Setting up 401k for small businesses

I would look into companies that integrate with your payroll provider. Then look for ones that offer low cost investments.

We use Vestwell and like it.

If you can manage to match up to 4% a safe harbor is easiest to manage. Guideline was a good option but they just got bought out and are in the process of transitioning. There are other low fee options out there. Most integrate with QB these days so it’s fairly simple and automated.

Have you considered SEP s?

When I joined my small company 31 years ago, we didn't have a retirement plan in place, so I took it on as a project. (Then four employees, now 20 employees.)

Fast forward:
We went with a major brokerage (Charles Schwab) to avoid all of the high fees.
Charles Schwab does not establish plans directly for small companies, but we were directed to a service provider that handles small accounts on behalf of Charles Schwab.
I was able to select our investment choices and put together five throw-away options, but most importantly, an option that allowed us to access all funds or individual stocks available through Charles Schwab.
We did establish a 401K Roth as an option as well but I htink that came to be later.

At some point, 10 years ago, my boss attempted to transition it to a small firm with a local office up in his area so people could get a one-on-one advisor experience (Not Edward D. Jones, but equivalent). I put my foot down because it was just him doing a favor for one of his buddies, which would have pushed us into higher fee choices.

To recap, what we did right was have access to the entire market, access to low-cost fund options, and a large national brokerage that I have been able to consolidate all of our accounts into, including establishing a SEP IRA for my wife. Whether it is Fidelity or Charles Schwab, etc., it is nice not having to jump between companies to view and manage six separate accounts between my wife and me. Eventually, when I retire, I will be able to consolidate into self-directed accounts and remain with the same familiar brokerage.

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One possible disadvantage for you as a business owner: My wife's company has a SEP, and she has contributed 25% each year.

As a one-person company, it is a straightforward cash flow decision and is also very low-cost to establish and administer compared to a 401(k). But if she hires someone, she might not prefer to allocate 25% to that person(s). Still, I believe your hands are tied, requiring you to apply the same percentage to everyone who meets the eligibility criteria, irrespective of their performance, unlike pay raises or bonuses.

Something to consider as you can give yourself a raise or bonus (with tax implications) to fund a higher personal contribution for a 401 (k). The 401 (k) provides a constant vehicle for you to choose to invest or not out of your individual income, versus compromising what you might contribute due to the larger obligations a SEP might impose upon a company providing for 10 employees.

As an employee, I have gone a few years without a 401K match and also not received a raise during lean times like COVID and 9/11, etc., but I was always able to maintain my 401 K contribution and maxed it for the last 15-20 years. If I were relying on business cash flow and a CEO's emotions to fund a primary retirement vehicle during those times, I would not have accrued as much when we were struggling to make payroll.

Something to consider when you evaluate what is best for you and your company.

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far better tax advantage to the company and its a better benefit for the employees. 0% to 25% of W2 salary company contribution every year, allows the company to stay flexible and reward good years. its basically profit-sharing that comes right off your taxable income

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SEP IRA's are only be employer contributions are they not? Its basically just profit sharing.

OP is likely more interested in doing like a 2-5% employer contribution with the idea the employees can then do 2-5% themselves.

For the vast majority of businesses the employees will be able to do more in the 401k though. Most employers are going to do something in the 2-5% range and the best are usually in the 8-12% range. Then employees can do another 8-12% and get close to that 25% amount.

OP, one of the most important factors is to look at the costs and what can be purchased. I've been on plans in the past that only had something like 8-10 funds available and only 1-2 were low cost.