There is usually one thing that makes starting a business tricky. Many people do not start their own businesses because they simply do not have it. What is this one thing? CAPITAL/MONEY. Without money it makes it really hard to jump out on a ledge and start a business, especially if that business requires some sort of purchase of a machine, building or product in order to get started. There is an option out there that many people do not know about that will allow you to get the capitol needed to start your business. The way to do this is to use your IRA or 401K. You must have a "self directed" 401k to do this so if you have an IRA or 401k you will need to convert that account into a self directed 401k. As we continue we will talk about self directing your 401k in order to invest in a business.
A Self Directed 401K is a 401K plan setup for your company. As the Manager of the company, you can act as the Trustee for the Plan's monies. Like a self directed IRA, the 401k enables you to self direct your investments, but in this case it is on behalf of your 401K.
One investment option available through the Self Directed 401k is buying shares in your own company, thereby allowing you to fund and run a business. This can be a great benefit to you if you wanted to start a business or franchise but didnt have the start up money available. It allow allows you direct control over how well your 401k performs through direct ownership in your own business.
How does it work?