Look Like A Business
by Kay Green,
Copyright 2003 - 2013
When beginning a home business it is very important that it look like a business not a hobby. A wise person told me when I started out to make sure I looked like a business if I am going to be a business. What do other legitimate businesses do?
IRS allows deductions for expenses for a business but may not for a hobby. IRS usually allows deductions for expenses for a business as long as you make a profit 3 of the first 5 years. The big key is to actively be attempting to create sales/profit for your business.
To look like a business you need the following:
1. Register your business name with your state. This is sometimes called a DBA (Doing Business As). This adds credibility and many banks require this. Most states also require a Sales Tax ID number so you can correctly collect and pay sales tax.
2. Check to see if your city/county/state requires a business license
for home based businesses. Most do now. And it can hurt you to ignore this
3. A separate business checking account in the business name. All income needs to be deposited into that account with a note in the register what the income came from (and a matching invoice for that income). All expenses need to come out of this checking account (or a separate business credit card) using notes in the register explaining all expenses. IRS wants to see a clear separation of household money and business money. Take personal draws from this account when you have acquired profits.
4. A separate credit card / debit card in the business name that is just used for business. Use the business checking account to pay this bill as well.
5. An EIN (employer identification number from the IRS). This is a good idea even with no employees. If gives you a legitimate tax ID number to use instead of giving your personal social security number to your vendors.
6. A merchant account so you can accept credit cards for sales. Merchant Accounts accept Visa and Master Card with additional fees for Discover and American Express. Setting up a business account with Paypal is also advisable. Studies have shown that customers will spend 36% more using a credit card than cash.
7. Business Cards to give to potential customers and contacts.
8. Bookkeeping records pulling in all income and expenses from your business checking account, business credit card and cash (I hope you never pay cash for business expenses). QuickBooks, Quicken, and Microsoft Money all work well for small home businesses. If you have multiple products I suggest QuickBooks for better record keeping. Monthly receipts and invoices to back up all expenses and income.
9. A mileage log of every where you go and every mile that is connected to business and every mile that is connected to volunteer activities.
10. I suggest reading the book Tax Savvy for the Small Business and Tax Savvy Guide. They are very valuable in telling you what can be deducted in your business.
RECOMMENDED: Are you looking for a work from home company you can trust. I will not endorse a company that I have not used and participated in. I am happy to recommend the Send out Card Company! In fact. I joined them. If you would like to see what they are about go to https://www.sendoutcards.com/mypreciouskid/ and watch a 3 minute video and then send out 2 cards on me. Then go to https://www.sendoutcards.biz/mypreciouskid/ and watch the video on the opportunity! Let let me know if I can answer your questions. In fact this business is a perfect addition to another business. Use it to contact your customers/clients.
Articles written by Kay Green, Child Safety Expert, and Christian mom to Melissa 30 (married to Matthew), Jordan 27 (married to Katie), Allison 25, Haley 12. Kay and Russell, her husband of 33 years live in rural Oregon.
Kay's first granddaughter Madison
Kay was born December 2006. Twin grandsons Micah & Mason
May 2009. Granddaughter Emma Kate was born in September 2010.
http://www.MyPreciousKid.com Child Safety, Cloth Diaper & Baby Gear Store
http://www.KayGreen.com Author and Family Site
http://www.BuildItRightBusiness.com Helping others build businesses
Kay has also joined Send Out Cards - A Greeting Card Business
COPYRIGHT 2000-2013 My Precious Kid, Kay Green.
All rights reserved. Reprinting is only with this author's box and copyright intact.
More ARTICLES about business, parenting, adoption, homeschool and more by Kay Green!