Tag Archives: expenses

Finances

How To Gauge Services You Should Be Paying For

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I’ve been self employed for almost 20 years. Over the course of time, I’ve tried doing it all. It’s something that all of us naturally start off doing, but if you’re still doing it after a couple of years it either means you don’t have a lot to do or you haven’t taken time to consider what you can get off your plate so you can concentrate on your business and other things.

There’s a process one should go through when making a determination as to whether or not you should keep doing what you do that’s not part of your career. Below are categories and things to think about that might help relieve you of some of your workload… even if it might cost you a bit of money.
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Business

What You Need To Know When Starting Your New Business

If I were to start a new business again, I would hope to first read the book Before You Quit Your Job by Robert Kiyosaki. It talks about the reality of what it takes to get into the proper mindset of self employment. It’s not all that easy for the majority of people. Over 95% of all new businesses shut down with 3 years of starting.

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We’ll let Kiyosaki handle the mindset part of this. What we’re going to touch upon are more tangible things you need to think about that will help you transition from what you were doing before to set yourself up properly for what you want to do now.
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Tax Preparation

Writing Off Home Office Expenses

Most small business owners working out of their home knows they can write off expenses for their home office. Still, not all that many of them do, and they might not know how it all works. We’re going to offer a few bits of information that might help you save money on your taxes.

The first thing you should know if that you have write offs based on the dimensions of your office. If your office is 10×10 as an example, you get to write of $5 per square foot, which in this case comes to $500. There’s a maximum level of 300 square feet, or $1,500. This is called the “simplified method”. A more technical method involved figuring out the percentage of your house you’re using for work, such as if you’re running a day care out of your home or you have a studio where you work on projects that you want to claim. If you have extra complications like that it’s easier to work with an accountant to help you figure it out properly.

The qualifications for doing this is that you do a substantial amount of work from your home office, but it’s rare that anyone will check to see how much work you’re doing from your home. It’s supposed to only be used for business, but the definitions would be hard to prove either way. For instance, if you allow your children to use your office to do their homework it’s technically not allowed. If you use the room for other purposes, such as a laundry room (although no one would do this; just an example) then technically you’re not allowed to claim the deduction unless you have some kind of defined border showing which part is office and which part is home use.

By the way, if you’re an employee who works from home, you get to use this deduction as well. The same space rules apple as above. Strangely enough, you also get to write off expenses as it applies to your mortgage or if you rent an apartment.

Did you know if you decided to paint your office or change the flooring exclusively in there, you get to write off some of the expenses for this (you get to write off painting in full). Also, if you have a dedicated phone line for your business that counts as a write off.

If you have to store any type of inventory in your home and that room is used exclusively for that purpose you get to write that off. However, you can also write off some expenses if you use a portion of a room like a basement, as long as your home is the only location of your business.

There are a lot more exemptions you might qualify for, but truthfully it’s probably best to talk to a tax professional or your accountant to help you calculate these things and keep yourself from going crazy trying to figure it all out.

Managing Money

5 Things To Know About Self Employment

Over the last 5 years, there have been a lot of people who have decided to work for themselves. Luckily a few have succeeded, but the rate of attrition is over 95% for those who didn’t make it 5 years. Self employment can be enjoyable, but it can also be hard. Like everything else, there are some things you should know about it before you start and once you’ve started. Here are 5 of those things.

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1. No matter what you’re good at, unless you already have clients willing to work with you your biggest issue isn’t going to be skill or product quality but marketing. This takes place before selling because you have to get the attention of those who could possibly hire you to work with them.
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Managing Money

Businesses Sometimes Must Spend Money

As much as we tell businesses and individuals that they need to budget their money in case something comes up, we need to also mention that if you’re a business you need to spend money from time to time for multiple reasons. It’s hard to spend money you don’t have, which is why we talk about budgeting, but it’s important for your business not to be too shy about buying a thing or two here and there.

The biggest reason of course is that you get to write off those expenses when it comes to taxes. This is why we say to keep receipts and track your mileage. As we stated in our previous post, you can still make good money while having your business considered as operating at a loss, and it’s all legal.

What should you be spending your money on? Here are 5 things to consider.

1. Business meals. Networking is the name of the game when it comes to most businesses and a major perk is that you get to write off your meals when you’re doing any sort of business. You get 50% off of any meals you pay for towards your taxes, which means you don’t have to meet potential clients at McDonalds. And if you’re traveling a lot, any meals you buy out of town count as business expenses.

2. Education. There isn’t a business in the world that stays stagnant. Yet the first thing businesses often do is stop training and learning when things get financially tough. That will put you behind your competitors and that’s never a good thing. You get to write off training seminars and materials.

3. Networking. Most businesses have some kind of professional group they can join to either learn more about their business or network with others who are in business for themselves. Chambers of Commerce in your local area are always something to consider, especially if you tend to spend most of your time alone, if only because it not only gives you a reason to get out of the house, but it’s tax deductible. Getting to know other professionals, even if they’re not in your field, is always a good business move.

4. Office equipment. Unless you’re a large business you’re probably not depreciating any of your office equipment, but that doesn’t mean you shouldn’t think about changing things from time to time, especially when you get to write it off. Computers, software, office furniture… sometimes you have to bite the bullet and buy something new, but knowing you get to write it off should lessen the blow somewhat.

5. Clothes or uniforms. There’s no rule that says you have to keep wearing the same thing over and over. Clothes and uniforms sometimes wear out, and since you get to write off the costs of these things it makes sense to update your wardrobe from time to time. You may not be able to write off that Syracuse University t-shirt, but if you buy a couple of dress shirts and maybe a pair of shoes… you’re good to go.