Making appropriate retirement contributions
Yes, and no. On average, total compensation for an associate is about 25 percent of the associate's production, says board member Gary Glassman, CPA. So, if he or she receives cash compensation for 22 percent of production, 3 percent is left for such employee benefits as social security, disability, life insurance, and retirement.
Glassman, a partner with Burzenski and Co. PC in East Haven, Conn., says most employers offer either SIMPLE or 401(k) retirement plans. With these plans, your associate invests a percent of his or her salary every month in the plan; you contribute an amount equal to 3 percent to 5 percent of your associate's paycheck. "Your contribution is part of the associate's total compensation," he says.