FRANCHISE FUNDING QUESTIONS
Q. My CPA/Attorney isn’t familiar with this. Is it legal? How long have people been doing this?
A. The governing body of law that allows a 401k Plan to purchase stock in the plan sponsor was passed in 1974. Although retirement plans like this are prevalent with big corporations, their use in small corporations is relatively new. For that reason, your CPA or Attorney may not be aware of it.
Q. How much does it cost?
A. Fund My Franchise charges $4,995 to design and install the 401(k) Profit Sharing Plan. The 3rd party administrator (Tenet Financial Group's) annual Administration Fee is billed monthly at $120, starting the month after the effective date of the plan.
Q. How long does this process take?
A. The average length of time to fund the corporation is 3 to 4 weeks.
Q. Can I take a paycheck?
A. Yes, you can pay yourself a salary as soon as you capitalize your business (typically 4 to 5 weeks). We suggest that you consult with your tax advisor regarding salary and payroll.
Q. Why a C-Corporation?
A. A retirement plan is allowed to purchase stock of the plan sponsor, so long as the plan sponsor is a “separate taxpaying entity.” The only corporate entity that is considered a “separate taxpaying entity” is a C-Corporation.
Q. Why should I consult with my CPA prior to starting the process with Fund My Franchise?
A. Your tax advisor is an integral part to this process. To insure that your opening balance sheet is correct and the ongoing administrative responsibilities are met, we recommend that you meet with your tax advisor.
Q. What makes Fund My Franchise different?
A. We are not a sales company. Our mission at Fund My Franchise is to help you explore your funding options so you become comfortable when making a decision. We know your goal is to be a business owner and in order for you to feel comfortable in making your final decision, you have to feel comfortable with your funding option(s). We provide a very high level of customer service to ensure that the design, installation and administration of your new 401k plan is done correctly. For most of our clients, this process is largely unfamiliar. Because of that, we view our professional responsibility to our clients as one of our highest priorities.