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Retirement Planning for Business Owners and the Self-Employed: 2025 Strategies to Lower Taxes and Build Wealth 

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Retirement Planning Isn’t Just for Employees Anymore

As a business owner, freelancer, or self-employed professional, you’ve probably heard it before: 

“I’ll start saving for retirement once I’ve got the business stable.” 

 “My business is my retirement plan.” 

 “I’ll worry about it next year.” 

In 2025, with rising taxes, inflationary pressures, and uncertainty about the future of Social Security, those excuses are more costly than ever. The truth is — the earlier you build a retirement strategy, the more flexibility, tax savings, and wealth you’ll accumulate. 

At Riley & Company CPA, we specialize in helping business owners across Northeastern Pennsylvania create tax-advantaged retirement plans tailored to their income, business type, and life goals. 

In this blog, we’ll walk you through your retirement savings options, explain the tax benefits, compare contribution limits, and help you avoid common traps that drain wealth and create IRS problems. 

PART I: Why Retirement Planning Matters for Entrepreneurs in 2025

Running a business gives you freedom — but it also means you: 

  • Don’t get a 401(k) match 
  • Don’t automatically contribute to Social Security (if you don’t plan to) 
  • Don’t have forced retirement savings unless you build them 
  • May be tempted to reinvest every dollar in your business 


That can be a recipe for burnout, late-stage regret, and avoidable tax bills. 

💡 The Power of Tax-Advantaged Retirement Plans 

In 2025, you can: 

  • Reduce your taxable income 
  • Avoid self-employment tax on some contributions 
  • Grow wealth tax-deferred or tax-free 
  • Protect assets from creditors 
  • Prepare for succession or sale of your business 


Whether you’re earning $40,000 or $400,000, there’s a plan that fits your needs. 

PART II: Comparing Retirement Plan Options for the Self-Employed

Here are the most common and powerful tools for business owners in 2025 — from solopreneurs to firms with employees. 

🧾 1. SEP IRA (Simplified Employee Pension) 

  • Who it’s for: Sole proprietors, freelancers, small businesses with few/no employees 
  • Contribution limit: Up to 25% of net income, max $69,000 for 2025 
  • Tax impact: Contributions are tax-deductible and reduce your taxable income 
  • Setup: Simple — no annual filing required 


💡 If you have employees, you must contribute the same % of compensation for them as you do for yourself. 

✅ Best for: Solo professionals with high income and no employees 

🧾 2. Solo 401(k) 

  • Who it’s for: Self-employed individuals or owner-only businesses (with or without a spouse on payroll) 
  • Employee contribution: Up to $23,000 ($30,500 if over 50) 
  • Employer contribution: Up to 25% of compensation 
  • Combined limit: $69,000 ($76,500 with catch-up) 
  • Roth option: Available — post-tax now, tax-free in retirement 


📋 Requires filing Form 5500-EZ if assets exceed $250,000 

✅ Best for: Business owners wanting flexibility, higher contributions, and Roth options 

🧾 3. SIMPLE IRA 

  • Who it’s for: Small businesses with <100 employees 
  • Employee contribution: Up to $16,000 ($19,500 if over 50) 
  • Employer match: 3% match or 2% nonelective contribution 
  • Setup: Easy, low admin burden 


⚠️ Less flexible than Solo 401(k) or SEP IRA for high-income owners 

✅ Best for: Businesses with employees wanting a simple, low-cost plan 

🧾 4. Traditional or Roth IRA 

  • Who it’s for: Anyone with earned income (subject to income limits) 
  • Contribution limit: $7,500 (or $8,500 if over 50) 
  • Tax impact: Traditional = tax-deductible; Roth = tax-free growth 
  • No employer plan needed 


✅ Best for: Supplementing other plans or younger solopreneurs 

🧾 5. Defined Benefit Plan (Pension Plan) 

  • Who it’s for: High-income earners over 45 who want to supercharge retirement savings 
  • Contribution: Based on actuarial calculations — can exceed $100,000/year 
  • Tax impact: Huge deductions, requires fixed annual contributions and admin 


✅ Best for: Doctors, consultants, partners with stable income wanting to save aggressively 

PART III: Choosing the Right Plan Based on Your Business Type

Let’s break it down by business situation: 

👨‍🔧 Solo Consultant or Freelancer 

  • Start with a Roth IRA for tax-free growth 
  • Add a Solo 401(k) for bigger savings 
  • Optional: Contribute to both a Traditional IRA and Roth if income permits 

🧑‍🔧 Owner With a Spouse on Payroll 

  • Use a Solo 401(k) for each spouse 
  • Double the contribution limits 
  • Consider backdoor Roth contributions if income is high 

👩‍💼 Small Business With 1–5 Employees 

  • Start with a SIMPLE IRA to build benefits culture 
  • Upgrade to a Safe Harbor 401(k) when cash flow stabilizes 
  • Consider profit-sharing add-ons for top employees 

🧑‍⚕️ High-Income Professional or Practice Owner 

  • Combine a Solo 401(k) with a Defined Benefit Plan 
  • Potential to contribute $100K+ annually 
  • Massive tax deduction now, structured wealth later 

PART IV: Common Mistakes Business Owners Make — and How to Avoid Them

Even well-intentioned entrepreneurs make errors that reduce deductions, limit growth, or trigger IRS problems. Here are a few we regularly correct: 

🚫 Mistake #1: Waiting Until Year-End (or After Tax Season) to Act 

Some plans — like Solo 401(k)s — must be established before December 31st to make contributions. 

✅ We set up client plans early in the year, then adjust contribution strategy as income becomes clearer. 

🚫 Mistake #2: Mixing Personal and Business Retirement Goals 

If your business finances and personal retirement goals aren’t aligned, you could overextend or under-contribute. 

✅ We offer integrated planning — forecasting both business cash flow and personal wealth milestones.  

🚫 Mistake #3: Not Using Roth Accounts Strategically 

Many owners focus only on deductible contributions. But tax-free withdrawals in retirement can: 

  • Avoid high RMDs 
  • Lower future Medicare premiums (IRMAA) 
  • Create more flexibility in retirement income planning 

✅ We help clients balance Traditional and Roth contributions to manage long-term tax exposure. 

🚫 Mistake #4: Missing IRS Compliance or Deadlines 

Plans like Solo 401(k) and Defined Benefit Plans have strict filing rules. 

✅ We handle plan selection, setup, compliance, and IRS reporting so you can focus on running your business. 

PART V: How Riley & Company CPA Helps You Build a Tax-Smart Retirement Plan

We do more than recommend a plan — we help you make it work. 

Our services include: 

🔹 Retirement plan selection based on your business and income 

 🔹 Custom contribution strategy for tax optimization 

 🔹 Solo 401(k) and SEP IRA setup and compliance 

 🔹 Defined Benefit Plan design for high earners 

 🔹 Mid-year contribution modeling to prevent overfunding 

 🔹 Roth vs. Traditional analysis based on lifetime tax projections 

 🔹 Coordination with financial advisors to align investments with tax goals 

Conclusion: A Strong Retirement Begins With a Smart Tax Plan

In 2025, there’s no one-size-fits-all retirement solution. But there is a right plan — tailored to your goals, income, and business type. 

The earlier you start, the more you save. The smarter you plan, the more you keep. 

Final Thoughts: Make 2025 a Year of Smart Moves, Not Just Survival

You don’t need to predict the future. You just need to prepare for it.
With smart cash management, thoughtful tax strategy, and the right advisory partner, you can turn uncertainty into opportunity.

Let’s talk about your business goals and challenges.