Saving for the Future

Unlike those in the corporate world, most photographers don't work for companies that offer retirement plans. It's important to think about the future. Small business owners have several options to choose from, such as self-employed 401(K), SEP-IRA, and SIMPLE IRA. All three have different features, so it is important to compare plans. In researching these options, determine the key advantages of each, as well as who is eligible. You also need to understand the funding responsibility, annual contributions, and limits per participant.

In the early years, if you are operating alone, it might make sense to go with the SEP -IRA. This plan is low-cost and low-maintenance. The other options usually are for people who have employees or a staff. Remember, your decision is sometimes linked to how you set up your corporate structure.

Additionally, note what access you have to the assets. You might find yourself in a financial situation down the road where you need to draw or take a loan from your plan, so check out the availability of funds and penalties for early withdrawals, if any. You also need to understand the vesting of contributions and the administrative responsibilities associated with your plan. Discuss your long-term goals with an accountant or financial advisor.

In closing, in matters of corporate structure and financial matters, it's important to seek the expertise of accountants and lawyers. Just like we have our craft, so do they.