All Articles Tagged "home based business"
This article was written exclusively for MadameNoire Business by financial expert Lynn Richardson. Known as the “Madea of Money,” Richardson is a money coach, author, the president of Hip Hop Sisters and COO of Russell Simmons’ Hip Hop Summit. You can follow her on Twitter and on her website. And be sure to join us next Thursday at 7pm ET on @MadameNoireBiz for the next in our #MNBizChats series. We’ll be offering tips and discussing all manner of financial matters. Don’t miss it!
It’s simple: a home-based business will get you a refund when tax season arrives. The average American only takes about eight tax deductions: real estate taxes, mortgage interest, charitable donations, and a few others. But if you have a home-based business — and you actually run your business like a business with the intent to make a profit –there are over 440 tax deductions available to you that you can itemize on Schedule C of your 1040 tax return.
One of my clients organizes her college reunion every year. Between site visits, travel, and meals, she spends over $6,000 each year and she’s never made a profit in the past. Now that she is in business for herself as an event planning consultant, she writes off every bit of the class reunion expense that is related to her home business. (See IRS Pub 334)
Have you ever invited people to your home for a dinner party? Well, if you have a home-based business, and you truly have the intention to discuss business, turn your gathering into a business dinner party! (See IRS Pub 463) Place information about your business near the food. Take pictures of people looking at your business cards. Answer questions about your business and always ask for referrals. When guests ring your doorbell, greet them by saying “How’s business?” Get it? I know you do! You can write off what you spent on meals, invitations, and other items related to your business dinner party.
And yes . . . it’s always business when it comes to the kids too. The IRS allows you to hire your children to work in your home-based business, write off the income you pay them (they don’t have to report it unless it’s over $5,000 annually), then they can use the money they earn to buy school clothes, school supplies and anything else they need. (See IRS Pub 15, Child Employed By Parents) For me, $5,000 times three kids equals $15,000 in additional tax write-offs each year. And when nieces and nephews and god-children ask for money, I hire them to complete a project for my business, I send them a w9 at the end of the year and I write that off too! (See IRS Pub 535)
So, if you haven’t done so already, take a look at what you like to do, what you are good at, and what you spend your time doing for fun and turn it into a business. I’m not suggesting that you pretend to be in business, but rather, that you actually make a decision to BE in business for yourself and get educated about the tax benefits. Most businesses do not require a license or a tax ID number, but check with your local government for registration or permit requirements.
In order for your business to be recognized as a business and not a hobby by the IRS, you must have the intent on making a profit and you must run your business like a business by keeping good records. When you get a receipt, write on the back: who was involved, what you discussed (if it was a dinner meeting), where you were, how much you spent (because receipts fade) and when the event took place. You don’t need a receipt for expenses under $75 (unless it’s for a hotel room) but I suggest you keep them all anyway. Plus, you should keep a small “tax diary” to record your daily business expense notes and mileage. And, of course, meet with your tax professional to discuss your options and how they impact you personally.
Some say this is hard work, but so is being broke! So do the work and remember my mantra, “It’s Always Business.” And keep in mind, your business will grow as a result of your work and you get to interact with people and have a good time. All of that and a tax refund!
For more information on tax rules and regulations, visit IRS.gov.
Every business starts somewhere and for many of us, it’s our home office, the kitchen table, or the local coffee shop. Even if you end up with a multi-million dollar company, it may be awhile before you can afford office space. So you use your home address until you can, right? Not if you can help it.
Using your home address as your business address can be a dangerous decision. In many situations, your business address is public. You might have it listed on your website or business card. If you’re incorporating, the address is on file at your Secretary of State’s office. Domain registrations require an address on file and just about anyone can find that looking it up online. When you register your business name with the county or buy your business license, these documents require your address and are on public record, too. The last thing you need is for customers, competitors, and just plain crazies to know exactly where you live if they have a deep need to find you at 3am.
Smart small business women use rented mailboxes as their business address whenever possible. The cheapest option is a post office box because they run about $50 every six months, depending on the size you choose. You can also access your mail at all hours of the day and night. You should remember that some companies won’t deliver to PO boxes and that most government licensing and registration processes won’t allow you to use them as your primary business address.
Renting a mailbox from a company that specializes in business mail services costs a little more but worth it. The UPS Store, PAK Mail, and many other independent companies have mail services that give you a real street address. They also forward mail when you’re away from home. You even have the option to check your mail by phone to avoid unnecessary trips to check your mailbox.
If the post office or a mailbox service isn’t convenient for you, consider piggybacking off another business’s address. For a monthly fee, someone with a dedicated office may let you use their office as a business mailing address. Negotiate or barter with local, independent businesses for the best results with this option.
(Black Enterprise) — When Maxine P. Gill was laid off from her job as a sales and marketing director for Comcast Corp. in 2008, she decided to explore her longtime dream of entrepreneurship. “I always knew I wanted to own my own business,” she says. After considering a rib restaurant venture with a business partner, she decided to look into franchises instead since they have a structure and support system already in place.
(Forbes) — 1. Work-at-home scams have been around for decades. In the past few years, the FTC has seen the number of complaints nearly double. Legitimate work-at-home jobs exist, but you’ll need to do some homework to avoid the too good to be true operators. For tips, see AARP’s advice here. The home-based work website ratracerebellion.com, a website co-founded Christine Durst, an internet fraud and safety expert, for example, prescreens job leads.
(Christian Science Monitor) — Several years ago, Lisa Hammond quit her job as an assistant manager at the Wal-Mart inWichita, Kan., took a 60 percent pay cut to work for a call center, and came out ahead. How? She worked from home. This way, she saved on commuting and day-care costs, which had swallowed about half of her approximately $2,000-a-month take-home pay from Wal-Mart. Today, and two work-at-home jobs later, she earns more as a work-at-home field representative for the United States Census Bureau than she did at Wal-Mart – while still avoiding commuting and day-care costs. ”I’m spoiled now. I wouldn’t want to go back to working in an office,” says Ms. Hammond, a married mother of three. Amid traffic jams, high gas prices, family needs, and a yen for more flexibility, what 21st-century worker hasn’t thought about skipping the office scene and telecommuting instead? But taking a pay cut to do it? To some, the benefits outweigh the lost income. A survey by New York-based Dice Holdings released earlier this year found that 35 percent of technology professionals would take up to 10 percent less pay to telecommute full time.
(Businessweek) — When you are working for yourself, the responsibility for staying on top of projects, communicating with clients, and collecting money you’re owed falls completely to you. There’s no boss checking in to make sure you are meeting deadlines, no team to keep you on track. It helps to be naturally organized. If you’re not, you can learn to be. “Most people aren’t naturally good golfers, but they can be taught how to do it,” says Lisa Kanarek, founder of WorkingNaked.com in Dallas. If you don’t put in some effort, you’ll have a tough time being successfully self-employed. Mark Miller, a self-employed marketing specialist who founded High Impact Marketing in Los Angeles, says he learned this the hard way. “I have never been a particularly organized or neat person in terms of keeping my things in order. Unfortunately, those traits did not translate well into the business world,” he says.
(Inc.) — Kene Turner understands the value of building a better business. After all, that’s his job. The mission of EpiLife is to help organizations achieve social responsibility by implementing special project-based initiatives within their communities. Before launching EpiLife, Kene worked for the YMCA of New York, where he taught youth entrepreneurial programs. EpiLife is based out of Turner’s home in New York City, and represents his desire to give back to the community that helped him in his own childhood. “When I was a teen I lost my mom to cancer,” he says. “I never knew my father. I was a child in transition. I had family, but not much. The ones that really helped me were members of the community…and it was that message that I want to implement into a venture or business.”
(Huffington Post) — Like so many other Americans who’ve turned to entrepreneuship, I decided to start a home business and start selling the pique assiette mosaic art I’d been designing as a hobby. The first move was to load up on supplies — getting more plates on eBay, colored grout, tile cement and gloves from Home Depot — as my plan was to include planters, candlestick holders and lamps, later adding cremation urns. Everyone had advice: ”You need a state tax I.D. number,” — my husband. ”I need a web site,” — me.
(Entrepreneur) — The small-business market has traditionally been populated by corner stores and family-owned businesses. For women with an entrepreneurial streak, small-business opportunities have always been abundant. It’s turning ideas into profitable enterprises that takes dedication and hard work. From stylists and bakers to bookkeepers and designers, women have played an important role in the small-business marketplace. Today, women continue to influence their communities and the business world as a whole by launching successful, home-based companies. The economic downturn has been a catalyst for home-business growth. Take Indianapolis-based writer Emily Suess, for example. “In my case, my home writing business began because I simply needed the money to make ends meet,” she says. “In tough economic times, people become increasingly resourceful about how they market their talents and skills.”