Payroll and 401(k) for self-employed
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.
Q: I’m looking for an entity to provide payroll taxes and 401K for my wife, who’s changing from w-2 to 1099 independent contractor travel agent. Is this something you do?
A: Perhaps the best approach might be to get set up with a computerized accounting program like Quickbooks that - once set-up - handles this easily and automatically. Over the long term this will be easier, more flexible, and less expensive than using an outside payroll company. While a one-person 401(k) is a possibility, it makes sense to exhaust the easier choices first: SEP, IRA, SIMPLE PLANS all may be more attractive substitutes for a 401(k). Consider the full 401(k) plan only is the easier and less expensive plans do not fit the requirement. While the substitutes are free, it will probably cost a few hundred dollars to operate a 401(k) due to the more complicated tax and Department of Labor requirements. The 401(k) is available through www.FreedomBenefits.org and OnlineAdviser service can provide help with the accounting system setup. It should only take an hour or two to set up the entire benefit program.
Summary
More resources:
FreedomBenefits.org