The convenience of opting for a used car loan

Smart auto purchasers shop for used cars. It is because their worth doesn’t run down rapidly. Don’t think used vehicles have passed their sell-by age. Several used cars that are accessible in the marketplace are in a categorically decent condition. And, with the primer of certified pre-owned cars, used cars are as worthy as brand new cars. Purchasing a used car becomes all the more imperative if you have poor credit history. Lenders often repudiate new car loan applications of poor credit auto purchasers. But, as a used is economical, they don’t have much issue in offering poor credit lowest interest rate for used car loan. Maximum poor credit car purchasers panic about getting sanction on car financing program. If you are feeling nervy about your car loan request, don’t fear.

Attaining an approval for a used car loan is legitimately easier when equated to looking for loan approval for a newer car. While several banks do not highpoint used car loans as their well-liked product, the procedure of obtaining it is less intricate, which makes it appropriate for those who wish to make an instantaneous purchase. The crucial benefit here is that even when a bank does not approve a loan request, there are moderately some auto financing firms who can either act as a conduit between the loan candidate and the bank; or totally finance the car from their end. In both the occurrences, getting a loan gets easier if it is for a used car. All things considered, a used car loan can expediently help you to fix your primacies with a control on the budget simultaneously. If a stress-free loan approval within the limit of a fixed budget is a norm that you look for your subsequent car, you know right where to capitalize.

Now that you have a clear idea about your monetary position, start the car loan procedure. Apply only with sub-prime lenders who are knowledgeable in offering poor credit car loans. You can use the online approach for getting such loans. Internet offers extreme comfort in finishing the auto financing procedure. You can apply with numerous lenders without leaving your home. Also, you will get approval through phone call which means online car loans guarantee 100% ease. When you get car loan quotes, equate it with your budget. Select the quote that will warrant easy loan repayment.

Indian Economy Growth with the Methods of FDI

FDI has a direct bearing on the growth of the Indian economy. The country has been experiencing strong financial stability as well as steep economic growth.

Now, how does FDI help in the betterment of a country? The methods of FDI help in creating employment opportunities, developing infrastructures, creating linkages in domestic firms, producing revenues in the form of taxes, and so on.

Financial and technical collaborations, joint ventures, and capital markets all are different forms of FDI that help in boosting the economy. There are certain criteria different countries need to follow. The approval of RBI and FIPB is necessary for investment in sectors like the manufacture of tobaccos and cigarettes, defence equipment, etc.

There are two methods of FDI by which investors can invest in India.

By setting up a separate legal entity in India under the Companies Act, 1956. The investment can be up to 100% of the capital.
Setting up a branch office in India under the observation of Foreign Exchange Management Regulations.
As per the analysis by FDI India, NRIs, QFIs, and foreign institutional investors get permission to invest in India.

Student Car Loans: Essential Tips to Buy Your First Car Easily

A car is no longer a luxury. We have said this many times. However, buying a car seems like a privilege, especially when you do not have a credit score or a full-time job that pays well. Traditional lenders may reject your loan application for lack of financial stability. Bringing home those new set of wheels can become a daunting task if you are a college student or even a recent graduate trying to build your career.

If you want to make the car buying experience a pleasurable one, seeking the right advice and solutions will definitely help. But first things first: Buy a car only when you need it. You do not want to carry the burden of a car loan along with the pressures of college life. Opt for a vehicle if it allows for easy commute and easy access to job opportunities.

Buying a Car: What Problems do First-Time Buyers and Students Face?

1. Lack of Experience

As a student, you may have never purchased a car or any other asset on your own. It can make the entire buying process and financial procedure intimidating. Lack of experience means you can get stuck with a lemon or end up paying more for a car than its worth. In order to avoid getting ripped off by dealers and lenders, it is essential to conduct thorough research online and seek multiple options before signing on the dotted line. You can even ask your parents to assist you in making the purchase.

2. The Issue of No Credit History

Another crucial issue that young buyers face while buying their first car is the absence of an established credit history. If you do not have a credit score, lenders won’t be able to ascertain your credit worthiness. The majority of them will reject you or offer you high interest rates and lower LTV. To avoid an expensive student car loan, you need to apply with several lenders who are open to working with credit-challenged car buyers. Remember lenders believe that it is better to have a no credit score instead of a bad one.

Can a Student buy a Car?

When it comes to buying a car as a student, you have many options. Despite the obvious problems of lack of financial experience, you can still get a car.

1. Save for a Car

If you are not in a hurry to buy a car, you can save for a couple of months and then, buy it in cash. If you have the money, making a cash purchase is easy because you will not require any kind of loan approval. It won’t matter if your credit score is good, bad or non-existent. On the other hand, you will have to wait for your car and the cash purchase won’t help you build your credit score.

2. Ask your Parents to Buy You a Car

If your parents can afford to buy a car for you, you will be able to get behind the wheels quickly and without giving away a large chunk of your savings. The majority of parents offer to buy a used car for their college-going students to make them learn the responsibilities of owning a vehicle. If your parents are unable to buy you a car or you decide to buy it on your own, this option is not suitable for you.

3. Apply for First-Time Student Car Loans

Specially designed for first-time car buyers, these auto financing programs help you to buy a car with no credit history. Research to find online auto financing companies that help students secure car loans at the click of a mouse. By choosing a student car loan, you can buy a car and be on the right path of establishing your credit score. If you can convince any of your parents, family members, friends or employers to co-sign your loan agreement, you will be able to improve your approval chances phenomenally. It will also lead to lower interest rates.

How to get the Best Auto Loan Rates?

Just as you prepare for your exams, you must prepare for the car financing process. If you want to build a good credit score and ensure affordable monthly payments, follow the tips mentioned below:

1. Find a job that allows you to make car loan payments and assume other car-related expenses. Falling behind on payments can deteriorate your credit score and increase your chances of repossession.

2. Fix the down payment amount that you will pay to the dealer. It will reduce the loan amount and allow you to enjoy low monthly payments.

3. Learn your credit score. A no credit score situation means you will still have a credit score, albeit a lower number. It will never be zero as expected by most student car buyers.

4. Even if you have never applied for a loan, an old department card or a checking account may work in your favor and result in a decent financial history. So, keep a list of your financial documents (bank statements) ready.

If you are student who wants to buy his first car, you may face a few hurdles along the way. However, if you are prepared to solve them with tact and patience, you will be able to become a proud owner of a car.

Consulting – 5 Maximum Ways to Advance With Consulting

This article aims to offer you with general tips that you can use in any field of consulting.

1. Be an expert. As you need to be a great source of information to your clients, you need to make sure that you are extremely knowledgeable on your chosen niche. Go with a particular consulting field that you have relevant experience, education, and trainings on so you can offer your clients with expert advice that can bring huge difference to their lives or to their careers. Let me give you an example; if you want to sink your teeth into business consulting, you need to have a degree in business management, accounting, or commerce. You must also have a proven track record in running a successful business and you must have at least 5-10 years of relevant experience to become eligible.

2. Keep your ego in the pocket. As a consultant, you need to understand that it’s always the client who has the last say. Even if you are pretty sure about your suggestions, let your clients go to other route if he feels like doing so. Getting head-to-head with these people will not benefit you. You’ll more likely to make your clients feel better if you make them feel that they are always right.

3. Be genuinely interested with your clients. If you are the kind of person who is just after the money and doesn’t really care about bringing difference to the lives of your clients, there is no way that you are going to make it big in this field. If you want your clients to come back and if you want them to recommend you to other people, you must be willing to go out of your way just to make sure that they are 100% satisfied.

4. Improve your communication skills. One of the pre-requisites to become successful in the field of consulting is to have exceptional communication skills. As this job will require you to communicate with your clients on a day to day basis, you need to know the most effective ways to articulate your thoughts, ideas, and recommendations. You must not struggle to find the best words just to get your message across and you must be able to communicate in a very easy to understand manner.

5. Be cordial. It is very important that you are a team player and that you can easily work with different people to excel in this field.

How to Sell Consulting – Uncover 5 Nifty Secrets to Sell Your Consulting Services

Being knowledgeable on your chosen niche is not enough to make money through consulting. If you want to easily get your prospects to do business with you and if you want to improve your sign up rate, you need to effectively sell your consulting services. Here’s what you need to do:

1. Be more visible. You’ll easily be able to promote easy recall if you make yourself more visible in your chosen niche. Let me give you an example; if you are into environmental consulting, you must involve yourself on activities that are related to the environment. You must also create a campaign against elements that can hurt mother nature. By doing so, people can easily associate your name to the kind of service that you provide making it easier for you to convince them to sign up to your services.

2. Share a piece of your knowledge. Your prospects would surely want to know if you are really good on your chosen niche. Give them an idea as to how in-depth your knowledge is by sharing a slice of your expertise. You can write and distribute articles online, host free but short teleseminars, or go with forum posting and blog marketing. The more in-depth and hot information you share to your prospects, the higher your chances of earning their trust.

3. Build your own website. Wouldn’t it be much easier if you have your own place over the internet where your prospects can get as much information about the services that you offer? Create your own website to make the process of selling your consulting much easier. Start by choosing a very descriptive and keyword-rich domain name. Make it speak volumes about your expertise by making it informative and content-rich. Don’t forget to make it easy to navigate, easy to download, and visually appealing to convince your visitors to stay a little longer.

4. Advertise. Take advantage of the power of the internet when promoting your consulting service. Aside from talking about it on your website and blog, you can also promote it using PPC ads, search engine marketing, paid links, and banner ads. Using these effective tools will help you become more visible in the search page results so you can easily connect with those people who need what you offer.

5. Offer free trial. If you are just starting out and if you find it challenging to get people to do business with you, I recommend that you offer free trial. The idea here is to convince your clients that you can offer them exactly what they need so you can get them to sign up in no time.

Strategy Consulting – Uncover 5 Fresh Secrets Jump Start Your Strategy Consulting

Strategy consulting is a type of a business service that is usually being offered by management consultants who have in-depth knowledge or expertise in designing and implementation of different business strategies. A strategy is defined as a well thought-out course of action specifically designed to achieve a business’ specific goal.

Strategy consultants are more in-demand these days as the business world has suddenly shifted from local to global markets. Due to the existing demand and due to the attractive salary that this profession can offer, more and more people are trying to sink their teeth into this endeavor. Are you one of them? Then, here’s how you can get started in the field of strategy consulting:

1. Experiences, educational background, and trainings count. If you want organizations to hire you, you must convince them that you are truly knowledgeable in the field of business and that you can offer them with expert advice about their business plans. You can do this by creating an impressive portfolio. You must have a degree in business management, accounting, commerce, or any other related fields. You must also have 10-15 years experience in running a business, and you must have attended relevant trainings.

2. You must have great presentation skills. Obviously, your job will include presenting your ideas before business owners and top management. As such, you will need to develop great presentations skills. You must be able to communicate the gist of your content without causing confusion. You must also be able to use presentation tools to your advantage.

3. You must be result-driven. Organizations are paying you huge amount of money for one good reason; to help them achieve their goals. Give these people great value for their money by making sure that your action plans are failure-proof. You must use your experiences and your in-depth knowledge in creating effective plans that can help your clients grow their business exponentially.

4. Be organized. As a consultant, you must know what you need to do and when. You must know how to properly manage your time and you must know how to plan ahead. Being organized can surely make your more effective in this field.

5. Advertise your services. Increase your chances of getting your prospects to sign up by properly advertising your services using several online or offline marketing tools. It would also help if you can solicit for referrals from your most satisfied clients to boost your client base without wasting enormous time and money on an aggressive marketing campaign.

Different Focuses – Client Vs Consultant

Clients and consultants often have unique and different focuses during business hours. This can lead to issues throughout IT engagements.

The Consultant

As a consultant, my focus at a client site is singular when I am engaged to implement a new system, write reports, train a course, etc. When on site to implement a new system, I usually don’t have a “day job” that would divert my attention in the event of a problem with a client’s current applications. Even if I did, many times I wouldn’t know where to start. Issues such as these are often well beyond my scope or ability to handle:

I don’t know how to resolve an accounting issue in a client’s legacy system because I have never worked with it before.
I can’t extract data from a mainframe because the extraction tools are antiquated and I have no experience with them.
Let’s assume that I do have the knowledge of a client’s legacy systems and can pitch in. Let’s also assume that the organization is comfortable the “all hands on deck” approach. From an insurance and liability perspective, however, I may not be able to do this for two reasons:

The statement of work typically does not cover my working on applications with which I am not familiar.
From Sarbanes-Oxley perspective, I may not legally be able to get involved.
In the end, for the consultant willing and able are often not the same.

The Client

Clients, on the other hand, are constantly balancing (or trying to balance) present and future priorities. The former almost always defeat the latter, causing

Project delays
Cost overruns
Critical oversights
Minimized knowledge transfer
This problem is particularly acute at understaffed organizations. Heaven forbid that one of the following scenarios occurs:

An organization loses a key contributor unexpectedly.
That end-user’s responsibilities are not (sufficiently) documented, much less understood.
The organization is confronted with an emergency requiring the immediate and undivided attention of current end-users.
The project has a “hard stop” for budgetary and/or date reasons.
The end result is that the organization is more susceptible to major problems, oversights, and project failures.

With more than a decade of experience, Phil Simon assists organizations in all phases of systems consulting including vendor selection, project management, business needs analysis, gap analysis, system testing and design, end-user training, interface and custom report development, and documentation. The result: providing his clients with superior systems, increased ROI, and a healthier bottom line.

Phil is the author of the book Why New Systems Fail and a seasoned independent systems consultant. He started his company in 2002 after six years of related corporate experience. With his extensive knowledge of both well-known and homegrown applications, he has cultivated over twenty clients from a wide variety of industries, including healthcare, manufacturing, retail, and the public sector.

Sales Consultant – Discover 3 Nifty Methods to Become a Better Sales Consultant

Sales consultants are those people who have great selling skills and relevant experience in marketing who help clients in selling their products and services. There are many types of sales consultants and their responsibility varies. There are those who help business owners in growing their sales by promoting product awareness and there are those who offer expert advice as to how their clients can make their offerings more suitable to the needs and demands of their target market.

The number of sales consultant have grown exponentially in the last decade as more and more business owners and organizations are trying to boost their sales and get ahead of their competitors. If you are part of this growing number, you need to know how you can survive the cutthroat competition in this field so you can easily convince your potential clients to sign up to your services. Here’s how you can do that:

1. Gain an in-depth knowledge on the product or services that you are promoting. As a sales consultant, it is extremely important that you know the products that you are promoting inside out. You must know how they work, how they were made, the materials used, their limitations, what set them apart from the rest, and their major selling points. The more information you know about the product, the better you’ll get in promoting them to your target market.

2. You must know how to present your products as the best solution to the problems of your target market. It is not enough that you have an in-depth knowledge on the product that you sell. In order to help your clients boost their sales, you must know how to position their products as the best solution to the problems being faced by their target market. Let me give you an example; if your clients are offering fitness equipment, you can do some sort of demonstrations to convince your prospects that this particular products is all that they’ll ever need in losing their unwanted fats.

3. Target human emotions. As a sales consultant, you must be aware that most buyers make a purchase based on impulse and not on logic. Thus, you will need to know how to target their emotions when you are convincing them to buy from you. Learn how to create marketing communications that can help you get your clients to feel certain emotions that can drive them to swipe their credit cards.

Writing a business plan – A Systematic Way to Handle your Routine Workflow Whilst Achieving the Set

Writing a business plan is done with the intention to evaluate your business from all the aspects which includes description and analysis of the business. Creating a business plan is an essential step for an entrepreneur. Business plan can prove use..

Writing a business plan is done with the intention to evaluate your business from all the aspects which includes description and analysis of the business. Creating a business plan is an essential step for an entrepreneur. Business plan can prove useful in many ways like:- It will clearly lay down your business objectives based on factual information.- It can be used as a medium to sell your idea or business.- You can help you overcome the drawbacks in your business strategies.- You can get lot of valuable opinions from it.Business plan comes with a different format that enables to know the different factors of your business. You can include the following while writing a business plan to enhance its effectiveness: – Vision statement – it helps to outline your business purpose and goals.- Business profile – describes and defines your business. Try to focus on the market you intend to focus on or have interest in.- The people – You are the cog in your wheel of success. Learn through your experiences of past and make changes in your future plans of business. Try to be factual while writing a business plan as it will be followed keenly by the people you have business relationship with like investors,Guest Posting lenders and vendors.- Economic assessment – provide a complete assessment as business will be a part of your economic environment. Explain that your business is applicable and is appropriate to regulatory agencies which you will be dealing with in future.* Include cash flow, marketing plan and expansion plans too.Business plan is good way to test your understanding about the market and also the goods or services before you start the business. You must avoid certain things while writing a business plan. Stick to short term objectives and modify the plan as it is necessary. Don’t write long term planning because the reality of the business can be different. While explaining the issues, use simple language which can be easily understood by all. Avoid optimism; be extremely conservative in predicting sales and profit of the company. Do not ignore the strategies of your business.Business plan acts as a roadmap to the course of your business. But you cannot predict the changing condition that will surface. So after starting your business it is necessary to make a periodic change and update in your business plan. The six steps to a successful business plan are – writing the main business concept, gather all data feasible to your business concept accurately, outline the utmost important concept in your business plan, make it a compelling plan which will help you to focus while also being a valuable tool for business relationship.Business plan should be accurate, precise in containing the information of the business. Business plan should include mission statement, vision, and business plan outline. The procedure of good business plan includes:- Preparing a complete business plan.* Researching to find business plans.* Package of your business plan.* Changing or updating the business plan according to the changing environment.A good business plan helps to get a complete insight of your business and the way you are dealing with it. Writing a business plan proves to be very helpful to the entrepreneur to run the business successfully in the competitive working environment.

“Solo” 401(k) Plans Offer Big Tax Deductions: Tax-Deferred Investing to the Max

Major changes to the tax laws now allow small business owners to … 401(k) plans more easily than ever before, and benefit from bigger 401(k) plan … than they’ve ever seen. These 401(k

Major changes to the tax laws now allow small business owners to establish 401(k) plans more easily than ever before,Guest Posting and benefit from bigger 401(k) plan deductions than they’ve ever seen.
These 401(k) plans have been dubbed “solo” 401(k) plans because of the new rules’ popularity among single-owner businesses. Yet, it is possible to have more than one owner and maintain a “solo” 401(k) plan, as noted below.

To obtain the benefits for the 2003 tax year, however, you must act before December 31st. (For more about the types of investment services our investment affiliates offer, please visit http://www.marcjlane.com/decisiontree.htm) In contrast, SEP IRAs can be established at the same time your individual income tax return is filed (i.e., April 15 of the following tax year).

This report highlights some of the significant benefits of a solo 401(k) plan.

A solo 401(k) plan allows a small business owner and his or her family to defer and invest tax-deductible (pre-tax) retirement contributions at a fast rate. The importance of maximizing retirement plan contributions cannot be emphasized enough. Over time, compounding tax-deferred investing can significantly increase one’s wealth. (For “A Case For Professional Money Management,”and more about this important aspect of growing wealth, please visit http://www.marcjlane.com/decisiontree.htm)

How you might benefit from a solo 401(k).

Eligibility. While a small business owner could establish a 401(k) plan under prior law, the administrative hassles might have discouraged you from doing so. Recent legislation makes establishing a 401(k) plan much more attractive for small business owners. Now, a business entity whose only eligible participants are business owners, partners, and/or spouses of owners or partners may establish a 401(k) plan easier and with greater deductions than ever before. Children, parents, and grandparents may also participate as long as they earn income from the business. (However, specific plan administrators may have their own guidelines or limitations regarding participants.) Nearly all forms of business entities and ownership are eligible for a Solo 401(k). Sole proprietors, partnerships, corporations (including S-corporations), LLCs, and LLPs may all establish Solo 401(k) plans.

The good news: As long as the eligible 401(k) participants are limited to those mentioned above (“eligible solo participants”), the solo 401(k) will not be subject to all the administrative, recordkeeping, and investment monitoring regulations that traditional 401(k) plans must follow. Full-time employees who are at least age 21 and have one year of service must be offered the opportunity to participate in any 401(k) plan. However, for these purposes, a part-time employee working less than 1,000 hours per year can be disregarded and will not affect the solo 401(k)’s legal compliance. It may be a good idea to set up a solo 401(k) now, even if you may add an employee who is not an eligible solo participant in future years. At that time the solo 401(k) plan can simply be suspended or terminated.

Key benefits. Under the new law, you may deduct up to $40,000 for each participant in a solo 401(k), as explained in more detail below. Even more appealing, if you and your spouse are actively involved in your business and have sufficient business earnings, you and he or she may be able to contribute – - and deduct – - up to $80,000 for retirement.

Another benefit under the new law is that you can reach the maximum deduction of $40,000 at a faster rate than ever before – - with as little as $112,000 of income in 2003. In contrast, at that income level, other retirement plans allow much lower contributions (e.g., a SIMPLE IRA would generally allow about a $11,360 deductible contribution, and a SEP IRA or Profit Sharing Plan would generally allow about a $28,000 deductible contribution. See the comparison chart below.)

If I have a side business, will a solo 401(k) benefit me, even if the business doesn’t make much income?

Yes. In fact, a side business is a prime candidate for a solo 401(k). A traditional employee, if he or she has a side business, may now make additional deductible retirement contributions very rapidly via a solo 401(k) plan. With just $20,000 of income, you may be able to deduct up to $17,000 and only pay income taxes on the remaining $3,000. The rapid deductible contribution rate (in this case, 85%) can be very appealing to those wanting to save more for retirement, particularly if the income generated from a side business is not required for their immediate needs. What’s more, if the participant is 50 years or older as of January 1st, “catch up” provisions allow even higher contributions for that year ($2,000 in 2003, and increasing by $1,000 each year to a maximum of $5,000 in 2006 and later years).

What other benefits does a solo 401(k) offer?

Solo 401(k) plans also offer several other advantages:

Roll over other plans. Once your 401(k) plan is established, you may roll over other retirement accounts into it.

Loans. You may borrow up to 50% of your account balance (up to a $50,000 loan) and repay it over five years (or over 10 years, if the loan is used for a principal residence).

Brokerage accounts. The plan may include a self-directed brokerage account, allowing maximum investment flexibility.

No tax return. No tax returns for the plan are necessary, as long as assets remain under $100,000.

Simplified tax return. If assets exceed $100,000, a simplified tax return may be filed if the plan covers only you (and your spouse) or one or more partners (and their spouses).

No FICA tax. The employer contribution portion is not subject to FICA (Social Security) or self-employment taxes (but any salary deferral portion is subject to tax. See “Comparison of Contributions” below for description of methods of contribution).

Extended contribution date. Employer contributions may be made after year-end (by your tax return deadline, including extensions). However, salary deferrals must be made by December 31st, and may only be made from income earned after the 401(k) plan is established.

Creditor protection. Retirement assets held in a 401(k) plan are generally protected from the claims of creditors. Creditor protection provides peace of mind that your wealth will continue to build despite any potential hazards on the way to retirement.

(To learn more about some aspects of these advantages of a 401(k) plan, see “Borrowing from Your Retirement Account” please visit http://www.marcjlane.com/LaneReport/0304lr.htm and see “Exactly What Does Marc J. Lane & Company do?” please visit http://www.marcjlane.com/investment/index.html

Comparison of Contributions: Solo 401(k) vs. Other Plans

Recent legislation increased the maximum deductible contribution under many retirement plans to 25% of compensation, up to a maximum contribution of $40,000. Since a 401(k) plan, uniquely, has two methods of contribution (i.e., an employee salary deferral and an employer contribution), it is able to take advantage of these new limits and defer retirement contributions at a very rapid rate.

For 2003, the maximum salary deferral generally allowed is $12,000 per participant (unless the participant is at least 50 years old, as noted earlier). Additional contributions may be made by the employer; however, employer contributions must be made for each eligible participant and at the same rate (i.e., 25% of compensation). Salary deferrals are ignored when determining “compensation” for purposes of computing the employer contribution. Therefore, the contribution rate (i.e., 25%) is applied toward the participant’s compensation before salary deferral. However, the “compensation” amount used in the calculation is less for unincorporated businesses than for corporations because of a reduction for self-employment taxes.

The chart below compares the maximum contributions available in 2003 for several popular retirement plans. The chart presumes that the business is incorporated, and reflects both the maximum employee and employer contribution components.

Comparison of Retirement Plans: Maximum Contributions (2003)

Business Owner Wages for 2003 SIMPLE IRA SEP IRA SOLO 401(k) $ 20,000 $ 8,600 $ 5,000 $17,000 $ 40,000 $ 9,200 $10,000 $22,000 $ 60,000 $ 9,800 $15,000 $27,000 $ 80,000 $10,400 $20,000 $32,000 $100,000 $11,000 $25,000 $37,000 *$112,000 * $11,360 $28,000 * $40,000 * $120,000 $11,600 $30,000 $40,000 $140,000 $12,200 $35,000 $40,000 $160,000 $12,800 $40,000 $40,000

Maximizing Your Solo 401(k): A “Side Business” Example

Bill is an employee of a corporation at which he has been contributing the maximum amount to that company’s 401(k) plan (currently, $12,000). With the stock market’s bear market from 2000 to 2002, he knows he either needs to contribute more toward retirement savings or get by with less income in his retirement years. (Note: Bill will probably opt to contribute more toward retirement savings since he is not a $20 million lottery winner) (To see “Case Studies,” please visit http://www.marcjlane.com/Studies/casestudies.html)

Bill is also the sole shareholder of a corporation that he created five years ago for a side business. That business currently generates $40,000 of income, and since it is a side business, Bill doesn’t need the income to support his family’s routine expenses. If Bill establishes a solo 401(k) for the corporation, he can contribute $22,000 toward his retirement in 2003:

Salary deferral (maximum) $12,000 Employer contribution (25% of $40,000) $10,000 TOTAL solo 401(k) contributions $22,000

With these additional contributions, Bill can nearly triple the total amount he contributed to retirement plans in 2002 (i.e., $12,000 in 2002 with his primary corporate job, and $34,000 in 2003 with both his primary job and his side business). Bill will only pay income taxes on the remaining $18,000 of the $40,000 of income earned from his side business.

However, Bill can do better. If Bill’s wife, Betty, is involved with the business and earns a salary of $10,000, she can contribute her full compensation as salary deferral. The total contributions for Bill and Betty would be calculated as follows:

Salary deferral (Bill) $12,000 Salary deferral (Betty) $10,000 Employer contribution – Bill (25% of $30,000) $ 7,500 Employer contribution – Betty (25% of $10,000) $ 2,500 TOTAL solo 401(k) contributions $32,000

Bill and Betty will now pay income taxes only on the remaining $8,000 (20%) of income generated from their side business and they’ll avoid current income taxes on $32,000 (80%) of the business income. Combined, they will contribute $44,000 toward retirement in 2003 ($32,000 from the side business and $12,000 from Bill’s primary job)!

Conclusion

A solo 401(k) plan now offers small business owners a practical way to rapidly contribute toward retirement, reduce taxes, consolidate retirement plans, and provide liquidity via 401(k) plan loans, if necessary. While everyone may not qualify for a solo 401(k), those that do enjoy the benefits of the plan for years to come. If you have questions, or if we can install a solo 401(k) plan for your business, please let us know and we’ll be happy to help you. ____________________________

Retirement planning is an important part of your overall financial plan. How often should you review your financial goals? To learn more see “Start 2003 With a Review of Your Financial Goals and Strategies.” please visit http://www.marcjlane.com/LaneReport/0301LR.htm

Interested in tax-focused planning? We can help. To learn more see “Wealth Retention Through Tax-Focused Planning: The Next Financial Challenge.” please visit http://www.marcjlane.com/LaneReport/0207LR.htm

When should someone consider professional money management for a retirement – - or other investment – - account? To learn more see “A Case For Professional Money Management.” please visit http://www.marcjlane.com/LaneReport/0204LR.htm