Are You Sitting on Undiscovered Business Capital?
Turn your IRA into tax-free funding to jumpstart your dream enterprise
By Sharon Faiola Petersen and Lauren Goodman, Guidant Financial Group

Although thousands have discovered this golden opportunity, some of the savviest investors are still unaware of this remarkable funding option: You can utilize your IRA monies before retirement age to purchase a business without incurring early distribution penalties.

Thanks to the government's 1974 ERISA laws, you can self-direct your retirement funds into investments that include purchasing a business and/or franchise. Have your eye on a corner taco stand? Thinking of turning your love for animals into a pet-grooming shop? Funding your dream enterprise with retirement monies is a dynamite option for those wishing to take control of their future by going into business for themselves.

The Benefits
While individual retirement account (IRA) funds could be used in this way for the past three decades, it's only been in recent years that people have taken a closer look at personally controlling the investments made by their IRAs both in and out of the stock market. More specifically, an increasing number of new business owners are enjoying the benefits available to them through what are commonly known as "self-directed IRAs."

By using an IRA structure similar to that of a self-directed retirement account to purchase a business or franchise, you can save money, increase your retirement account value, and even offer a 401(k) to your employees. It's ideal for those who want to avoid taking out loans to finance a start-up business. Or, if your retirement funds can't cover the full purchase price, the structure allows for multi-party purchases - a perfect set-up for husband and wife teams. You can even combine your retirement money with loan money. All these options allow you to start your business with significantly less overhead, which translates into greater profits.

For example: To finance a $200,000 business, a 10-year 10.75% SBA loan could stunt your growth for the first 10 years. However, a similar business funded with retirement monies would not be subject to debt payments. Thus, the over $2700 you would be paying monthly on your loan could be reinvested instead into your business to increase your growth rate.

It Gets Better!
Using retirement funds to finance your entrepreneurial endeavors could mean much higher returns within your retirement account, since company profits not expended on loan repayments can be deposited back into the account. In this way, your retirement nest egg grows along with the success of your business. Profits funneled into your retirement account are tax deferred, just like earnings from traditional stock-market investments. Over time, this could save you thousands in tax dollars.

These self-directed account structures provide a surprising amount of flexibility. Plans such as these allow for investments into new or existing businesses. Other plans are structured to allow for investments in real estate, vacation rentals, hard money lending and much more. Into real estate flipping? You could combine your interest in real estate with your desire for self-employment by forming a Real Estate Operating Company (REOC). Want to invest in shrimp farms in New Orleans or timberland in New Zealand? With the right self-directed account structure, you can do that, too.

According to David Nilssen, president and CEO of Guidant Financial Group, a retirement account facilitation company headquartered in Bellevue, Wash., "Most people don't realize they can make substantially more with their IRA and earn this in investments that traditionally are more secure than the stock market, like real estate and tax liens. Yet less than 4% of the 16.4 trillion dollars in retirement funds are held outside stocks, bonds and mutual funds."

Getting Started
Restructuring your IRA (or other retirement accounts, like 401(k)s) to allow for a business or franchise purchase is best left to professionals experienced in such matters. While no taxes or penalties are triggered in transferring the funds from your old retirement account into the newly created one, the IRS does have the right to tax up to 100% of your IRA value if you fail to follow the appropriate government guidelines. For this reason, you will want to employ the services of retirement account facilitators who have structured hundreds (and preferably thousands) of these accounts successfully.

Although an increasing number of investors are discovering the value of this business-funding option, there are still only a handful of companies that specialize in creating these unique accounts. Many offer free consultations and will explain in more detail how the structure works in relationship to individual business goals. Do your homework, and don't be afraid to ask questions. Remember, it's your money and your business.

Financing your business with your own retirement funds takes the anxiety out of this first step in business ownership . . . and it puts you on the fast-track to greater success.

For more information, visit www.guidantfinancial.com.

Eight Keys to Selecting the Best Retirement Account Facilitator
Successfully buying businesses with IRA money requires the securing of account facilitators who know exactly what they're doing

By Sharon Faiola Petersen, Guidant Financial Group

A growing number of people are discovering the joys of utilizing IRA money to purchase businesses and franchises. Consequently, more companies are springing up to meet the account-structuring needs of those seeking to take advantage of this "self-directed IRA" funding option. These companies can run the gamut from the sublime to the ridiculous, so it's crucial that consumers know what to look for when choosing a retirement account facilitator.

When structured correctly, money in your IRA account can be accessed before retirement to buy a franchise/business without incurring early distribution penalties. Setting up a structure for these types of transactions is a complex process involving rollovers, creations of corporations and/or new accounts within IRS and Department of Labor guidelines, and appropriately submitting numerous documents to various agencies.

Ensuring that the structure is created correctly and that all compliance measures are adhered to is critical. If it's done wrong - or if it's created for a transaction that doesn't meet government guidelines - it could result in the incurring of significant penalties or the dissolving of the tax-free status of your retirement account. Not only could you lose the opportunity to purchase the business or franchise of your dreams, but you could be penalized as much as 100 percent of your retirement funds.

Although you can find numerous companies on the Internet offering to facilitate the structuring of these unique accounts, beware: all facilitators are not created equal. Some of these companies cut corners that leave clients open to later IRS repercussions. Others are tiny one- or two-person operations lacking the infrastructure to provide professional service or, based on the handful of accounts they have set up, they lack adequate experience to provide reliable guidance. So who can you trust? Thankfully, there are some professional and respected companies you can rely on with confidence. But even among these, costs for services can vary widely.

To help keep you and your hard-earned retirement money safe, here are some of the characteristics you should look for in selecting an account facilitator:

Professional Expertise. Look for companies staffed with a wide variety of professionals who can look at your unique situation from all angles. Check to see whether the company is affiliated with other respected organizations, is well-known in the industry, and completes hundreds or, better yet, thousands of these plans each year.

Reputation. Even though this is a relatively new industry, you do want to see that the facilitator has been in business for at least a few years and has built a reputation for itself. Nothing can replace the value of real-life experience. You want to be confident that all the early trial-and-error took place long ago and that the current service is reliable and error free. You don't want to be the guinea pig for a brand new company. It would be wise to invest some time in checking out what companies are in the news and what type of recognition they have been receiving.

Communications. Does the company make you blindly submit your information to them without providing the ability to talk with them directly? While online submissions are fine, be wary of sites that don't even give you a phone number where you can contact them. Also, are their representatives always available to answer your questions? A good rule of thumb is: the easier it is to communicate with the facilitator, the more secure you can feel about what is happening behind closed doors.

Success. Is the company growing or is it struggling to keep its head above water? Will it still be in business next year? The best companies to deal with are those that have a large and growing clientele. Don't be afraid to ask how many similar accounts the company has structured or how many clients they've served. Bolder is better when it comes to questioning those who will be facilitating your financial future.

Conservative Approach. Hearing "yes" is not always in your best interest. There are companies out there that will, out of ignorance or greed, set up structures that enable you to purchase businesses that are not permitted or advised under the IRS or Department of Labor laws. Choosing a facilitator that will keep you away from any business deals that are even remotely questionable is a safer route to take. Look for facilitators who encourage you to run your potential transactions past counsel. Better yet, look for a company that includes this step as part of their facilitation package.

Customer Service. So what constitutes topnotch customer service? Look for characteristics such as: Proactive Communication (the company reps keep you regularly informed of where you are in the process, and they speak a down-to-earth language you understand, not some trade lingo that makes little sense in the real world); and Ongoing Support (you can rely on the company to answer your questions and "hold your hand" if necessary after they're set up your account).

Turnaround. A company should be able to set up the account within 20-25 days. Yet some companies promise five days or less . . . which makes you question what corners they're cutting, since some states require as much as eight days to process documents. You need to be clear about your time constraints, and you should expect a clear and honest time estimate in return. And then you should be able to rely on that estimate.

Competitive Prices. Is the company clear about the costs up front? And do you know exactly what services you are purchasing? Some companies will charge separately for each step of the process, while others will charge for the "package." Package deals can provide the better bargain, as they includes features that other programs will expect you to pay for separately and which can add substantially to your costs (such as an IRS authorization letter or time with outside counsel).

One of the best steps you can take is doing a thorough study of the companies wanting your business. Shop around! Most account facilitators have websites you can peruse and most offer free consultations. This may sound simplistic, but write your questions down beforehand and keep them in front of you. It's far too easy to lose your train of thought in the midst of a detailed - and sometimes confusing - sales presentation.

Finally, never lose sight of the fact that you're dealing with your money, your business/franchise purchase and your success or failure. Go with a company that ensures that your money never leaves your authority, and that you remain the one who defines your future.