While real estate and certain types of security investments can provide high returns for your investment dollars, no investment compares to the potential returns that investing in a successful business can yield. Entrepreneurs, like Donald Trump and Larry Ellison, have turned a few thousand dollars into billions. It is understandable then that an individual like yourself would want to consider a business investment or investments for your retirement portfolio. If you are familiar with running a business or currently run profitable companies this can be a lucrative way to grow retirement funds with an investment you’ve proven to be successful with. There are many ways in which you could invest directly or indirectly in a business. These can include loans to a business or investing in equity or stock. You may want to work for the business or take a less active role.

If you are considering using your retirement funds to purchase or start a business, there are a few items you should keep in mind when moving down this path. First, would include determining whether you would be a majority owner and would like to work and draw compensation from the business. If so - you will need to utilize a structure like Audeo, Guidant’s Entrepreneur Pension. Whether you are attempting to start a business, purchase an existing business, or buy a franchise, Audeo, Guidant’s Entrepreneur Pension, can give you the ability to dramatically increase your retirement account while being reasonably compensated for your management of the business. Audeo, Guidant’s Entrepreneur Pension, utilizes a 401k profit sharing account. You can utilize Audeo, Guidant’s Entrepreneur Pension, regardless of whether you have an IRA, 401k, 403b or other retirement account. In most cases, if you have an account that is eligible for a rollover it can be used for Audeo, Guidant’s Entrepreneur Pension.

The first scenario assumed you were an active participant in the company. But what if you took a lesser role in the business or were not a majority owner? There are a lot of scenarios in which this could be the case – but let’s say you invested in a business, purchasing 30% and were not going to work for the business. You essentially were a silent partner. It would be possible to invest in such a business using a truly self directed IRA account. We know of one instance where an individual made roughly a 3k investment into a company he was a part owner of and turn it into 30 million dollars! If you elect to invest in a business using IRA funds, as opposed to a 401k account like used for the Audeo, Guidant’s Entrepreneur Pension, the income returned to your IRA account may be subject to UBIT. You can find additional information about unrelated business taxable income in Guidant Financial’s educational website.

Another option that can be considered a business investment is a loan to a business. If you intend to not be actively involved or receive compensation from the business, you may want to simply lend money to the business. In this way you can avoid UBIT, but may miss out on the potential growth of stock or membership in the business.

When looking at investing in a business there are a lot of items to discuss and consider.