Know More About Tax Advantages for Small Businesses

Regardless of their size, there are many types of employee retirement plans small businesses can offer as part of their benefits package. Offering retirement plans to

employees is a good way to attract and retain top-level talent in your industry. The IRS provides tax incentives to small businesses that offer retirement plans. There

are several different plan types for small businesses, from simple plans that anyone can open to employer-sponsored plans for businesses that employ between 2 and 100


This article is for small business owners looking to learn more about retirement plan options for their employees. Choosing the right retirement plan for your small

business starts with researching all the options available to you and your employees. Analyze who your employees are and what retirement plan options make the most

sense for them, then choose one that aligns with your small business’s needs and values.

Several different types of small business retirement plans are available, and plan providers have affordable, accessible options designed for even very small

businesses. There are also some tax advantages that can help offset the expense of sponsoring a small business retirement plan.

You can choose from simple plans that anyone can open, plans designed for self-employed people with no employees, or employer-sponsored retirement plans for small

businesses that employ anywhere from two to 100 workers. Read on to learn more about the small business retirement plan options that are available to you and some tips

to help you decide which ones you want to discuss with your CPA or financial advisor.

The government offers a Retirement Plans Startup Costs Tax Credit to help small businesses offer retirement plans to their employees. It allows you to deduct up to 50%

or $500 off plan startup and administration costs for the first three years of your plan. If you match or make contributions to employee accounts, that money is also


It allows you to contribute to your own retirement savings plan, and like your employees, you have the option of elective deferrals that may allow you to lower your

income tax bracket. Also, depending on your income, you may qualify for the Saver’s Credit.

Additional tax credits may soon be available, as federal lawmakers seek to make retirement plans more accessible and affordable for small business owners. For example,

one bill under consideration would provide a tax credit to small businesses that auto-enroll their workers in their retirement plans.

Do Small Businesses Have to Offer Retirement Plans? The short answer is no. In fact, no private businesses in the U.S. are required to offer retirement plans to their

employees. Many companies offer retirement plans as part of benefits packages to help attract and retain talent. For smaller companies, offering retirement plans may

help bring in new workers, but it also may be the right thing to do for your existing employees.

Depending on your situation, it’s important to consider how retirement plans will impact your business and its employees. Oftentimes, providing benefits like

retirement plan options or health care can be a major tipping point for employees who are waffling between staying loyal to your company and taking their talents


Key takeaway: There are no laws requiring small businesses to offer employee retirement plans. However, doing so can help you attract and retain top talent. The

government incentivizes small businesses to provide employee retirement plans with tax credits. You can deduct up to 50% or $500 off plan startup and administration

costs for the first three years of your plan.

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