| Adjusted Net Income Business
(ANBI) - 401(k) Retirement Glossary & Terminologies
Adjusted Net Income Business (ANBI) is the total income of an unincorporated
business owner as shown on IRS schedule C, schedule F or schedule
K-1. For many business owners, it is this number (the adjusted net
business income) that determines the amount of contributions they
can make towards employer sponsored plans or individual business
(self employed) 401(k) plans.
The following items are added back to the net income of an unincorporated
business at year-end to obtain the ‘adjusted net business
income.’
- Owner’s salary
- Owner’s personal expenses including travel,
car, food
- Owner’s pension/retirement contributions
- One time Capital expenses like purchase of
trucks, equipment, computers
- Interest & amortization
- Depreciation
Many small business owners have the tendency
to write off as many business expenses as they can to minimize their
tax liability at year end. To compute adjusted net business income,
unfortunately we have to add back these write offs to net income
to arrive at adjusted net business income.
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