Self-employed persons and partners can take advantage of tax-sheltered Keogh retirement plans or simplified employee pension plans (SEPs).
Advantages flow from: (1) tax deductions allowed for contributions to the plan (a form of forced savings); (2) tax-free accumulations of income earned on assets held by the plan; and (3) in some cases, special averaging for lump-sum benefits paid from a Keogh plan on retirement.
If you have employees, you must consider the cost of covering them when setting up your plan.
If you do not have any other retirement plan and have no more than 100 employees, you may set up a salary-reduction SIMPLE plan.
Self-employed persons can also pay for their health coverage on a more advantageous basis than other individuals. They can also use special health-related plans to further lower out-of-pocket medical costs while obtaining tax breaks. If you pay a certain amount for coverage of employees, you may be entitled ...