Disclaimer: This article is not provided as legal advice, nor is it a substitute for legal counsel. As laws in jurisdictions vary, it is incumbent on the recipient to insure compliance with State and Federal labor and tax laws. The content of this blog should foster discussion with your financial advisor to determine parameters of state and federal laws affecting your business. Gusto payroll and HR services are only available in the US.
For small businesses, it can be tough to offer retirement savings benefits plans to your staff because the cost is higher with fewer employees. Nowhere is this truer than in service-based small businesses. It’s rare for small businesses like salons, spas, and fitness centers to offer employees benefits like PTO, health insurance, or retirement planning. There are a variety of retirement plan types available, such as:
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401(k)
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Solo 401(k) plans
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IRA
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Roth IRA
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SEP (Simplified Employee Pension) Plan
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SIMPLE (Savings Incentive Match Plan for Employees)
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Qualified plans (H.R. 10, Keogh Plans)
Since many small businesses don’t have a dedicated HR resource to guide them towards the right small business retirement plan, it’s even harder to get a head start.That makes it particularly challenging for beauty, fitness, and wellness professionals to get a jump on saving for their golden years. But it doesn’t have to be! Vagaro has partnered with Gusto to help small business owners set employees up for success and empower them to get a jump on retirement savings.
What Is a 401(k) Retirement Account?
In plain language, a 401(k) is a type of savings account that’s used for your retirement. The money (funds) that are put into this account are taken from a worker’s paycheck every pay period. The money that’s deposited into a worker’s 401(k) is taken out BEFORE any tax deductions come out of payroll (pre-tax earnings.) It’s called a 401(k) because that’s the tax code the IRS uses to describe this kind of savings account. A person can use the money in their 401(k) to invest in mutual funds, bonds, stocks, or similar assets. Until they’re withdrawn, funds in a 401(k) aren’t taxed on interest, capital gains, or dividends. At first, the 401(k) was intended to supplement pension plans, but over time, they’ve come to be the main way Americans save for retirement.
With Gusto & Vagaro, you'll have a head start on "growing" your retirement savings!
Most traditional workplaces offer 401(k) plans as a benefit of employment. Many workers in the beauty, fitness and wellness industries are booth renters, and are classified as independent contractors instead of employees in a traditional sense. This is why many small businesses in service professions—such as salons, spas, barbershops and fitness centers—don’t often offer employees a 401(k) plan. The reasons for this vary, but most of the time the reasons come down to employers not knowing the best options. There are many retirement plan types available, including the ones best-suited to independent contractors or service professionals working for small businesses:
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401(k)
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Solo 401(k) plans
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IRA
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Roth IRA
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SEP (Simplified Employee Pension) Plan
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SIMPLE (Savings Incentive Match Plan for Employees)
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Qualified plans (H.R. 10, Keogh Plans)
Because retirement plans come with different requirements for employer contributions, employee contributions, and matching contributions requirements, without HR to help, deciding may be overwhelming.
Gusto Simplifies 401(k) Savings for Employees
According to research, most workers in the US understand that it’s important to have a 401(k) or comparable retirement savings plan, but don’t feel confident in their ability to start one by themselves. In fact, nearly 50% of those surveyed said that they don’t understand the best retirement investment options for their future. Further, more than 1/3 of US workers get stressed out at the idea of having to choose a 401(k) plan! That’s where Gusto and Vagaro can help your small business and your eligible employees (even if they’re classified as self-employed) with a low-cost benefit plan for employee retirement. By providing this option to your staff, you’ll give them the tools today to help make plans for tomorrow. Gusto is set up to provide employees with the ability to split paychecks into multiple bank accounts and savings programs, setting them on the road to financial success. Instead of feeling overwhelmed by researching complicated financial documents and making life-changing decisions alone, you and your employees will have a team of professionals to guide you.
Did you know that almost 70 million people in the US don’t have access to a retirement savings plan at work?
Small businesses—particularly businesses like salons, spas, and fitness centers—are less likely to have retirement savings benefits and tax-deductible contributions to retirement savings plans available. Which is a shame for both the small business owners and the employees who work there! That’s because statistics show workers are 15 times more likely to be proactive saving for retirement when employers offer them the resources to do so. The reason most small companies cite as preventing them from providing employee retirement savings plans is the cost. Gusto and Vagaro know that your small business success depends on your team of talent. We believe that your employees deserve the best, and that small companies shouldn’t have to sacrifice quality benefits to meet budget. Building a better team starts with better benefits. By giving them ways to lay the groundwork for their financial future, you’re making an investment in the ongoing success of your business.
Small Budget, Big Savings & Tax Advantages: Give 401(k) Access with Gusto and Vagaro
You don’t have to become a 401(k) genius to give your staff retirement savings benefits—far from it. Vagaro’s partnership with Gusto allows you to have a team of payroll professionals and savings wizards at your service and customer support you can count on. The best part is that for small businesses whose employees fall into different tax classifications, you’ll have access to the same benefits plans and tax benefits as larger companies with more resources. You won’t have to sacrifice the quality your employees deserve to stay within your budget. There are no setup fees, low annual maintenance fees, and no minimum number of participants required. That means that whether you’re a hair salon with 2 booth renters, a nail spa with 3 commission-based employees, or a fitness center with hourly staff, everyone can plan for their future.
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Simplify by Syncing Your 401(k) with Payroll Services
Gusto (partnered with Guideline) easily syncs with payroll to automatically deduct employee 401(k) contributions every pay period, with no extra work or recordkeeping for the business owner. Through Gusto’s 24/7 online portal, employees can enroll in a new 401(k) plan in less than 5 minutes. From there, Gusto and Guideline will provide guided portfolio recommendations. Employees will be able to use the employee self-service portal to modify and adjust their contributions as their needs change. Every 401(k)-contribution adjustment automatically syncs to the Vagaro payroll runs and Gusto payroll completion, giving both you and your staff peace of mind.
Disclaimer: This article is not provided as legal advice, nor is it a substitute for legal counsel. As laws in jurisdictions vary, it is incumbent on the recipient to insure compliance with State and Federal labor and tax laws. The content of this blog should foster discussion with your financial advisor to determine parameters of state and federal laws affecting your business.
Set your employees up for success with Gusto and Vagaro and give them a head start on saving for their retirement! When you outsource HR through Gusto, you’ll have resources available to help guide your staff to the right savings plan. Take care of your employees, and they’ll take care of you—Gusto retirement benefits are the key to succeed! Try Gusto free for 3 months through your Vagaro software and give your small business an edge on the competition.
Header Image: Giorgio Trovato via Vagaro
Infographics and Animations: Mia Montemayor via Vagaro
