Part 2 of 5 On The Home Business Set-Up Guide – Tax Deduction
Part 2 of 5 On The Home Business Set-Up Guide
Alvin N
Dear Reader,
These articles will provide a step by step guide on how to start and run a home based business based on my experiences and other home business owners. This is part 2 in a series of 5 articles. They are written in a basic format and where possible main points are summarised in an attempt to be understood by all. I have tried to minimise the technical jargon as much as possible.
So lets jump right in and see what we need to know about starting and running a home based business.
Regards,
Alvin
http://www.parttimeincome.org
Legal Structures
The legal structure of your business is very important as it is a function of liabilities and tax deduction. The most common structures are:
Sole trader
Partnership
Company
Trust
Sole Trader
When you are a sole trader you are personally responsible and liable for the business and its activities. Commonly you may start out as a sole trader, and as you expand, you will need to seek out partners or investors. Your accountant is the best person to advise you if this is the best structure for your business.
Partnership
This arrangement is where you and your partner are liable for anything related to your business. It is a very good idea to get a solicitor to write up a partnership agreement to avoid disputes down the track.
Company
This is a legal entity liable for the debts it incurs and paying tax on income. Your accountant can help you set a company up, or you can buy one off the shelf, which may be more cost effective.
Trust
Depending on your personal circumstances, and the country you live in, trusts can be useful in business and estate planning. They can be quite complex, and again, your accountant is the best person to speak too.
Registering Your Business Name
You can operate a business under your own name or register a business name. Registration of a business name allows you to operate under that name.
Select a name for your business that describes to your customer what you do. A descriptive name promotes and advertises your business more effectively.
Licences And Permits
Depending on your municipality, you may need licences and permits. Do the right thing and check with your local council. Doing the right things now will save you a lot of unnecessary leg work later.
Insurance
Often overlooked, insurance is an important part of your risk management plan. There are two types of insurance: general insurance for loss/damage of assets and risk insurance which is your personal insurance cover.
Ensure your business insurance is separate to your personal insurance.
To establish the type and amount of insurance you need for your home based business, check with an insurance broker.
Managing Risk
You must have a risk management strategy for your business. Your SWOT Strengths, Weakness, Opportunities, Threats analysis from article one, will show what could expose your business to loss and what actions to take to reduce that loss.
Marketing
As a home business entrepreneur, you must understand what your customers want and give it to them. You must strive to have a service or product that meets and excels your customers needs and expectations. This is what makes them come back to buy from you, and this is how you grow your profit. Try and think like your customers and you will find they want:
Satisfaction
Value for money
Performance
Reliability
Presentation
Don
Love Of Reading Can Predict Your Online Success – Tax Deduction
Love Of Reading Can Predict Your Online Success
Rebecca Gilbert
When I was a very small child, I discovered that I had a love for reading. There was nothing better then spending an entire afternoon engrossed in a good novel. Reading for me was a pleasure, and magically transported me all over the world. My love of reading from an early age sharpened my vocabulary skills, my spelling, and my ability to learn, without me even realizing it.
Up until the time that I had decided to start a home based business on the internet, I didnt feel that my love of reading played a role towards increasing my finances...how wrong I was.
When I started a home business on the internet, I knew absolutely nothing about network marketing, advertising, building websites, search engine optimization, tax deductions, or the millions of other things needed to run a successful business from your home. And the affiliate program that I had signed up for provided me a mentor who was basically non-essential towards me being successful and moving up the ranks.
Although the program that I had signed up for provided all kinds of training material, I didnt find it to be in a logical step by step order and became very confused at where I was to begin and what my ultimate goal was to be.
Through much trial and error, I had given up on someone helping me and decided that if I was going to be successful, it was going to be up to me whether I succeeded or failed. At that point I returned to my roots and my love of reading. I started watching the people who were successful online and started reading their articles on how they got there. I started visiting various online and webmaster forums also. You would be surprised how much free information is out there if you just take the time to look for it and read. People who have made a fortune on the internet are only too happy to share their experience and knowledge with you.
From that point, I started immitating the steps that they had taken, and before long, I had created a successful online business of my own without any help from anyone besides the webmasters who had decided to post free information on their websites.
I recently started creating an easy to follow tutorial for my own affiliates and the response has been positively overwhelming, and has taken my business to new heights. http://www.101homebusiness.org/tutorial.html
If you have a love for reading, I can already predict your online success. Even without a mentor, you can create a successful business from your home by simply reading.
Best wishes for you future success and prosperity!
Sincerely,
Rebecca Gilbert
About The Author
Rebecca Gilbert has been a successful internet entrepreneur since July, 2002. Visit her at: http://www.101homebusiness.org for the best internet ventures available. For more articles by Rebecca, please visit: http://www.101homebusiness.Org/home_based_business_articles.html
Home-Based Business Owners Save Thousands on Their Taxes – Tax Deduction
Home-Based Business Owners Save Thousands on Their Taxes
Karin Workman
Do You Qualify For Home-Based Tax Deductions
New changes in the tax laws have made it easier than ever to claim Home Office Deductions and keep more of what you earn.
If your home is a place of business, many of your personal expenses can be deducted as business expenses resulting in lower taxes.
You may be thinking, "I have an Accountant/CPA/Tax Preparer/Tax Software who knows all about tax deductions so I dont have to know anything about them."
There are several reasons why that thinking could be costing you thousands of tax dollars. Some of those reasons are:
Most Accountants/CPAs/Tax Preparers do not "specialize" in Home-Based Businesses and do not keep up with the ever-changing laws pertaining to them.
You are ultimately responsible for knowing what you can and cannot deduct as business expenses. Why YOU are accountable to the IRS for your deductions, not the tax preparer.
If you pay someone to do your taxes you still need to know what you can deduct so that you can gather all relevant paperwork.
The most compelling reason: Getting the greatest benefit from your deductions.
To qualify for these deductions you must meet 2 conditions, which most, if not all, Internet Marketers meet.
Condition 1: Do you work as an Internet marketer out of your home on your "home computer
To qualify for deducting expenses related to using a workspace for business in your home, your home must be
Your "principal place of business " or you must use the space only to earn your business income.
Use it on a regular and ongoing basis to meet your clients, customers, or patients.
AND
Condition 2: Are you in business to make a profit
Whether you made a profit or not is immaterial. Even if you lost money but intended to make a profit these deductions are still available to you.
If you answered yes to both of these questions then you do own a Home-Based Business and as such you are qualified to deduct Business Assets, Direct and Indirect Expenses.
Business Assets include business equipment such as computer, fax machines, business furniture such as desk your dining room table for instance, desk chair and filing cabinets. These are 100% deductible if they are used "exclusively" for business purposes.
If these assets are not used "exclusively for business the amount you can deduct is proportionally related to how much these things are used in your business. It is possible to deduct a portion of your living room, sofa, DVD player etc if you meet certain conditions.
Direct Expenses are those directly related to conducting your business. This would include office supplies, telephone service,, cellular phones, ISP service, hosting, advertising etc. Direct expenses are generally 100% deductible.
Indirect Expenses include such things as rent on your home, utilities including heating and air conditioning and general repairs such as replacing a roof or repainting the exterior of your home.
These are authorized legal deductions passed into law specifically for Home-Based Businesses by congress.
If you use your home for business purposes, many of your personal expenses can legally be converted into deductible business expenses including utilities such as heat and electricity, cleaning materials, house insurance and property taxes.
Learn all you can about what you can deduct and you will consistently save thousands on your income tax each year.
"Im proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money." - Arthur Godfrey
About The Author
© 2004 By Karin Workman, A 30-year veteran Home-Based Business Owner who specializes in Tax Preparation for Home-Based Businesses. Karin also wrote the Hot New Ecourse: "Reap the Rewards!" Designed to help you save tax dollars and put more money into YOUR pocket. The course is Free so do yourself a favor and subscribe today. http://reaptherewards.businessoppsunlimited.com