Financial matters are always in the focus of business owners. For the self-employed, tax planning is an important process that can improve profits and help business owners accelerate wealth creation. At the same time, business owners should also think about planning for retirement and saving for their future. Fortunately, you can achieve both goals by establishing a Solo 401 (k) retirement plan.

Only 401 (k) are self-directed retirement plans that offer flexible investment options and one of the highest contribution limits among qualified retirement plans: $ 53,000 for 2016, or $ 59,000 if you’re 50 or older. This allows participants to reduce their taxable income by thousands of dollars each year.

These are the deadlines:

Many people mistakenly assume that the Solo 401 (k) account must be set up and received contributions before the end of each year. Because of this, eligible entrepreneurs tend to delay creating a retirement plan and may lose tax benefits and retirement savings. There are different deadlines for setting up a Solo 401 (k) and for making contributions, and freelancers should be aware of these deadlines to plan ahead.

You must set up your Solo 401 (k) at the end of each year

Small business owners have until the last day of the year to establish a Qualifying Solo 401 (k) plan for contributions for that year.

To be eligible for a Solo 401 (k) plan, you must be engaged in a self-employed business with the intention of making a profit. That company cannot have employees other than you and your spouse.

But you can make contributions during the next year.

Fortunately, Solo 401k contributions do not need to be made before December 31 to count for the fiscal year.

Based on the tax code, Solo 401 (k) plans can receive contributions until your company’s tax filing deadline. For sole proprietorships, partnerships, or LLCs, the contribution deadline is April 15 of the following fiscal year. For corporations, it is March 15th. You can even request an extension if necessary.

What can you win?

By contributing to a Solo 401 (k) plan, you can reduce your taxable income by a substantial amount. Funds can grow tax-deferred, which means that you will not pay taxes on the wealth you accumulate until you make withdrawals during retirement.

You can use a Solo 401 (k) calculator to determine the exact amount you can contribute this year.