Monthly Archives: October 2013

The Financial Benefits of a Home Business

There are many benefits to starting a home business online.
Aside from the potential for earning extra income or even
replacing your salary eventually, you will really make your
home earn its own keep!

For tax purposes, while it does matter whether you have any
other source of income, you can reap the benefits either way
when you itemize your tax deductions. The Federal laws apply
to us all, but each state may also have various rules that
apply, so be sure to read about the tax laws each year to be
sure you are within the law and following directions. It is
very important to keep all of your receipts throughout the
year if you are going to claim any of your expenses as
deductions.

The differences for example are that if you have other
income the law is strict about having an actual office in
your home. You need a door on the room and the room cannot
be used for any other purpose. If your home business is
your only source of income, then they are more relaxed as
the potential for abuse is not so great. You still need the
space to be used only for your business, but you don’t need
a door.

It may also affect the percentage that you can deduct for
maintaining the home where you have the business. For
example you may be able to deduct a percentage based on the
square feet used for the business for your rent and
utilities, insurance, etc. Of course any money you spend
for equipment, supplies and advertising are all deductible
as self-employed business expenses. If you do not have
medical insurance from a job then you can deduct a
percentage of some of your costs for insurance, co-payments,
glasses, dental, etc as a self-employed individual. If you
have staff or consultants who help you to do anything for
your business, this is also deductible.

You will start to save money right off the bat if you are
working from home as your only source of income. Just add up
what you spend now for transportation to and from your
workplace, the gas, bridge, parking, etc., and the wear and
tear on your car. Factor in what you spend on going out to
lunch, being well-groomed (clothes, dry cleaning, shoes,
barber or beauty salon). Right there you are saving money
that can be used to invest in building your business.

Of course if you are really serious about starting your own
business, then it will be easy for you to sacrifice some
things if necessary, to make it happen. Namely you can ask
yourself if you would rather go out to eat dinner, buy a
movie or a new dress or use the money to create a new income
source, your own business.

Working online, everything you need to do to promote a
business is far faster and less expensive than doing it in
the ‘real’ world. For example if you were opening an
office or a store your expenses would be very high and that
is why the average time for a business to realize a profit
is 5-years. You are paying two rents – one at home and one
at the store or office. You have insurance x 2, you have
utilities x 2, inventory, decor, equipment, and possibly
staff.

As well, doing advertising physically – signage, flyers,
brochures, mailers, classified advertising, etc. is very
expensive. The Internet allows you to create and use all of
these faculties at very low cost. There is no postage, there
is no paper. Online you can also spend money but it is not
always necessary – for example you can pay copywriters or
designers to create web pages for you, but at the same time
you have options to use low-cost software that will do the
job, and even to learn how to do things for yourself for
free, although this is likely to cost you a lot of time for
the learning curve.

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