8 Ways to Save for Retirement as a Freelancer - Entrepreneur

8 Ways to Save for Retirement as a Freelancer - Entrepreneur


8 Ways to Save for Retirement as a Freelancer - Entrepreneur

Posted: 28 Sep 2020 06:00 AM PDT

6 min read

Opinions expressed by Entrepreneur contributors are their own.

Freelance life unquestionably brings freedom and flexibility. You can work full-time or part-time for who you want, when you want. Depending on your work choices, this type of career can be lucrative and satisfying.

For freelancers, both payment and tax withholding processes are different from a traditional job. These tend to get their income in a non-taxed way. That means that what they bill a client is what they get paid. 

Because no state or federal gets taken out from your payment, you might take a financial hit when it comes time to do your taxes. However, there are some ways to save for retirement and invest in ways that reduce your on a quarterly and annual basis.

Related: 5 Top Financial Tips for Entrepreneurs

Open and contribute to a SEP-IRA

The SEP (Simplified Employee Pension) Individual Retirement Account (IRA) is surpassing other retirement accounts in popularity. Part of the reason for that growth has to do with increased flexibility for your retirement plan. You can deposit more into a SEP-IRA than you could with a , which has a stricter contribution limit.

Another advantage of opening a SEP-IRA is the amount you can contribute. You can contribute up to 25 percent of business profits after you subtract business deductions and half of your total self-employment taxes. Most brokerages offer a calculator to help you determine this figure when you sign up for the account. 

If you incorporated your as an S-Corp and pay yourself a salary, then the calculations are different. 

Try a solo 401(k)

Another option is to open a solo 401(k), which often allows for a larger contribution than even the SEP-IRA. You'll also have opportunities to make post-tax "Roth" contributions that aren't available with a SEP-IRA.

Although that won't benefit your tax obligation today, it will help your long-term savings plan. Someday you'll want to retire and start tapping into that money. The only downsides are that the paperwork is more complex and there may be more fees involved.

Related: New Stimulus Bill Unlocks IRA and 401(k) Dollars for Financially Affected

Have multiple retirement accounts — if it makes financial sense

You might be able to maximize the benefits of various account types by opening a few and adding to each over the course of your freelance career. How you decide which ones to open should be based in part on your tax bracket and marital status. 

Check with your tax professional on whether to add a Roth IRA or traditional IRA to your retirement account portfolio.

Make catch-up contributions

Although this tax tip might not apply to everyone, it does help those freelancers who are 50 and older. Freelancers in this demographic can make what's known as a catch-up contribution to their 401(k) plans.

The extra contributions can help to reduce taxable income and generate considerable tax savings. Because the amount continues to change each year and is also tied to your tax bracket, the best approach is to read the guidelines. 

Related: 13 Reasons Why Your 401(k) Is Your Riskiest Investment

Pay your family to work for your business 

Relying on family assistance can yield more benefits than ready access to trusted help. By paying family members to work for your business, you can also help reduce your tax burden. While there are some varied rules in place for doing so, self-employed people can gain the most benefit. If you have a corporation, this option has different requirements. 

The IRS provides specific guidance on this approach. made to children are not subject to social security and taxes if your business is a sole proprietorship.

However, while payments to a child under the age of 21 are not subject to Federal Unemployment Tax Act (FUTA) tax, they are subject to income tax withholding, regardless of age. If you employ your spouse or parents, those payments are subject to income tax withholding as well as social security and Medicare taxes. 

Add retirement and taxes into your rate for clients

While freelancing, it's important that you create a process for regular rate increases so your clients get accustomed to it. In addition to factoring in your increased value to your clients as you gain experience, it will help fund your retirement and cover the cost of your taxes. 

Calculate your estimated tax payments using different income rates while also determining how much you can put into retirement accounts to offset taxes and help build that nest egg. Divide the number you need by your number of clients. This way, you can spread the cost across your client base rather than hitting one or two clients up for the full amount. 

Related: 8 Lame Ways to Fritter Away Your First Million Dollars

Invest more in marketing to grow your business while writing off this expense

If you don't have many clients, then pursue a strategic marketing plan to generate more income. While you might spend some money now, you can write off those marketing expenses in many cases as part of your deductions.

That doesn't mean you should spend without thought. It's important to set a financially prudent marketing budget. A tax deduction is only a small percentage of your total marketing spend, so focus on maintaining cash flow while attracting new clients.

Consider incorporating your business

Incorporating can be such a complex process that freelancers often opt for the straightforward sole proprietorship structure instead. However, despite its complexity, incorporation can yield significant benefits and perks like liability protection, tax breaks and health insurance discounts that you can't achieve as a sole proprietorship. 

Because every business is different, it's important to do your research first and consult with a tax professional and a financial advisor. This will pay dividends not only for your ongoing freelance income, but also any attempt you make at home ownership, or for your retirement savings as well.

Related: New Study: Health Care Is Freelancers' Biggest Concern

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Mary Kay Inc. Helps Nearly 1000 Texas Student Entrepreneurs Kick-Start Businesses Through Boss Club Foundation Summer Program - Business Wire

Posted: 28 Sep 2020 06:00 AM PDT

DALLAS--()--The women of Mary Kay know a thing or two about being their own bosses—and were thrilled to recently partner with the Boss Club Foundation to inspire student entrepreneurs in Texas to achieve their own dreams.

The Boss Club Foundation, which aims to inspire confidence and ignite creativity in students through the pursuit of entrepreneurship, just concluded their 2020 Summer Entrepreneurship Program with nearly 1,000 students ages 7-18 in North and Central Texas. The program tasked students with starting and running their own real businesses over the course of three weeks and beyond. Students chose between five self-guided kits with everything to create a simple product business—think dog treats, bath bombs, cake pops, fudge, and hand soap. For students with their own ideas, a video course was created that helped them create and launch their own business ideas from scratch.

Mary Kay, a leading advocate for female entrepreneurs across the world, sponsored 25 girls from underserved areas around Dallas to participate in the program. Madeline Littrell, Mary Kay Manager of Global Corporate Citizenship & Sustainability, recorded an in-depth video course on developing a purpose-driven business—a topic close to Mary Kay's heart. The brand also provided over 1,000 units of hand sanitizer so that students could interface with their customers safely.

"Through more than 56 years of empowering women to follow their dreams, entrepreneurship has become synonymous with Mary Kay," said Deborah Gibbins, Chief Operating Officer at Mary Kay Inc. "Boss Club Foundation's Summer Entrepreneurship Program empowers local youth with real-world lessons that go beyond traditional learning – interpersonal communication, relationship-building, and creative thinking, among many others. We are thrilled to play a part in helping the next generation achieve their entrepreneurial dreams."

By all accounts, the program was a huge success. Student entrepreneurs started hundreds of small businesses and many chose to donate a portion of their profits to organizations in their local communities. A survey conducted after the program revealed that nine out of ten students would like to continue to pursue entrepreneurship in the future.

"The 2020 Boss Club Summer Entrepreneurship Program was a major success, and Mary Kay played a key role in making that happen," said David Grubbs, Co-Director of the Boss Club Foundation. "They directly enriched the lives of our students through not only their financial support, but also through coaching our students to identify and live out their business' purpose as an entrepreneur. Their involvement and subject-matter expertise made a difference in our community during a season when it was needed the most. We're honored to partner with like-minded companies like Mary Kay that seek to inspire confidence and ignite creativity in the lives of students."

About Mary Kay

One of the original glass ceiling breakers, Mary Kay Ash founded her beauty company more than 56 years ago with three goals: develop rewarding opportunities for women, offer irresistible products, and make the world a better place. That dream has blossomed into a multibillion-dollar company with millions of independent sales force members in nearly 40 countries. Mary Kay is dedicated to investing in the science behind beauty and manufacturing cutting-edge skin care, color cosmetics, nutritional supplements and fragrances. Mary Kay is committed to empowering women and their families by partnering with organizations from around the world, focusing on supporting cancer research, protecting survivors from domestic abuse, beautifying our communities, and encouraging children to follow their dreams. Mary Kay Ash's original vision continues to shine—one lipstick at a time. Learn more at MaryKay.com.

Business ideas you can start at home amidst Covid-19 measures - The New Times

Posted: 01 Sep 2020 12:00 AM PDT

The Covid-19 pandemic has left many jobless, businesses struggling and salary cuts, for those that are still employed. This has left many trying to start business ventures and income streams and at the same time mindful of the Covid-19 measures in place.

There are a number of ideas and concepts that emerging entrepreneurs can start operating from their homes. Below are a number of ideas and sectors one can start a venture working from home.

Agribusiness

Nellie Ingabire, a farmer and a business owner in Kayumba Sector, Nyamata District is of the view that farming is a business that one should try in this period.

Nellie Ingabire, a farmer and a multi-business owner. Joan Mbabazi.

For those who have an extra room or space in their homes, she said that one can consider transforming it into a chicken house or for indoor mushroom.  

A small space of about 10 by 5 meters can house up to 200 chickens, if someone puts up a creative installation.

Ingabire added that when rearing local or broiler chicken, an individual could sell eggs to their neighbors, friends or even at a local food store.

"Indoor mushroom farming is also worth giving a try. This is one of the easiest, since we now spend more time at home. In just 10 days, one can be harvesting," she said.

"I buy my ready to plant spores at Rwf 500 each. With about 200 spores, one can harvest about 100 Kgs of fresh mushrooms every week with each kilogramme going for Rwf 3,000," she stated.

The 'agri-preneur' also noted that all one needs is growing the mushrooms in a small space where they can control the temperature, humidity and light. Mushroom farming is also ideal in that there is no need for weeding or supervision.

Ingabire further explained that one could also keep a milking cow at their backyard depending on where they live. They can hire a labourer to collect peels from their neighbourhood, and make sure the cow gets adequate water and a clean area.

"A good cow can produce 20 to 25 liters of milk a day which could be supplied to the nearby market or neighbours. A litre of milk costs about Rwf 400. If one sold to a number of people per month, that would be good income," she added.   

"I myself breed pigs, chicken, goats, cows, ducks, fowls, and pigeons. I sell eggs and chicks and for pigs, cows, and goats, I sell young ones.  If one has an agreement to supply milk or meat to a hotel, restaurant, or they would be guaranteed regular income," she says.

Liquid Soap making

Ingabire is also involved in making liquid soap which she noted that she only needs two large 200-litre containers. With just an investment of Rwf 100,000, she is in a position to make 400 litres of liquid soap, selling 20 liters at Rwf 15,000.

Art production

Gislain Mugisha, who is a pencil artist explained that when one is talented in any art genre and can market for themselves, there is no doubt that they can earn at the comfort of their homes.

Gislain Mugisha, a pen-potrait artist. Joan Mbabazi.

"Developing one's skills at home is very easy if one has access to tools such as a computer or phone. However, it is necessary to create communication and network through social media to showcase one's artworks," he stressed.

Mugisha added that for this business to be fruitful, one should seek opportunities and connect with galleries for collaboration, learn from the internet and keep in mind the need to improve their skills.

The artist advised on creating more artworks with different meaning so that an artist is qualified for each and every opportunity, without any limitation.

"Always approach galleries online and establish a good connection so as to exhibit one's artworks in their showroom, create a great connection with fellow creatives," he said.

 The portrait artist points out that some of the tools to start the art business are; a drawing table (for those who use pen, pencil and other drawing medium), easel (an upright support used for displaying and fixing something resting upon it, at an angle of about 20° to the vertical) to those who paint.

Other necessities he said include; canvas, paper, brushes, pencils, pen, paints, working chair, working space (could be one's room), computer or phone that can has internet access to allow one to learn of access markets.

Baking

Nana Gasengayire and Rehma Makarukundo, the brains behind a Kicukiro based "Bolus Ltd", a company involves in pastries noted that starting a baking business requires passion.

"Know your craft, invest in one's self first, for instance, buy equipment, and set up to making quality products. Test and test and test, until the best quality of merchandise is achieved," Gasengayire said.

Rehma Makarukundo (L) the CEO of Bolus Ltd and her daughter Nana Gasengayire (R). Joan Mbabazi.

She added that one should read up and get informed on how to get started by registering their business and make sure that they are operating legally Rwandan Standard Bureau measures of standards.

Makarukundo stressed that like every other business, one requires to create networks which can be achieved through joining groups, social media, to create awareness of the brand's existence.

She further explained that an individual can literally start with an oven and a mixer and grow from there. "Alternatively, start with any capital and budget it according to the most needed equipment," she said.

Women in handcraft weaving Agaseke in Muko Sector, Musanze District. Sam Ngendahimana.

editor@newtimesrwanda.com

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