Benefits You Can Get Through Your Business in 2024 (U.S.)
Benefits are a top reason holding people back from starting a business and going self-employed.
But there are plenty of benefits when you own a business- including health insurance and retirement - they’re just phrased a little differently. Below are top benefits you often receive at a job that you can also get through your business.
Okay, before we dive in on all of this, I have to share that everything we’re about to cover I have learned from experience. I am not an attorney or a certified public accountant. The information I’m about to share is meant to guide you and I highly recommend reaching out to an attorney, certified public accountant, or business advisor to help advise you on your specific journey.
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Retirement
If you’re familiar with a company 401(k), a SEP IRA (simplified employee pension plan) is the self-employed version.
It works like a traditional IRA in that your contributions are tax-deductible now and the distributions are taxed later.
If you have employees, you must contribute the same percentage to a SEP IRA for them as you do yours (once they meet certain requirements). This gets a bit complicated, so be sure to reach out to a business advisor, financial planner, or CPA (certified public accountant) for help.
What you can contribute to your SEP IRA
You can contribute 25% of your business’ net income, up to $69,000 in 2024*!
To compare, the max contribution to a 401(k) is $23,000 in 2024, while the max contribution for a Traditional or Roth IRA in 2024 is $7,000 if you’re under 50 or $8,000 if you’re 50 or older.
So that’s a lot and definitely something worth looking into!
You can also have a Roth IRA and a SEP IRA depending on your income.
*Note that your SEP IRA contributions are tax deductible, but only at the end of the year, so be sure to calculate your self-employed estimated quarterly taxes without your SEP IRA contributions.
What happens if you over contribute to an IRA. →
Health Insurance
Health insurance is likely the top benefit keeping you from quitting your job and diving into self-employment, right?
So many people are afraid of how expensive their health insurance would be if they did not get it through their employers. But they never actually look into it.
All it takes is checking out healthcare.gov or talking to an insurance broker, which I recommend. (My health insurance broker also sells me business insurance, home insurance, and auto insurance, which is super convenient.)
My Health Insurance Premiums
For the sake of providing perspective, below are my numbers for 2022 and 2021. Remember, your insurance premium will depend on the type of plan you choose and the state you live in.
2022 Premium: $223/mo. single plan + HSA Eligible
My business pays - and writes off - this entire premium, so I write myself a check from my business account on the first of every month.
2021 Premium: $477/mo. family plan + HSA Eligible
My husband and I were on the same health insurance plan last year, me being the primary. We opted for a high deductible plan, and it’s actually a better plan than when we had insurance through Shelby’s former employer. And we didn’t pay that much more!
Not only that, my business was able to pay 50% of my health insurance premium because I was the primary.
$300 (my portion of the premium) / 50% = $150 paid by my business
Health Savings Accounts (HSA) Eligible Plans
My plan also offers HSA contributions.
An HSA is a health savings account that is tax deductible AND not taxed on withdrawal, as long as the funds are spent on qualifying expenses. This is literally the only contribution you can write off your taxes and not be taxed when you use it.
And unlike FSA (flexible savings accounts), you don’t have to use your money up at the end of each year. You can save it for as long as you’d like.
Shelby pointed out that when you’re older, your main expense is more than likely to be health insurance, so it makes sense to invest as much as possible in an HSA. Granted, you likely won’t earn interest on it, but the tax benefits are pretty nifty.
The max HSA contribution for 2024 is $4,150 for yourself only, or $8,300 for family coverage. Your spouse counts as family.
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Unlimited Sick Time
The relief of being able to stay home sick without worrying about how many sick days you have is a huge draw for being self-employed. However, some businesses are more hands-on than others so sick days can still be a challenge. I share tips to alleviate that stress in this blog post.
Tuition Reimbursement/Professional Development
You can likely pay for and write most things off through your business, such as tuition (if it pertains to your business). Just ask your CPA!
Vacation and Work-Life Balance
And as a business owner, you can take unlimited time off, have a flexible schedule, and work from home.
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If benefits are holding you back from diving into self-employment, be sure to reach out to a business advisor, insurance broker, and/or a CPA so you know exactly what the numbers are and where you’ll stand. It’s likely not as bad as you’re thinking. The benefits could even be better if you went self-employed!
For a complete guide on starting a business, check out my Begin Your Business online course.
Looking for more customized support? Check out my Debug Your Business membership.
Hey there! I’m Meg:
LOVER OF CATS, ROLLER SKATING, AND VW BUGS
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