The Solo 401k is for Solopreneurs. A Solopreneur is a solo entrepreneur or solo business owner.
Your Solo 401k business can be your main full-time job, part-time, in addition to a full-time job, etc. The business can be any entity structure, including a sole proprietorship, (single or multi-member) LLC, S-Corp or C-Corp, or a partnership. Sole proprietor is the most common form of business.
You can start with one business entity and change your business entity later on. For example, you may start your business (and Solo 401k) as a sole proprietor and change to an S-Corp later on.
You also have full flexibility in changing your business. You can start with one type of business (for example, a sole proprietorship Uber driver) and later change to a completely different business (for example a videographer using an LLC as the business entity)
You can earn income from your business as 1099-MISC, Schedule C, K-1, 1120, 1120S, or 1065. The money you get from your business to qualify for the Solo 401k must be “earned” income (instead of “passive” or “unearned” income).
Your Solo 401k business cannot have any full-time W2 employees, other than you or your spouse. You may have part-time W2 employees (who work under 1000 hours per year), or independent (1099) contractors who work with your business.
If you have no W2 employees in your business, you qualify!
Your Solo 401k business can be a side-business and it’s OK to have a regular “full-time job” in addition to your Solo 401k.
Some common examples of Solopreneurs are:
- Software developers
- Coders
- Landscapers
- Attorneys
- CPAs
- Uber and Lyft drivers
- Handyman
- Writers
- Consultants & coaches
- Salespeople
- Engineers
- General Contractors
- Architects
- Realtors
- Real estate professionals
- Photographers/videographers
- Anyone who receives 1099-MISC income
The following 20 freelance websites are a great start for easy, quick ways to begin your own business and qualify for a Solo 401k:
- Start your own Consulting Business
- Driver for Uber or Lyft
- Walk dogs and get paid on Rover
- Showcase your graphic design skills on 99 Designs
- Design websites or software at Get A Coder
- Get jobs from sales to construction work at Simply Hired
- Perform administrative work from home with Guru, Freelancer, and Elance
- Upwork has everything from short to long term projects, and entry to expert level positions
- Top Total is geared toward experienced freelancers and boasts clients such as JPMorgan, Airbnb, and others
- If you’re tech savvy, People Per Hour has freelance gigs for you
- Are you a filmmaker or photographer? Design Media is a great freelance site to get creative jobs
- College Recruiter is the perfect start for college students or recent grads looking for freelance work to earn cash
- If you’re a marketer or copywriter, The Creative Group will put you together with businesses and organizations in need of your services
- Provide customer support from your the comfort of your home with We Work Remotely
- Like to talk on the phone? Do telecommuting work in accounting, human resources, and more with Skip the Drive
- If you have specialized expertise in a particular area, Just Answer will pay you to answer expert questions
- Are you a whiz at math, science, languages, or history? Join Tutor, the world’s largest online tutoring and freelance community.
- If you work with your hands, Task Rabbit is an excellent choice. Choose from local jobs in your area that need done, from assistant tasks like picking up or dropping off the dry-cleaning to handyman work
- Artists should check out Art Wanted, where you can sell original artwork
- Do you know a foreign language? Make money as a translator with Project 4 Hire
There is no income threshold for your business to qualify for the Solo 401k. You can start your Solo 401k on the day you launch your business (even if you haven’t made any money yet in your business). You can even setup your Solo 401k while you’re doing market research on what type of business you want to start.
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