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National Small Business Week, an annual event that pays tribute to small entrepreneurs, sheds light on how small businesses impact the U.S. economy and culture. With the booming gig economy, there are more small companies than ever.  This week, we would like to recognize our clients as many of them are small business owners and high income self-employed professionals. 

The definition of small business can be confusing. Many people consider a small business to be a retail shop, restaurant or a mom-and-pop enterprise.  According to Wikipedia, small businesses are “privately owned corporations, partnerships, or sole proprietorships that have fewer employees and/or less annual revenue than a regular-sized business or corporation.” 

Some small businesses may not appear to be just that. A professor who consults on the side is a small business. An executive who gets paid serving on a board of directors is a small business – as is a person who makes income from posting YouTube videos.  Professionals such as doctors, lawyers and financial advisors may operate their smaller companies as a sole proprietorship.

Because we specialize in working with small business owners, we know the advantages running your own business. While there’s flexibility, autonomy and independence, there are also big tax benefits – sometimes tens of thousands of dollars in tax savings. The Tax Cut and Jobs Act (TCJA) has increased the value of high contribution retirement plans like Defined Benefit and Cash Balance plans, offering large “above the line” tax deduction. These tax deductions lower taxable income sufficiently to qualify the small business owner for the additional 20% deduction and even lower their tax bracket. 

If you’re a small business owner, it’s easy to find out what’s the best retirement plan for you. Use our instant do-it-yourself calculator to see how much you can save.