If you have been thinking about starting your own business or investing in a business start up, then chances are that you have considered business funding. Many people think that the only way to get money to start a business is to walk into the bank and request a business start up loan. Getting a loan from the bank is an option, but is it really the route you want to go down? You would have to pay back the loan on a timeline determined by the bank, pay an interest rate determined by the bank, and may have to structure your business differently due to the bank’s requirements. The deeper you dive into getting traditional startup financing, the less control you actually have over the business. This is enough to make many individuals hesitate before quitting their day job, but before throwing your arms up in the air let’s discuss another option; one that gives you much more control over your business and how to fund it.

The individual 401k – customized business funding


The individual 401k is structured in a way that gives you complete control over your business, your own salary, and how you choose to fund your business. This is because the individual 401k is really made up of 3 parts:

  • The business owner
  • The actual individual 401k account
  • The corporation

The business owner is you, and you can decide to take a salary from the business or to just have the profits feed right into your retirement account.

The individual 401k account is your retirement. It is also the source of funding for your business. You can choose to invest directly into the business or to take out a loan to fund your company. Profits from the business will go back into your account and/or pay off the loan with interest to yourself.

The corporation is your actual company. Its structure is somewhat dependent on how you decide to pay yourself (or not) and whether or not you want to take a loan out from your retirement.

It is also fairly simple to roll over existing accounts into a new individual 401k. Therefore is it very possible for you to start your business or invest in a new business with money that you already have. You don’t have to pay a bank. You don’t have to forfeit control. You don’t have to wait!

We recommend viewing our pages on the individual 401k for more information. If you are considering opening a new indi-k then we do also recommend talking to a licensed custodian with legal staff on hand. You definitely want to make sure that your corporation and account are set up properly. We can help you find a custodian that is right for you!

Contact us!