17 Tips to Setting Up A Home Based Business...

Here's a brief recap of the first 8 tips...

           *Decide what you are good at or what you like

         *Collect Information

         *Labor Regulations and Planning and Zoning Laws

         *Plan to Work and Work Your Plan

         *Select a Business Entity

         *Where in Your Home Will You Work

         *How Will You Fund Your Company

         *Choosing and Registering Your Business Name

 
STEP 9 PURCHASE ALL LICENSES AND PERMITS
City Hall or the County Tax Collector's Office will be a good place to start. Either place
can tell you where you will need to go to get a business license, and pay for permits. The
Chamber of Commerce is another good resource for getting information pertaining to
your city. Having your licenses early on is important. By completing this step, you will
know if the business you have chosen requires any additional considerations, such as
permits.
STEP 10 APPLY FOR A SALES AND USE TAX PERMIT
While you are at City Hall or the County Tax Collector's Office, inquire about obtaining
a sales and use tax permit. If you sell a product and/or service, there is a good chance that
you will need to charge and collect sales tax. If you are required to collect the tax and you
don't charge your clients for it, you may have to pay the tax out of your own pocket.
Know what you are getting into before you make a sale.
STEP 11 GET A BUSINESS IDENTIFICATION NUMBER
There are two possible paths to explore when deciding on an identifying number and it all
depends on if you will have employees, or not. Decide if you will be a one man business,or if you will hire others to help your business grow, and flourish. There is only so much
that one man can do. You will at some point either choose to subcontract duties, or hire
others to help you.
You are allowed to use your Social Security number on a sole proprietorship without
employees. If you choose to become another legal entity such as a corporation, you
should complete and file the IRS Form SS-4. This is the application for an employee
identification number. Once issued, keep this number handy. Make copies of it. You will
use this number periodically throughout the life of your business.
STEP 12 OPEN A BUSINESS CHECKING ACCOUNT
You should do a little research here. What are all of the service charges, and what can
they offer you? You can go online and search several national bank web sites and look
for the bank with the best of both worlds. In the event that you bounce a check, what will
happen? How much will your account be charged, and will they honor the check you
wrote? Can they give your checking account some kind of protection?
When you deposit a business check, find out how long they will hold your funds. It is no
fun knowing you have tens of thousands of dollars in your account, and you can't use any
of it for five to seven days. What is even worse is if you didn't realize this and wrote
thirty checks to neighborhood businesses that deposited your checks within forty-eight
hours.
The fees you could be hit with really rack up. If your bank charged you $25 for each bad
check you wrote, and the company you wrote the check to, charged you $35 or 10% of
the amount of the check, you could be crushed. You know the money is in your account
and so does your bank. The bank just feels like holding onto it, and then they have the
nerve to hit you with these fees...
Make sure you realize all of the hidden fees that can be assessed to your account.
Sometimes saving two dollars a month on the statement charge isn't worth foregoing
your canceled checks. You might be better off having the original cancelled checks every
month to help at tax time, and reconcile your books. Do the research and find the best
situation for yourself.
STEP 13 LEARN IRS GUIDELINES
You need to be familiar with the IRS guidelines. By knowing the rules before you play
the game, you can create a strategy that will help you win. What I mean by this, is that by
knowing how you are taxed, you can decide if spending a little money on equipment
before the end of the year will be worth it. It could help put you into a lower tax bracket,
thereby reducing the amount of tax you owe.You need to familiarize yourself with IRS Schedule SE and Schedule 1040 ES. These
two forms relate to Social Security and Self-Employment tax, and estimated tax for
individuals.
STEP 14 SET UP A RECORD-KEEPING SYSTEM
Your local office supply store will be able to outfit you with legal pads, notebooks with
three and four columns for entering item descriptions, per unit cost, total cost, and
account balances. Purchase a few 8 ½ x 11-inch three-ring binders. You should include
the three-ring dividers, labels, and a file cabinet. You will be able to utilize the file
cabinet more than you realize. Supplier's catalogs, customer files, banking records, legal
records, and research & development data must be stored in a place that is easy to find.
You should plan on purchasing a separate notebook to keep in your car. This should be
entitled "Auto Mileage Log". You can use this to record your beginning mileage, and
ending mileage from your business trips, and errands. The IRS allows .36 cents per mile
to be deducted as a business expense for year 2003, and 37.5 cents per mile in 2004.
You should consider getting the IRS Publication 583 that will help guide you through
record keeping requirements. A link to this website can be found at www.irs.gov. This
site also contains links to other important IRS Forms along with their descriptions. This
site is a great time saver when searching for tips and information about tax code.
STEP 15 SPEND MONEY ON YOUR BUSINESS
By the time you have reached this step you should have thought out your whole business
situation. You know your competition, you have a solid business plan, you know who
your customers are, and you know how much they will spend. After you have completed
all of the necessary planning, its go time.
The following list will help you cover many of the important items you could have to
ensure your business is operated in an efficient and professional manner:
Business Cards w/logo
Cell Phone
Copy Machine
Computer
Printer
Fax machine
Business software
Envelopes
Stamps
Answering Machine/Service
Office Furniture
Letterhead
Stationary
Brochures
Press Kit
STEP 16 ITEMIZE YOUR PHONE CALLS
You should have a business phone. You should not write off your phone unless it is your
dedicated business phone line. You may be able to deduct the business calls made from
your personal phone. Keep track of who you called, and why. Keeping these records with
your monthly statement will help justify the business expense/deduction to your CPA and
the IRS if need be.
STEP 17 PURCHASE SPECIALIZED INSURANCE
There are more self-employed professionals in the workplace today than ever before. The
one thing that many of these individual business owners overlook is the insurance. If you
are giving people life altering advice, or are managing their wealth, make sure you are
prepared.
You should strongly considering purchasing Directors insurance if you will be an officer
or director of your corporation, or any one else's. You should also consider Errors and
Omissions insurance if you provide advice, tax assistance, or financial planning services.
You don't want to make a mistake and end up with a lien placed against your home, and
a withholding from your paycheck to settle a judgment against you. Mistakes happen, so
be prepared in advance.
Once you begin your home based business, your life may never be the same. The
satisfaction you will have from your efforts can be extremely rewarding. You may find
that after a year or two, you have created a smooth running and efficient business,
requiring little attention. Just remember that you have to always improve your products to
stay on top.
Good luck and make these 17 steps work for you.
These tips were found online at www.financialfitnesstips.com