How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask WebCPA Your Own Question
WebCPA
WebCPA, Tax Accountant
Category: Tax
Satisfied Customers: 111
Experience:  Licensed CPA. 10+ years experience.
52706456
Type Your Tax Question Here...
WebCPA is online now
A new question is answered every 9 seconds

I am currently a speech-language pathologists in the TX area.

This answer was rated:

I am currently a speech-language pathologists in TX .. I am interested in opening my own business and becoming self-employeed via my own company...which doesn't exist as of yet... and being able to open and contribute to my own 401K program. I have read that I could contribute up to approximately 47K if I am the only employee..

Welcome and thank you for your question!

Obtaining an employer tax ID (or "EIN") is a relatively simple process that can be done by completing a Form SS4, either in paper, or as the preferred method, on-line. Here is a great link to the IRS website with information about when and why you would need an EIN, as well as how to apply on-line.

http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

Once at this website, click "Apply for an EIN on-line" and it will guide you through the step-by-step process. Note the hours of operation are Mon-Fri 7am to 10pm.

If you have trouble with the link, simply go to www.irs.gov, and type "obtain EIN" in the search box.

Regarding the retirement plan, if you decide to form your own business, you may want to consider something called a SEP (Simplified Employee Pension). A SEP is available to any size business and is easy to establish by adopting Form 5305-SEP. For 2012, contribution limits to a SEP-IRA are the lesser of 25% of the employees compensation or $49,000. Therefore, if your compensation through your newly formed business was $196,000, you could contribute $49,000 to the SEP-IRA. There are pros and cons to adopting any retirement plan, and I would advise reviewing some specific research prior to making your decision. Factors to consider are the size of the business, both in revenues and profit, number of employees, and compensation structure.

Here is a useful link to provide you with more information on a SEP plan:

http://www.irs.gov/retirement/sponsor/article/0,,id=139828,00.html

Another great resource is Publication 4333, "SEP Retirement Plans for Small Business". http://www.irs.gov/pub/irs-pdf/p4333.pdf

A slightly more detailed and technical research guide is IRS Publication 560, "Retirement Plans for Small Business":

http://www.irs.gov/pub/irs-pdf/p560.pdf

As far as companies to manage the funds, yes Vanguard has a great reputation as a conservative and well run company. I can't speak for everybody, but none of my clients that use Vanguard have ever complained about them.

I certainly hope this has provided you with the guidance you were looking for today and as always, I am more than happy to help.

Kind regards,

WebCPA

WebCPA and 2 other Tax Specialists are ready to help you