Ideas for a Home-based Business
Ideas and Tips for Starting Your Home-Based Business
Excerpt from Jumpstart Your Bookkeeping Business
Available from Amazon at http://budurl.com/jumpstartbookkeeping
Even if you have a regular job, you may have thought about starting a home-based business that you can run part-time. Working from home is the dream of many people, especially parents of small children.
No matter how committed you are to your career, your priorities change the second you hold your newborn child. The same is true if you adopt. I remember when I first looked into the eyes of my adopted son. It was a life-changing moment.
The desire to work from home is also the dream of those who are disabled, are caregivers, retired, or who just want to live on their own terms. If quality of lifestyle is the primary criteria of your career decisions then running a home-based business may be the logical choice for you.
So, if you want to run a home-based business, what business will it be? Typical choices for a home business have included:
• MLM or multi-level marketing where you sell a product but primarily try to sign up other people to work with you to sell the product and sign up other sellers
• Sell a product through contacts and parties such as kitchenware, skin care, or health products.
• Home day care. If you’re a young mother taking care of your own small child you might want to get licensed to care for a few other children and make some money until your child enters school or beyond.
• Virtual assistant: many home-based businesses are run by office professionals who provide services from word processing to bookkeeping to clients all over the country. All information is exchanged over the internet although it is possible to service local clients as well but still exchange information online thus saving on travel and office expenses.
If you want to explore the world of home business from the perspective of a working mother, you should check out the Home Based Working Moms website run by Lesley Spencer Pyle. It’s an abundant resource for moms or anyone else who is searching for the perfect home-based business.
What are the benefits of working from home? Well, first there are the obvious benefits:
• You can plan your day as you please
• You can save on travel expenses by controlling the amount of driving you have to do.
• You can save on wardrobe because you don’t have to dress up every day for the “office”.
• You can plan your day to be at home when your kids are home.
• You can save on child care by being home when your kids are home from school but you may find that you have to limit your work (and income potential)load.
• Home office tax deductions
o Rent or mortgage interest payment
o Home security system
o Outside home maintenance
o Home insurance
o Housecleaning services
o Trash pickup
o Depreciation of the home value (excluding land)
Imagine being able to take a tax deduction for money you are spending anyway. Based on the percentage of your office space compared to the total home square footage, you can deduct a portion of your
In order to take a tax deduction for a home office you must be able to prove that the space is used regularly and exclusively for your business. That means that there is no bed or television or anything else of a personal nature in your office space. If you’re using a spare bedroom, you’ll have to prorate the square footage of the bedroom so that the percentage of expenses related to business use is strictly based on your actual business space. The home office deduction can be an audit trigger so if you take it, you must be able to back it up with data.
Why are tax deductions so valuable?
When you’re self-employed, you have to pay all of your own taxes. When you were an employee, your employer withheld Social Security, Medicare, and state and federal income taxes. Your employer also paid into your Social Security and Medicare fund out of his own pocket matching your investment dollar-for-dollar. Now, as an independent contractor, you will have to pay Social Security and Medicare taxes on your net (after expenses) profit. This Self Employment tax is 15.3 % of your net profit and it is calculated on your tax return every year. So the lower your net profit, the lower your tax bill.
Keep in mind, however, that you won’t want to show a small profit forever. Profit is good when applying for a bank loan as it shows that your business is growing. Profit also means that you’re paying and accumulating enough Social Security to make for a decent fund from which to collect benefits.
Will it make you look less professional to work from home?
When you are just starting your business and money is tight, you want to conserve your cash in any legal way possible. You don’t have to go out and rent office space. Most people will understand if you work out of your home. If you do work from home, you don’t have to tell your customers and you don’t have to keep it a secret. It doesn’t have to be an issue at all. It’s really your business – literally.
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Categories: For Business Owners