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29 Replies Latest reply: Jan 27, 2009 3:04 PM by SBC Team RSS

Event: Starting your home-based business

SBC Team Master
Currently Being Moderated
Interested in making extra money, escaping the corporate rat race, or just taking more pleasure out of working from home? Small business guru Barbara Weltman shares best practices in starting your home-based business.

A tax and business attorney since 1977, Barbara Weltman has the knowledge entrepreneurs need to get ahead and stay ahead. She is a respected corporate speaker, contributing editor, author of more than a dozen books from major publishers, sought-after expert media source, newsletter publisher and more than ever a trusted advocate for small business owners. Check out http://www.BarbaraWeltman.com for more information.

Post your question for Barbara here and then check back on January 27th at 2:00PM EST, or any time thereafter for her reply. You can post a question any time during the event hour. However, she may not have a chance to answer all of them.

Ask Barbara questions like:

 


  • What additional expenses should I have to take into account? (e.g. health insurance)
  • What savings can I immediately see when working from home?
  • If I have more than one great idea for a home-based business, how do I choose which one to go with?
  • How do I separate business from my personal life?

Prior to relying on any legal, tax or financial advice or recommendations provided herein, you are advised to consult with your attorney, financial adviser and/or tax professional to verify the information provided and to determine the applicability of any federal, state or industry specific laws and/or regulations that may apply to you. Bank of America or Barbara Weltman shall have no liability for legal, investment, finance and/or tax decisions based on the information provided.
  • Re: Event January 27: Best practices for starting your home-base
    BlueRidgeJR Newbie
    Currently Being Moderated

    Having this type of forum is terrific for a home-based business owner! Right now, I'm still working full-time and working from home on a part-time basis; obviously time is as precious for me as it is for all entreprenuers.
    I'm interested in learning the best techniques for keeping personal and business accounts separate and the organizational tips.

    Thanks!
    • Re: Event January 27: Best practices for starting your home-base
      BigIdeas4Biz Newbie
      Currently Being Moderated

      Businesses are required to keep books and records. It is essential to separate your business from your personal finances so you'll be able to complete your business tax return and take full advantage of write-offs to which you are entitled. Good recordkeeping will also help you determine profitability, stay on top of cash flow, and maintain a handle on your finances.

       

      Here are some ways to optimize your business finances:

      • Keep a separate business bank account and use a business credit card. Do not use business money to pay for personal expenses.
      • Use accounting software or online solutions to keep track of your income and expenses. For example, accounting products from QuickBooks and Microsoft can get you up and running in minutes. Back-up your financial data to keep it safe (you don't need to back up if you use an online solution that stores your data at the solution's site).
      • Set up a file system to store business receipts need for your taxes.
  • Re: Event January 27: Starting your home-based business
    boconiva Newbie
    Currently Being Moderated
    What is the best way to advertise your business. My sister and I have started a business, but need idea's for advertising our service. This service is based on performance not on cost. Thanking you in advance, for any help you may give us!
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated

      Businesses, whether home-based or not, need to let potential customers know they exist. The challenge is to do this on a budget, especially in these tough times. Here are some suggestions:

      • Have your own website where you can publicize your business (whether or not you sell products or services there).
      • Network, network, network. Build relationships with other business owners to maximize word-of-mouth advertising.
      • E-mail marketing (permission-based contact with potential and existing customers through newsletters, etc.).
      • Seek referrals from existing clients.
      • Brand your business-with a name, a logo (where important). Use this on business cards, letterhead, brochures, and other marketing materials.
      • Participate in social networking. Online communities such as SmallBusinessOnlineCommunity can help you spread the word.
  • Re: Event January 27: Starting your home-based business
    tashmaxx Newbie
    Currently Being Moderated
    My husband and I are wanting to start a home based business as Process Servers(Legal Document Assistants). We plan on running the business out of our home as long as possible and once we have enough clientele we may then get office space. Do you have any advice at all about running this type of business?
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      As with any business idea, it's a good idea to write a business plan. This will serve as a roadmap for your activities. Writing the plan helps you determine whether your business idea is viable as well as think through who is responsible for doing what in the business, what the start-up and ongoing costs will be, how you'll market your business, and other key points. The plan doesn't have to be a best-seller to be an effective tool for you. There are business plan tools available for free from the SBA at www.sba.gov and click on "Small Business Planner."
  • Re: Event January 27: Starting your home-based business
    solDesigns Newbie
    Currently Being Moderated
    Hi Barbara,

    I just started working full-time from home and wanted to find out if there was a list available of items that are tax deductible for a home-based business. What kind of things can we claim?

    Also, when working from home, what are your recommendations in terms of setting up a corporation, and how will that affect my personal taxes at the end of the year?

    If you have any tips for helping with keeping track of your expenses, it owuld be greatly appreciated!

    Thanks,
    Sol
    Owner
    SolDesigns.net
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Being in business, you can deduct ordinary and necessary business expenses (although tax rules place a number of limitations and conditions on write-offs). This includes a home-office deduction for the personal expenses related to the portion of your home used for business (if you qualify for the home office deduction). You can find the most complete listing in my book, J.L. Lasser's Small Business Taxes 2009. You can also find help in IRS Publications 335, Tax Guide for Small Business (for Schedule C filers), 535, Business Expenses, and 587, Business Use of Your Home, which are available at www.irs.gov.
  • Re: Event January 27: Starting your home-based business
    revvin Newbie
    Currently Being Moderated
    How can I access gainfull procurement opportunities in my geographical region that pertain to my court reporting industry? CART Services, Closed Captioning, etc.
  • Re: Event January 27: Starting your home-based business
    KyAnnadesigns Newbie
    Currently Being Moderated
    Hi Barbara!
    + I currently run a home-business, am a mother of two, plus a foster child currently, and I am a full time student who struggles greatly with time management, organization & sticking with one main idea....... So the questions I have are............+

    A) what suggestions might you have for someone like me who really struggles with staying focused and on track?
    B) What organizational tips & tools might you suggest for running a home-based business with very little space & who can never find anything? &
    C) How do I figure out which direction to take my business when I have too many ideas, & too much I want to do!

    Thanks so much, I can't wait to hear what wonderful advice you have for us!

    Rachael Johnson
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      A small business owner needs to stay focused in order to deal with the myriad of responsibilities that arise everyday. One way to help complete tasks on time is to schedule them and refer to your schedule throughout the day. Use a BlackBerry, Outlook Express, or any other scheduling tool which allows you to easily input your activities and receive reminders.
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Being organized is important to running a home-based business. You need to find space in your home that can accommodate your business activities. You can't squeeze a size 10 foot into a size 5 shoe, so if your home doesn't have the room, your business may not be workable there. However, there are many space-saving items to help you fit is limited space. For instance, consider getting an all-in-one machine to print, copy and fax rather than separate machines. Check out organizers and space savers at office supply companies, such as Staples.
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Business owners can't fly off in a million directions; it wastes time and money. To be more focused and weed out false starts in the wrong direction, it can be helpful to use an advisory board, a group of business experts who can act as a sounding board for your ideas as well as a resource providing their own suggestions for business direction and growth. If you go it alone, you'll need to evaluate every idea before investing time and money in it. Decide whether it makes business sense and it not just a neat idea that you might enjoy.
  • Re: Event January 27: Starting your home-based business
    Interpreter Newbie
    Currently Being Moderated
    Hi Barbara,

    Thank you in advance for reading. When I prepare to file this year, what in my home office can I write off? Is there a point where small business owners go overboard with write offs and sets off red flags with the IRS?

    Interpreter
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      No one knows for sure because the IRS doesn't say. However, if you meet the requirements for claiming a home office deduction (e.g., it is your principal place of business and you use the space regularly and exclusively for business) and you have good records of the expenses, then even if you are questioned, you'll win. It's a good idea to take a photo of your home office to show that it's used for business and isn't just the kitchen table.
  • Re: Event January 27: Starting your home-based business
    Elite1 Novice
    Currently Being Moderated
    Barbara,

    Could you outline some of the advantages/disadvantages of the various legal entities for those considering a new business start-up or a change in business structure. There seem to be a lot of posts in this forum regarding which entity to choose as well as the differences in taxation for them. Perhaps if you provide a foundation, these individuals will be able to prepare for their meeting with their accountant and attorney. Thank you.

    Tanya
    Elite Financial Services, LLC
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      There are several types of business entities. The most common are sole proprietorship, partnership, limited liability company (LLC), S corporation, and C (regular) corporation. The decision on which entity to use depends on several factors. For example, if you want personal liability protection so business creditors can't touch your home and other personal assets, you'll need to use an LLC or a corporation (C or S). The number of owners may also impact your decision (you can't be a partnership if you're the only owner). Other factors that come into play include state income tax treatment, audit risk (the IRS audits certain entities more than others), and access to certain fringe benefits. Most home-based businesses are sole proprietorships while LLCs are the most popular choice for new businesses in general; these may not be the best choice for you.
  • Re: Event January 27: Starting your home-based business
    SBC Team Master
    Currently Being Moderated

    Community,

     

    Please join me in welcoming Barbara to the SBOC. She will be posting as BigIdeas4Biz.

    Barbara, take it away whenever you're read!

    The SBOC Team
  • Re: Event January 27: Starting your home-based business
    SBC Team Master
    Currently Being Moderated
    Community,

    Remember to refresh your browsers often to view Barbara's latest responses.

    Other than that, have fun and get those questions in!

    The SBOC Team
  • Re: Event January 27: Starting your home-based business
    SBC Team Master
    Currently Being Moderated
    We're half way through the event with Barbara. Don't be shy, ask a question about starting YOUR home-based business!
  • Re: Event January 27: Starting your home-based business
    BigIdeas4Biz Newbie
    Currently Being Moderated

    Keep it legal
    Before starting a home-based business, make sure you're allowed to operate from home. It depends, of course, on the type of work you'll be doing. For a freelancer writer, there's no problem; someone detailing cars in their front yard may have issues with the town. Check local zoning rules to be certain. If you live in a community, check homeowner's association rules. Also check rules on posting business signs (there may be limits on size, location, etc.).
  • Re: Event January 27: Starting your home-based business
    BigIdeas4Biz Newbie
    Currently Being Moderated

    Protect your home
    If your business computer, inventory or supplies are destroyed during a fire or other disaster in your home, are you protected? If a customer to your home slips on the steps and is injured, do you have liability protection for this? Check with your homeowner's policy; usually business property isn't covered or there are strict limitations, and business guests may not be covered either. Talk with your insurance agent. You may be able to add onto your current homeowner's policy (for only a few dollars) to cover your business. Or you may want to purchase a business owners policy (BOP) to maximize your coverage.
  • Re: Event January 27: Starting your home-based business
    Tori Novice
    Currently Being Moderated
    Hi Barbara,

    Thanks for making your second appearance on the SBOC! I was hoping you could answer some of the questions in the original post.

    What additional expenses should I have to take into account? (e.g. health insurance) What savings can I immediately see when working from home? If I have more than one great idea for a home-based business, how do I choose which one to go with? How do I separate business from my personal life?

    ~Tori
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated

      When you start a business from home, be sure to have health insurance coverage. Many people who start home-based businesses do so after they leave a job and continue their coverage through COBRA. This only lasts 18 months and can be costly, so don't automatically sign up for COBRA before looking into other options. Check on availability of coverage through a spouse or domestic partner, as well as through local chambers of commerce and business or professional associations. Also talk with an insurance agent who can help you find coverage. Consider, for example, a health savings account (HSA), which combines a high-deductible (low cost) health plan with an IRA-like savings account. The cost of the insurance as well as contributions to the HSA (within the limits allowed by law) are fully tax deductible.
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Operating from home can save you money to start up and run your business. You save on rent and utilities; you're already paying for your space (and you get a start write-off in the form of a home office deduction). You save on commuting costs. You may also save on work clothes, lunch expenses, and other items you needed to pay for when you worked outside the home.
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Separating your personal life from your business life within the confines of your home is challenging. There's always temptation to attend to a personal chore during business hours (working too little) or to visit the home office 24/7. To be successful when working from home, you need to find a balance. It's helpful to set regular hours (whatever works for you) and stick with it. A separate phone line for business is a good idea. And educate your family that you aren't to be disturbed while working (this is easier said than done).
  • Re: Event January 27: Starting your home-based business
    Vince Novice
    Currently Being Moderated
    Barbara,

    It seems as though you are very well-rounded when it comes to small business topics. How do you stay so well-informed on the subjects? Do you subscribe to news feeds? Belong to business associations or organizations?

    Thanks Vince
    • Re: Event January 27: Starting your home-based business
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Thanks for your kind words. It's a daily chore to stay up on small business information.. Many of my resources are from government agencies, like the IRS and Department of Labor. I also belong to several small business advocacy groups that send out emails and other information. And, because I publish an e-newsletter, Big Ideas for Small Business, and an Idea of the Day, public relations firms and companies send me information on new products and developments. I translate what I've learned into information that I publish. You can subscribe for free to my information at www.barbaraweltman.com.
  • Re: Event January 27: Starting your home-based business
    SBC Team Master
    Currently Being Moderated
    Barbara,
    On behalf of the Community, we truly appreciate your time today as well as your professional responses.

     

    Community,
    Although our time with Barbara has concluded, feel free to discuss today's event amongst yourselves and feel free to leverage Barbara's responses in your small business. And don't forget, for more information about Barbara, please visit http://www.barbaraweltman.com

    Thanks again!
    The SBOC Team

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