Benefits of Second Income Business
Husbands, wives, and single adults, with or without children work hard at their jobs for the income to cover the financial needs for themselves and their families. Managing that income is a challenging task. In a survey conducted several years ago people were asked, “How much extra money do you need each month to make ends meet or to have the things you need?” Interestingly enough the average answer was $50.00. Today the answer would probably be closer to $500. Nevertheless the problem is the same, people needed more money then and they are still stretching the dollars today to fit the family needs.
Folks end up finding second jobs or working as much overtime as possible. In today’s economy, those two solutions are harder to find. Perhaps you should consider another answer: begin a second income small business.
A small business will add value, income and savings as soon as you begin. Value by bringing a service to people, income from your work and savings because of the tax benefits and deductions you receive. You get to keep more of your income. For all you tax benefits and applications be sure to consult a tax professional.
Consider this; select a business or idea that you are passionate about or want to learn more about as it applies to your life. Develop a business plan; find a company that has a training program or system that incorporates compensation, education, mentoring, certification and licensing support.
Here are some second income business strategies that you can apply right away.
1. Always collect and keep receipts for business-related activities. This includes telephone, gas, mileage, cleaning supplies, toiletries, office supplies, janitorial equipment, office equipment, software, electronics, books, mail supplies, water & coffee service, business meals, training materials.
2. Convert a room in your home into a study or office. A portion of home-based business expenses can be written off. This includes heat, electricity, home maintenance, property taxes, mortgage interest, homeowners insurance, phone and internet services.
3. Hire your work-age children and pay them for work up to the exemptions allowed.
4. Organize a set of books for accounting purposes. If you don’t like this, use QuickBooks or Quicken to track accounts and other information. Consult with a bookkeeper or accountant, someone with an in-depth understanding of the IRS policy and procedures who can advise you on deductions or answer questions.
5. Open a separate checking account with Tax-ID or business name. Register your business. By registering in your name you circumvent some of the licensing requirements, i.e., filing a fictitious business name requires placing an ad in the news paper.
6. Set up a merchant account that accepts credit cards and ACH.
7. Develop a website and a plan for your marketing strategies. Your first marketing question is, “Who is my target market?” (Consider, age, income, needs, etc.) The second question is, “What is the best way to market my product to them?”
8. Set up a secure email account with an 800# and e-fax number.
9. Work with your tax professional to keep track of and carry back losses. If your business expenses exceed your income, losses can be carried back 3 years or carried forward 7 years towards profitability.
While not all of these strategies will work for every small business, this list made have triggered your thinking about starting and planning a second income business. In today’s complex employment environment, many families need a second income to get out of debt, pay for increasing needs of the family or save money for retirement. It is also a way to take advantage of the tax laws.
