In a Nutshell: Money for Starting a Business with the Business Owners Retirement Savings Account Pl

The rewards of entrepreneurship are many, including the ultimate satisfaction of making a huge sale, being the sole decision maker and one-on-one contact with your clientele.  Company ownership has its unique set of issues, though, the most obvious being how to secure capital for the small business.

Businesses in their infancy or expansion mode have traditionally used these funding resources:

• Personal savings:  This is an obvious choice, but too much taken out of your savings account may put other areas of your family’s life in jeopardy in the event of an emergency.

• Personal Loans: Family or friends may be willing to make a loan, often with no or low interest.

• Partnerships: Equity financing can work, but only in the near-perfect scenario where the partners are in agreement on major decisions, daily operations, responsibilities and liabilities.

• Venture Capital: Again, you surrender part of the equity and control of your company in exchange for the needed funding.

• Form a Corporation: A corporation can include a number of stockholders, with each investor owning a piece of the company that is in proportion to the amount of his or her investment. Corporations should be formed with legal advice, as they are closely regulated.

• Credit Union or Bank Loan:  Most commonly used, these loans can vary in length of term. It goes without saying that obtaining money from traditional sources for starting a business is challenging as you don’t yet have an established track record with credit, which tends to make lenders reluctant to take a chance. Baby Boomers in particular may leverage their retirement savings with SBA loans to operate a business to support their retirement.

The good news is that there are other options for securing capital for a small business start-up, including a program that is gathering momentum in the entrepreneurial world called BORSA: the Business Owners Retirement Saving Account plan. BORSA is a powerful financial tool which allows entrepreneurs to fund the purchase of a new business, business property or franchise, using the funds in an existing 403(b), 457, profit sharing 401(k), 401(a) pension, IRA rollover or Roth IRA.  Utilization of the BORSA plan will allow the small business owner to accomplish the financial aspects of a business plan without distributions, taxes, penalties or the use of retirement plan loans.

The basic requirements for setting up a BORSA plan for a business venture are

• An existing retirement account such as a 401(k), IRA or one of the other reitrement accounts mentioned earlier.

• Creation of a C-Corporation, thereby establishing a 401(k) profit sharing plan

• Professional guidance and consultation by a firm that is well versed in BORSA rules and governing laws such as DRDA’s firm of Certified Public Accountants and business consultants.

For additional information on the BORSA plan visit www.borsaplan.com or contact the DRDA, PC CPA Firm (recognized as one of the top 25 firms in the Houston Market by the Houston Business Journal): Pick up the phone and call toll-free at 1-888-588-2022.