you don’t see yourself in many of these 20 things, don’t fret. It’s okay. Be happy that you see yourself in just a few. In time, the rest will come. You just need to keep moving onward and upward.

From Lifehack

15 Free Online Learning Sites Every Entrepreneur Should Visit

Being a successful entrepreneur means you have to wear a lot of hats, especially when your company is just starting out and you don’t have enough employees to cover all the areas you need.

Learning the new skills necessary to start a new business can be expensive, but fortunately the initiative for free, high-quality, educational resources online has only continued to grow in the past few years. Below are some of the resources available to learn more about marketing, entrepreneurship, business management and more.

1. CodeAcademy

This great resource offers free interactive programming sessions to help you learn programming languages such as HTML, CSS, Javascript and PHP. You can save your progress as you go with a free account. Learning to code can help entrepreneurs fix bugs if they don’t have a developer, or even go down the road of building their own website or products (such as apps).

2. HubSpot Academy 

The free certification program offers courses on inbound marketing, including website optimization, landing pages and lead nurturing. These skills are a must for business owners as they try to grow their business and online presence.

3. Moz

If you want to learn search-engine optimization to make sure your website is as visible as possible, check out this treasure trove of resources from SEO leader, Moz. Besides having the free Moz Academy, there are also webinars (live and recorded), and beginner’s guides to SEO, social media and link building.

4. LearnVest

The most successful entrepreneurs know how to manage their money both on a business and personal side. In addition to having extremely affordable finance classes, LearnVest also offers some of its classes for free, such as “Building Better Money Habits” and “How to Budget.”

5. Niche consultant courses

The Internet has made for a coaching boom, which is extremely helpful to entrepreneurs who want to learn how to start or better a business in a specific niche. Some great coaches and organizations that routinely have free courses and ebooks on building a business include Natalie MacNeil and MyOwnBusiness. Try searching “niche keyword” + “business course” to find one most applicable to you.

6. edX

This free site currently has over 300 courses on a variety of topics, including “Financial Analysis and Decision Making” and “Entrepreneurship 101: Who is your customer?” These courses not only cover business in general, but can also you help learn more skills that are applicable to your industry, such as big data or environmental conservation.

7. Khan Academy

This free learning resource was created to give everyone access to education in math, science, art, technology and more. There are over 100,000 interactive exercises to put your education to practical use. Even though many of the courses are geared toward high school students, there are several courses that would be good for anyone to have a refresher on, such as taxes and accounting.

8. MIT Open Courseware

These are actual courses taught at MIT and offered for free on the sitefor viewing and reading at your discretion. The school put together an entrepreneurship page that lists available courses that are beneficial to new business owners. Courses include “Early State Capital” and “The Software Business.”

9. Kutztown University of Pennsylvania

This university has almost 100 free on-demand college courses that are extremely applicable to entrepreneurs, including ones that cover business planning, operations and management and small-business tax.  

10. Coursera

Much like MIT’s Open Courseware, this site has 114 educational partners that provide free courses to almost 10 million users. One benefit to Coursera is that there are very specific courses that fit perfectly into particular niches, such as “Data Management for Clinical Research” from Vanderbilt University and “Innovation for Entrepreneurs: From Idea to Marketplace” from the University of Maryland. Its wide network of partners allows for a greater selection.

11. OpenCulture

This site isn’t an educational platform on its own, but rather collects and shares free resources from around the web. Its list of 150 free online business courses is a great resource because it offers classes from iTunes U and other lessons on video and audio. The site also has lists of free audiobooks, certificate courses and other online courses.

12. YouTube

It’s probably unsurprising to most users that YouTube is one of the world’s largest search engines, as there are literally videos on just about anything you can imagine. From TED talks to recorded presentations on building a business, it’s a great free resource on just about any topic.

13. Alison

This platform offers free online courses from some of the most well-known names on the internet today, including Google, Microsoft, and Macmillan. With over 4 million users and over 600 courses already, it covers topics such as economic literacy, personal development and business/enterprise skills.

14. Saylor

The Saylor Foundation offers tuition-free courses and also works with accredited colleges and universities to offer affordable credentials. Its course offerings are similar to what you’d see when working toward a bachelor’s degree.

15. Podcasts

Even though it’s not an official course, podcasts are an amazing (and easily digestible) way to become a better entrepreneur. Podcasts can be listened to via streaming on your computer (if that certain podcast offers it) or via iTunes for iOS and apps such as Podcast Republic for Android. Podcasts such as Entrepreneur of Fire already garner thousands of listeners every episode and are a great way to learn the most up-to-date information and strategies possible. Another good list of entrepreneur podcasts include Think Entrepreneurship's.

Whether you learn best by audio, video or text, this list of 15 learning resources for entrepreneurs can help you learn more about building a business, accounting and getting customers.

Do you have a favorite resource not listed here? Let us know in the comments below.

From Entrepreneur

10 Questions to Ask Yourself When Testing a Business Idea

You've got a business idea you're jazzed about, but aren't sure if it's feasible. What you need to do is test the concept to see how it stands up to a series of rigorous questions.

"You are always testing," says Andre Marquis, Executive Director of the Lester Center for Entrepreneurship at Haas School of Business at the University of California, Berkeley. "What you start with is rarely what you end up with."

Where to begin? Here are 10 key questions to help you evaluate your business idea:

1. What is my customer profile?

Maybe your product or service idea seems like just the right solution for you, but can you identify a clear customer base beyond yourself? Ask what your customer's biggest pains are and how your product might help resolve them, says Alexander Osterwalder, co-author of Business Model Generation (Wiley, 2010) and founder of The Business Model Foundry, which provides digital tools to help develop business ideas. When David Dodge got the idea to start a tutoring business, he used Internet surveys to develop a psychographic analysis of his core customer. "I tried to dig deep and find more," he says. "Understanding and segmenting your market is very important." In 2005, he founded Sure Prep Learning in Scottsdale, Ariz., focusing his marketing on worried and competitive parents. Today, the business has more than 800 tutors.

2. What am I replacing? 

Whatever your idea is, someone out there is buying something else in its place, says Jim Pulcrano, executive director of IMD, the top-rated Swiss business school. Ask yourself what makes your product compelling enough to replace what's already in the marketplace. This doesn't necessarily have to be limited to products that have a similar purpose as yours, Pulcrano says. You could also look at your target customers' spending habits, he says, and consider how you could get them to buy your product instead of something else they currently purchase.

3. How do I demonstrate this idea to others?

Make your idea as tangible as possible, says Steven Stralser, clinical professor of entrepreneurship at Thunderbird School of Global Management in Glendale, Ariz. That might mean developing drawings or a working prototype. By figuring out how you can easily represent your idea to others, you'll start to see how much footing it has, Stralser says. "The ability to show it to other people becomes very critical."

4. Who will I need on my team? 

In the early stages, you'll need to figure out whom you can turn to for honest and informed advice about your ideas, Stralser says. And soon, you'll also need to think about whose brainpower you want on your side—whether in product development, marketing, IT or another function. Find a way to approach such people to gauge their interest in getting involved.

5. What resources do I need?

How can you actually make this idea happen? That requires asking what resources you'll need, from factories to computers to office space, Osterwalder says. Make a list of all the key assets and figure out whether you can obtain them before you invest a lot of time and money in testing and product development.

6. How long will my purchasing cycle be? 

You want to know the purchase cycle for your product or service so you can estimate your upfront cash needs. With a longer purchasing cycle, you'll need more money on the front end before you start bringing in revenue. If you are selling medical technology to a hospital, for instance, that transaction might take 18 months to complete. In contrast, a phone app can be purchased immediately.

7. What's a reasonable sales forecast? 

You want to analyze the actual operation of the business as much as possible to come up with a solid sales forecast, Stralser says. For example, if you want to open a restaurant, don't just base your revenue forecast on annual restaurant sales in your city. For a more specific estimate, consider the size and seating capacity of your proposed restaurant, the expected average customer bill, and the hours of operation.

8. How much growth potential does my idea offer? 

Think about how big you want your business to be and figure out if your idea can meet your expectations. For example, if you are writing software, building simulations or making something by hand, you should realize that you may not grow as fast as if you're making something that can be mass produced. "Are you selling your time, which is finite, or are you selling a product, which you can sell a million of?" Marquis says. "A lot of times it's not obvious to people."

9. Do I possess the necessary skills?

Having an idea and making it happen are two very different things. Be honest in assessing whether you're qualified to turn your idea into a business, Pulcrano says. If an idea requires highly technical skills or business experience that you lack, will you be able to find someone who can fill those gaps?

10. Can I see myself doing this for the next two years? 

Coming up with an idea can be exciting, but are you willing to dedicate your life to it for at least the next two years? Do you have support from family, friends and mentors, and are you willing to make the necessary sacrifices? Dodge decides whether to pursue an idea partly based on how excited he and his team are about it. "You have to look at opportunity cost and realize any new opportunity is going to take a tremendous amount of time and energy," he says.

From Entrepreneur