Retirement for Startup Archives

ProjectionHub is a web application that helps entrepreneurs create financial projections without Excel. We looked at just over 200 startups who have used ProjectionHub to create their financial projections over the last couple months and discovered some interesting data.

A full two thirds of entrepreneurs intend to make a personal investment into their startup. The average projected personal investment is just over $70,000.

This is an important stat for entrepreneurs to hear. Many want to be entrepreneurs think they can start a business without putting any of their own capital at risk. Often times you hear entrepreneurs say something like this, “I will just come up with a business plan, and then bring that to the bank and get a loan, or find an investor to fund our plans.” This is unrealistic. There are very, very few banks or investors that will give you a dime without some of your own skin in the game.

So, based on this data, if you want to start a business, the first thing you should probably do is start saving some money that you can use to make an investment into your startup.

You can start creating your financial projections with ProjectionHub today. Make sure to use coupon code “ba25off” to get 25% off, or just use our free version of the tool.

Everyday entrepreneurs make a mistake that make Uncle Sam smile!

They decide they want to start a business, they need some cash to get started so they withdraw funds directly from their retirement account. Guess what happens.

Immediately they give away 40% of their hard earned retirement account. They worked for years and sometimes decades to save these funds, and just like that they give it all away simply because they are uninformed.

Let’s imagine a $100k retirement account. You decide you want to pull it all out in November, so what happens?

First, if you aren’t old enough yet, you pay a penalty of 10% right off the top. $10,000 gone just like that. But the bigger problem is that you have already worked 11 months this year and let’s assume you brought in a decent wage of $50,000 so far. But now you just took another $100,000 in taxable income which probably brought you up to a 30% or more tax rate. So there goes another $30k of your retirement account.

So what can you do instead? Are there any better options?

There is a very specific 4 step process to be able to use your retirement funds to fund your business without paying taxes or penalties.

Step 1 – Establish a corporation with a customized retirement plan

Step 2 – Rollover your current plan into the new corporation’s plan

Step 3 – Your new plan purchases stock in a new corporation

Step 4 – Your new corporation now has the capital to start

There are 2 companies that specialize in helping entrepreneurs work through this process. BeneTrends and Guidant. At ProjectionHub we have actually partnered with BeneTrends to help entrepreneurs work through this process.

Learn more about the process to use your retirement account to invest in your startup here.

66% of Entrepreneurs Make a Personal Investment into Their Startup – Average $70k

Don’t Use Your Retirement Account to Start a Business Unless…