The second problem is that most people do not put enough effort into truly planning their business. The old adage states, “If you fail to plan, you plan to fail.” Unfortunately for some this is usually true. One of reasons “eplanit” has discovered for general lack of Internet business planning is scarcity of “Internet” specific business plans. So Dane, Dave, Mike, and Mat created “eplanit” a business plan software designed specifically for Internet business start-ups. The software features 109 questions, which upon being answered lead an entrepreneur successfully through thinking through their Internet business. The software can be downloaded, and is compatible with both Macs and PC's.

The combination funding report, and Internet business planning software has now been used by over 500 small business start-ups and has been well received by those using it. Like Diane who said "The template helped me keep my course and objectives for my business plan on track, and concise. It was very helpful to read all questions in each section, and then write sections one at a time. It's easy to get off on tangents when you have more than one thing to focus on, and plan worked for me."

My preferred type of retirement plan is Savings Incentive Match Plan for Employees or SIMPLE IRA. The SIMPLE IRA was created to make it easier for small businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan.

With a SIMPLE IRA you and your eligible employees may contribute up to 3% of earned income (with a maximum contribution of $10,000) on a pre-tax basis to individual SIMPLE IRAs. You must deduct Social Security and Medicaid from your gross income, but you can then make your SIMPLE IRA contribution before other taxes are levied, effectively lowering your taxable income.

As employer you must make “matching” or “non-elective” contributions into your employees’ SIMPLE IRA accounts. Matching contributions means that business matches elective deferral contributions made by employees. For example, if employee opts to contribute 3% of his salary to plan, employer must match 3% contribution.

At first you might cringe at matching your employees’ contributions, but as business owner and an employee yourself this can be great news. As an employee of your own business you can contribute up to $10,000 to your SIMPLE IRA and business can then match your contribution dollar-for-dollar, which means that you can put up to $20,000 in tax free dollars into plan per year. The cost of contributions is also deductible as a business expense.

The non-elective contribution option requires that company contribute 2% of every employee’s earned income to plan on employee’s behalf regardless of whether or not employee contributes to plan himself. For 2005 maximum contribution you would be required to make is $4,200.

Like a traditional IRA, you can withdraw money from a SIMPLE IRA at any time; however distributions within first two years of participation are subject to higher early withdrawal penalties than traditional IRAs or Roth IRAs. Withdrawals within first two years are subject to a 25% early withdrawal penalty. Withdrawals taken after first two years are subject to a 10% early withdrawal penalty.

As employer, advantages of a SIMPLE IRA include: company contributions to plan are tax deductible as a business expense; plan documents are simple and easy to administer; administration costs are low; and there is no government reporting required by employer.

The advantages of a SIMPLE IRA for your employees include: contributions are immediately 100% vested; contributions and earnings are tax-deferred until withdrawal; employees can contribute 100% of earned income up to $10,000 for 2005; and employees can direct their own investments within IRA.

This is a complex topic and I’ve just tipped iceberg here, but hopefully this will give you enough information to get investment ball rolling.

Here’s to your success!

Tim Knox