Steps for setting up a 401(k) for your business

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(FORTUNE Small Business) -- Dear FSB: How do I start a 401(k) plan for a non-profit organization - and also, how do I do it for a self-employed small business?

- Sammie Lee White, Flint, Mich.

Dear Sammie: Setting up a 401(k) savings plan is relatively easy, and the process is the same for nonprofit organizations and small businesses.

Start by contacting a major financial institution or brokerage that offers 401(k) programs. You may want to ask fellow business owners and colleagues for referrals.

Once you identify an appropriate provider, you will be asked to supply information about your company and its employees, such as their start date, employee status and levels of compensation, says Willard Brumbaugh, an insurance and annuity agent based in Apple Valley, Calif.

The company will prepare several options for you to consider. One critical decision every employer faces is how much money the company can commit to the plan, Brumbaugh says.

For example, some employers may choose to match 50% of every dollar contributed by the employee up to 6% of his earnings. Others may choose not to participate in a matching program at all.

Consider the provider's service quality and past performance. You'll also want them to provide high-quality communications materials that will resonate with your employees, says David Wray, president of the Chicago, Ill.-based nonprofit organization Profit Sharing / 401k Council of America.

Ensure that fees are clearly explained, and that you're paying a reasonable price. Wray advises talking to at least three different providers. Choose the option that most closely matches your company's goals.

You may want to consult a third-party financial advisor or CPA to help you evaluate your options or manage the plan, Wray says.

"Every owner-manager needs to look in the mirror and determine their own comfort level with the decision-making process," Wray says.

For self-employed individuals, a solo 401(k) is also becoming a popular option. The process is the same as outlined above, and starts with contacting a provider, Wray says.