I'll try to keep this as short as possible.
I am 32 years old (33 in October) and 2 years into a small business that is established as a Ltd. company. I own a 50% stake in the company. 2021 will be the first profitable year (small profit) and to date I have taken no income from the business. Due to some contracts that were recently signed the business will start making more money from now on and I expect my salary from this company to rise to about 25K in 2022 and up to about 50K in 2023. There is significant growth potential for the business but for long term planning purposes I am keeping my figures very conservative.
Separately I do freelance work online as a sole trader. Income c. 30k but took a hit due to covid in 2020 down to 20K.
So in terms of combined income from freelancing and the ltd. company, in 2021 I will make about 30K, 2022 about 55k, and 2023 onwards about 80K.
I have been so focused on getting the business off the ground and keeping it alive through covid that I am only now starting to think about planning for the future and AAM has been a great resource because it all seems very complicated/lots of jargon etc. that I need to wrap my head around.
One thing that comes up again and again is the maxim of "the earlier you start your pension the better" so I don't want to let another few years slip by without setting something up. Right now my income is low and not guaranteed (i.e I don't make a set amount each month) so I am anxious about setting up some complex pension structure only to run into a rough patch with the business and I can't make the necessary contributions. Having said that, I don't want to miss out on long term growth because I waited and waited for the perfect time to start a pension.
I know that the executive pension via the ltd company has lots of benefits but as far as I can make out you really need to be making a large salary for it to be worth the effort. I am planning to get to a sizeable salary as the business grows over time but right now I am operating in the 30 - 80k range over the next 3 - 4 years so I suppose my question is - Do I set up something small and straightforward now like a PRSA and put in a few grand for my 2020 tax return and another few grand for 2021 when the time comes and then maybe switch to an executive pension if/when my salary gets to a suitable level? Or should I hold off for a couple of years, put the cash in savings and start the pension when my financial situation has stablised?
Thanks!
G.
PS. Other info that might be relevant: Single, no debt, c. 20k savings, no mortgage.
I am 32 years old (33 in October) and 2 years into a small business that is established as a Ltd. company. I own a 50% stake in the company. 2021 will be the first profitable year (small profit) and to date I have taken no income from the business. Due to some contracts that were recently signed the business will start making more money from now on and I expect my salary from this company to rise to about 25K in 2022 and up to about 50K in 2023. There is significant growth potential for the business but for long term planning purposes I am keeping my figures very conservative.
Separately I do freelance work online as a sole trader. Income c. 30k but took a hit due to covid in 2020 down to 20K.
So in terms of combined income from freelancing and the ltd. company, in 2021 I will make about 30K, 2022 about 55k, and 2023 onwards about 80K.
I have been so focused on getting the business off the ground and keeping it alive through covid that I am only now starting to think about planning for the future and AAM has been a great resource because it all seems very complicated/lots of jargon etc. that I need to wrap my head around.
One thing that comes up again and again is the maxim of "the earlier you start your pension the better" so I don't want to let another few years slip by without setting something up. Right now my income is low and not guaranteed (i.e I don't make a set amount each month) so I am anxious about setting up some complex pension structure only to run into a rough patch with the business and I can't make the necessary contributions. Having said that, I don't want to miss out on long term growth because I waited and waited for the perfect time to start a pension.
I know that the executive pension via the ltd company has lots of benefits but as far as I can make out you really need to be making a large salary for it to be worth the effort. I am planning to get to a sizeable salary as the business grows over time but right now I am operating in the 30 - 80k range over the next 3 - 4 years so I suppose my question is - Do I set up something small and straightforward now like a PRSA and put in a few grand for my 2020 tax return and another few grand for 2021 when the time comes and then maybe switch to an executive pension if/when my salary gets to a suitable level? Or should I hold off for a couple of years, put the cash in savings and start the pension when my financial situation has stablised?
Thanks!
G.
PS. Other info that might be relevant: Single, no debt, c. 20k savings, no mortgage.