What You Gain when Start a Business From Home
Posted by : Premraj | Posted on : Monday, September 26, 2016
Are you one of the millions of people who want to quit the rat race and manifest your own destiny? Many find fulfillment and a sense of personal power by starting their own business from home. There are many benefits to running a home-based business, and here we focus on the financial angles.
Benefits of Home-Based Business
One of the biggest factors that inhibit startups is getting financing capital. With a home-based business, you’ll not only reduce your initial financial needs, you can even leverage some of your current expenses to lower your liabilities in other ways. You’ll also have the advantage of eliminating the overhead costs of renting or buying a commercial space, time-consuming commutes and some of the financial risks of starting your own company.
You can use a portion of the money you pay each month on your rent or mortgage as a business expense. The same goes for your energy bills and any equipment like computers and phones that you use to conduct business; many of these deductions are not available if you work for a company. There are specific criteria involved in each deduction, and you should check with a licensed CPA for further details.
- Your home office should be used exclusively to conduct business. The IRS has done away with percentages, so you can now deduct $5.00 for every square foot of office space under 300 square feet. Redecorating, repairs and furnishing your home office are also legitimate deductions as long as the work is performed only on your home office. Credits for utilities, phone lines and Internet connections are calculated on a percentage basis.
- Computers, phones, printers and related supplies are only 100% deductible if your use them exclusively for your business. It’s wise to buy separate devices for personal and business use.
- Travel to conventions or to meet with out-of-town clients is deductible. You can write-off 100% of your airfares, car rental fees and accommodations. Meals are worth a 50% deduction.
- If you purchase health insurance as the sole owner of a business, the monthly payments are only deductible of your ineligible for coverage through a spouse’s employee or military health benefits.
- You can also deduct a percentage of the cost of furthering your education or getting training you need to run your business as long as that education or training began after you established your business.
Money management, budgeting and retirement planning are as important in business as they are in running your household. You must be careful to keep your business budget and household needs separate for the sake of transparency and efficiency, and it will help your accountant at tax time. Keep receipts for any expenses related to your business, including office supplies and equipment – which are 100% deductible – as well as a portion of your car insurance and the cost of gas if you use your vehicle to make deliveries or meet with clients locally. You should also make sure to open one of the many available retirement plans for small or home-based business owners, which are tax deferred in many cases.
Technical and Money Management Aids
Software and services like those provided by invoice factoring companies offer innovative financing solutions that take some of the risk out of borrowing. Using budgeting software and financial management resources also helps you track spending easily and identify areas of concern before they become a problem. There are other software programs that allow you to input all of your expenses from gas to utilities, and it will figure the exact proportion of those costs that are deductible. Many of these programs also identify trends and areas of inefficiency and make suggestions on how to reduce liabilities and costs.
Running a business from home can be challenging and rewarding, but it’s easier if you keep your business and home life separate. However, being your own boss requires a balanced mix passion and planning. It will require hard work and long hours, but with access to a wealth of small business resources and knowledge of intelligent financial management, you can become the master of your own destiny. There’s no time like the present, so dream big and start today.