Welcome To:
A Contractor’s Guide to Building Wealth While Reducing Tax Liability
Class Objective
To help contractors and small-business owners understand how to use retirement plans not only as savings tools but as powerful tax shelters that protect income, reduce annual tax bills, and build long-term financial security.
Lesson Summary
Most contractors focus on surviving each job cycle, not realizing how much money they lose to taxes every year. By setting up the right type of retirement plan, you can legally shift income away from the IRS and into your future wealth. This class explains how to choose the best retirement vehicle for your business structure, how contributions reduce taxable income, and how to automate your savings strategy so you keep more of what you earn.
Video Explanation
Retirement contributions are pre-tax or tax-deferred, meaning the money you invest today reduces your current taxable income and grows tax-free until retirement.
Action Items:
Review your previous year’s income and identify how much tax you paid.
Calculate how much your taxable income would drop if you contributed 15–25% of profits into a retirement plan.
List your long-term goals: saving for retirement, building a legacy, or reducing taxable income — this helps guide plan selection.
If you’re a Sole Proprietor or Single-Member LLC, consider a SEP IRA — simple setup, low cost, and high contribution limits (up to 25% of net income).
If you operate as an S-Corp or Partnership, evaluate a Solo 401(k) — allows both employer and employee contributions for double tax advantages.
For growing teams, look into a Safe Harbor 401(k) or Simple IRA to retain employees and gain additional deductions.
Consult with a financial advisor or CPA to ensure the plan fits your income pattern and cash flow.
Set up automatic transfers from your business account to your retirement account each month.
Schedule quarterly reviews to increase contributions as revenue grows.
Keep records of every transfer in your Contractor Checklist System for tax documentation.
Retirement accounts legally defer taxes, allowing your money to grow faster while reducing what you owe now.
Track how contributions reduce your taxable income using your CPA’s quarterly projections.
Consider a Roth version (Roth 401(k) or Roth IRA) for tax-free withdrawals in retirement if you expect higher income later.
Reinvest the money saved on taxes into deductible business improvements, insurance, or real estate.
Don’t wait until tax season — start contributions early in the year to spread cash flow.
Avoid over-contributing; check IRS annual limits before making deposits.
Never mix personal and business funds when contributing — always pay from a business account.
Review your plan annually to adjust for income growth and IRS changes.
Thank you for completing this Session!
Home Building Master Class | The Contractor Checklist
Choose the right retirement plan for your business structure.
Automate contributions and document each payment.
Track tax savings and reinvest wisely.
Meet with your CPA annually to optimize contribution levels.
Treat your retirement account as both a savings plan and a tax strategy.
Start Next Session @
www.thecontractorchecklist.com
