The eventual sale of your auto repair shop shouldn’t be the sole provider of your retirement funding. This can leave you without enough money to live comfortably, obtain medical care, and enjoy your retirement years. Ideally, you should have more than one strategy for cashing in when it’s time to hang your hat, so you can still retire regardless of what you make from your shop’s sale.
Here are several vital steps to take when planning for retirement and how auto shop owners can get the help they need during the retirement planning process.
Create a 529 Plan For Your Children
A 529 plan is a type of savings fund intended to put money aside for college education. Every 529 plan fund has a single beneficiary and one account owner who manages deposits. The beneficiary and the owner of the account may be the same individuals. The funds in a 529 plan can be utilized tax-free to cover K-12 and college tuition and other related education expenses.
A 529 plan provides the opportunity to arrange recurring contributions in amounts as little as $15 or $25 a month deposited from a salary check or bank account, making it even easier to save. Anyone else can contribute to the plan, and there are no income phase-outs, no age limit, and no limit on the number of 529 accounts you can have. If the beneficiary does not use the funds for education, the account owner can change beneficiaries.
Set Up Retirement For Yourself & Your Employees
In addition to setting up a college fund for your child(ren), you should also create and regularly contribute to retirement accounts for yourself and your company’s employees. This is where the bulk of your retirement funds should come from; ideally, you’re able to retire using only these funds, and revenue from the sale of your business or other accounts is over and beyond your basic income needs.
The most common choices for core retirement accounts are SIMPLE IRAs and 401k plans. A SIMPLE IRA, which stands for Savings Incentive Match Plan for Employees, is a tax-deferred savings account that enables small business owners and employees to contribute money tax-free to the fund. Eligible individuals are self-employed or small business owners with less than 100 workers who don’t have other retirement accounts.
A 401(k) account is a corporate-sponsored retirement fund that workers can pay into. An employer can also match contributions, an excellent retainment incentive. When a person enrolls in a 401(k), they agree to have a portion of their pay deposited into their 401(k) account before taxes are taken out. Employees have a variety of investment products to select from, many of which are mutual funds.
Ensure Your Business Is On Good Financial Footing
Suppose you’re not generating enough revenue to pay into things like a 529 plan, 401(k) accounts, or IRAs. In that case, it’s essential to take a step back and determine how you might get your business on better financial footing. Your shop should be generating enough net income after expenses to cover your retirement planning costs and contribute to your employees’ retirement planning.
Consider Renting to a Service Advisor Before Selling
Consider renting the business to a service advisor before selling. This allows the service advisor to temporarily run the business for a few years before the sales transaction is finalized and allows the owner to keep their business on paper for several years after they formally retire. There are several ways this can be done to create a smooth, flawless transition between owning your business and selling it to another party.
Get Help From An Experienced Auto Repair Coach Today
Are you looking for ways to grow your auto repair business? Contact AutoFix Auto Shop Coaching today for more information or book your appointment for a consultation by calling (940) 400-1008.
About Chris Cotton
Chris Cotton is a seasoned auto repair coach and the owner of AutoFix Auto Shop Coaching. He grew up in a small Oklahoma town before attending the University of Oklahoma as a football player. Unfortunately, college couldn’t hold the budding entrepreneur’s attention very long, and Cotton left to pursue honing his customer service and business management skills at establishments owned by family and friends.
Eventually, Chris Cotton bought his own business and, after initially losing money on his investment, he turned things around. He exchanged -3% weekly net loss to +25% weekly net gain and now offers small businesses comprehensive coaching to help them do the same. When he’s not working with auto repair shop owners, Cotton enjoys traveling, visiting the beach, and spending time with his wife, Kimberly.