Home Business

Myths of Work From Home Self Employement Summary

In this article, you took a moment to calculate the benefits and costs of leaving your current job and becoming your own employer. By objectively calculating the cost of regular employment, you have a list of realistic, actual costs you are currently incurring. By comparing these against the costs you will now need to assume as you start your home business, you will gain a realistic sense of the financial
advantages and disadvantages when you compare the two situations.

As you learned in this article, however, assessing the risks is a bit more difficult. How much did risk impact your employment? It’s tough to calculate that, particularly if you were “almost” laid off or “nearly” part of a merger. Likewise, business risks aren’t always easy to pin down. Putting a price tag on months and months of worry over what “almost” happened can be tough to do as well. The better suited you are to self-employment, the less risk such an undertaking represents.

Be sure to check out our other 3 posts to reference what we are talking about the myths of home business self employment.

Myths of Work From Home Self Employement Summary

Home Based Business Job Information

Work From Home Business Risks

Be back soon with more great information on the home business industry!

Over the past few days I have talked about how a home business start up is supposed to take place and how the preparation is needed.

Home Business Summary

At this point, your office is set up, your phone log is waiting to be filled, and you have probably
given notice. Now is the time, if you have any doubts or questions, to go back and reread any
section in the website, to rerun your budget figures, or to revisit an issue about which you solved yet
are still feeling uncertain.

If you are ready to go, you are probably wondering what you are going to do now. After all, you
have no clients – just a sparkling business plan and a new home office. Be sure that you set the alarm clock for your regular waking time. Even if the phone never rings tomorrow, you will need to put in a full day at your home office.

You can find the previous posts below!

How Long Should I Keep These Records?

The length of time for which you must maintain your business records varies by type:

• Client contact information. As long as a client is active, all contact information should be readily available. Records for clients who are not active, but with whom you are on good terms, should be kept, too – these contacts are excellent sources for mailings, and provide additional value should you choose to sell your business down the road.

Working files should be kept for at least several years – long enough to be sure that the service or product provided has been paid for and its value not called in to question. What are working files? They are the notes, drafts, papers, and other items you accumulate as you work on a project. They are not the finished project itself, but the preliminary drafts, discussions, and note that lead to the final version.

If there are legal, ethical, or other considerations in your profession, you might need to keep your working files longer. (For instance, attorneys, accountants, and insurance agents might be required, either by laws or the ethical canons of their profession, to maintain records for a set period of time. If you are in these businesses, you should know these regulations quite well.) Personal preference comes in to play, too. I know some writers who still have working notes from stories published 20 years ago – and I know other writers who toss all papers as soon as a story is published and they are paid.

Keeping working files for at least three to five years, however, is not a bad idea and will help your work at home business.

• Financial records should be kept as long as you own your business. Because it is relatively easy to maintain a lot of records on your computer, you can keep the basic information there while archiving physical paper files to a storage facility after several years. If the electronic files get too cumbersome, move them off your computer and onto a CD-ROM or DVD. It seems odd to keep years and years of financial records handy, but as you run your business, you might want to have these files readily accessible. Even if you move the records to some type of electronic storage each year, keep the records handy. The information stored in them is valuable to you, as you watch for year-to-year trends, and compare each year with prior years.

Setting Up Your Home Based Business Office Space

You have your record-keeping functions in order; now you’re ready to set up your office space. But before you connect all that shiny, new equipment from the last article, make sure that these items are in order:

• Is your electrical system up to the task? Are the outlets where they need to be? Are the phone jacks near the actual phone base? Is the wiring “iffy”? Then have it inspected and upgraded before proceeding.

• Is your office space dry and free from water leaks? Leaks can damage costly equipment, so address the problem right now.

• Give your home office that extra coat of paint if needed. Buy a new rug, hang your favorite painting, and make it comfortable. You will be spending a lot of time here. Make it comfortable!

• Your home office might have been the family junk room before you took it over – end that pattern! Furniture, wall hangings, or knickknacks that just don’t fit in other parts of the home are not allowed in your office.

Get your physical home business office as ready as you possibly can. You will want to start operating out of this office right now (if you haven’t been already).

Tracking Invoices and Work From Home Income

For most service-based work, you will need to send an invoice to your clients. You should number your invoices in sequential order, although what number you start with is up to you. Record each invoice number, as well as the date, description, marketing code, and amount of money invoiced. The description should briefly state who the invoice was sent to and what project or work it covers. (More detailed information will be on the invoice itself, as well as in email communications and contracts with the work from home client.)

You can use your invoice-tracking document to help track the source for each project you invoice. That way, you know what marketing methods have been the most successful in your business. Adding a “marketing code” to your invoice tracking document is one way to record this information. Because it is your business, you will develop your own codes. Some suggestions are as follows:

P for postcard mailings
G for groups you belong to
W for former co-workers or those from your former company
R for referrals from current or former clients
M for magazine ads

You might also want to make these codes more specific; for example, “P” for referrals from your PTA contacts, “1QP” for the first quarter postcard mailing, and so on. As I said, the system is really up to you. The goal is to keep track of what kinds of advertising and publicity work best for you so that after your first year, you can clearly see exactly where to put your marketing dollars and why.

If you sell products, you probably won’t send an invoice for each book, basket, or piece of jewelry sold. However, you should set up a separate sales record spreadsheet that keeps track of these amounts, as well as any sales tax you collect.

Must Have Hard Copy Work At Home Business Records

Electronic documents are easy to store and take up much less space. But as of this writing, there are still some things that should be kept on paper. Technically, you can scan every scrap of paper you might keep and store it electronically. However, you might prefer, instead, to keep the paper version for awhile, and only go the scanning route if you are certain the document is likely to be kept for archival purposes only.

Also, some legal documents can come into a gray area. If you signed a contract with a client, keep the paper copy. It’s much easier to prove the contract was actually signed. Here is a list of the paper records commonly maintained by most businesses:

1. Client contracts. These are the contracts you and your clients sign when you agree to perform services. If the agreements are email/letter exchanges only, be sure to print those out and keep them in the same place as your other contracts. Get any verbal agreements confirmed in writing, even if it is only an email or letter reiterating your conversation.

2. Working papers of current and past projects. These are the notes, research, drafts, and other items from each project. If you have a database of your work, these files should have the inventory number of the appropriate work.

3. All business-related receipts (even if only part of the expense is home business related). Credit card slips should be saved, even though you will also have a monthly statement. Expenses in which only part of it is a business expense (for example, your electric bill) should also be saved.

4. Informational files. These are files about groups you belong to, issues affecting your service or subject matter, and copies of all marketing materials.

5. Copies of tax returns, beginning with the year you start your business. (You should probably keep your returns from prior years, too, although for nonbusiness reasons. Check with your accountant or with the IRS website, www.irs.gov.) The same goes for state and local taxes.

6. Previous versions of your business plan. As your home business plan changes and grows, you will want to keep past copies. Print your business plan and file a hard copy once every six months, or just before and after making broad changes to it.

Setting Up Home Business Expense and Income Records

If you’ll be taking on all the tasks associated with owning and running a home business, you will need to keep systems as streamlined as possible. A little bit of effort now in organizing your expense and income records will save you days and days of frustration later. In addition to saving you tons of extra work and frustration at tax time, keeping your income and expenses relatively up-to-date will give you an always-current picture of how much money you have brought in and how much money is going out.

Before you begin, review the budgeting so that you are familiar with the type of home business expenses you will need to track. The easiest way to set up income and expenses is to base the categories within your records on those in Schedule C of your federal tax return. To obtain the most current Schedule C, go to irs.gov and download the most recent form. Print it, and read through the directions.

Recording Home Based Business Expenses

The percentage of home expenses will depend on how much of your home you actually use as your home office. Let’s say that you have a 1,000 square foot home, and of that, 250 square feet is used as your home office. Therefore, you use 25% of your home for a home office. That means 25% of your utilities and rent/mortgage will be deductible as a business expense.

If you plan to sell your home shortly, discuss the home expense deduction with your accountant or tax preparer. When the home is sold, you might have to repay some of this amount. At the end of the categories, you should have two numbers off to the side. One is labeled “Total Expenses,” and it will add up all the expense columns – simply create a formula that adds up all the expense column totals, not including the working number columns for entertainment and household home business expenses. This supplies you with the total amount you have spent to date this year. The other number is labeled, “Net Income This Year.” This is the result of taking the total of all “Income” columns and subtracting the “Total Expenses” number.

This number is the amount you have actually earned after deducting business expenses. Much of this spreadsheet is tax related; however, don’t forget to also keep track of other, tax-related information, including home mortgage interest, charitable deductions, and IRA contributions.

Watch tomorrow as we show you how to track your home based business invoices and record your work at home income.

Setting Up Business, Calendaring, and Contact Management Records

First, you’ll want to keep an electronic copy of your business plan. Remember, as your business grows and changes, you will be updating this regularly. Review this weekly at first, as your business starts, then monthly. After the first one to two months, reviewing your business plan every three to six months is a good idea.

You’ll also want to maintain an electronic calendar. There are many excellent calendaring programs, and they are usually combined with a contact database. (Lotus makes Lotus Organizer, which might come with your IBM PC. ACT! is also a popular calendar/contact management software.) The calendar has several purposes. Primarily, double booking people is a big no-no (but you already knew that).

Equally important, however, is that your calendar will help you budget your time. If you see that you already have several “To-Do’s” on a given day, you should not schedule a lengthy meeting. Get in the habit of putting anything that needs to be done on your calendar. Don’t forget to block out time for personal commitments, such as special family outings, doctor’s appointments, and school functions.

You should also build and maintain a contact database, holding your clients’ names, addresses, phone numbers, email addresses, and so on. Contact databases have several purposes as well. Primarily, the most important phone numbers and addresses are right where you need them – at your fingertips.

Second, you will be able to send out mass mailings directed toward a particular group – that is, rospects who never became clients; clients from this year who should receive a holiday gift; clients who also gave referrals; all contacts who are attorneys (for a mailing aimed directly at attorneys); and so on. Programs with preset fields include ACT! and Entourage. For more freedom and flexibility, try database programs, such as FileMaker Pro or Access.

You can incorporate a phone log in to your contact manager, or, if you prefer, create a spreadsheet.
Your phone log should be updated every time you pick up the phone to make or receive a call, as well as every time you receive a voicemail message.

Note that you will record the date and time of each call, its length in minutes, who you spoke to, the company, the phone number, and the message or (if you actually spoke to a live person) what you talked about. (You might not want to repeat all these details if your contact manager is up-to-date, but be sure that the person’s name and company name is covered regardless.) The numbers next to “minutes” and “hours” are the actual amount of time spent on the phone, to date. Gathering this information will help you gauge how much phone time is required for various projects.

The column heading “VMS” is a place for you to indicate the nature of the phone exchange – was the call incoming or outgoing? Were you talking to someone or leaving a message on her voicemail? This log serves several purposes. Primarily, you will have an automatic memory aid as to when you spoke to someone, what you promised or said, and what you have discussed with whom. Should you be involved in any dispute, this log will also help you document facts related to that dispute.

You also should have an electronic inventory of all of your writing, designs, marketing plans, ideas, or any other creative property. If copyright issues are involved, this work database will also serve as the information source regarding what you have licensed to whom and when. This database will vary, based on the kind of work you do.

Stating How Your Business Will Interact with and Retain Customers

You already know when your prospective customer most wants your services. How will he learn of you at the right time? If he wants to surf, and you offer lessons, will he receive a flyer as he arrives on the boardwalk? Will he hear your ad on the radio as he drives to or lays on the beach?

And how will you respond to customer contact? How will you work with them and follow up on their interest? What information will you provide over the phone? Do you send customers a brochure or price list? You should plan for a clear exchange of information, so your customers know how you will provide the services offered.

Describing Pricing Structure and Rates

I will talk more about pricing in the other sections of this website. But for now, be aware that you should know the going rate for the services you provide. If you are providing services to customers in more than one geographic area, be sure that you know the going rate for each location. Then, in this section of the business plan, you’ll need to list and describe the pricing structure you intend to use for your business and the going rate for similar businesses in your market.

I now hope you have a better understanding of how to create a home business marketing plan that will further help you achieve greater results and better understanding if you ever decide to work from home!

4. You can get wealthy by operating a home business, but you do not have to be wealthy already.

How much startup money you need depends on your acceptable risk level, the other resources you have available to you, and the type of business you start. Later, you will form your draft business plan – and the budget that goes with it. Because home businesses vary widely, so too do the funds required to start one. Most home businesses require the savings of at least two to six months of living expenses. Additional funding sources are available, too, for small-business startups, particularly if you are in a Redevelopment Zone.

Redevelopment Zones and Enterprise Zones are undeveloped or povertystricken areas the government is hoping to improve. The government will provide you with loans or other assistance in exchange for you establishing a business there. Other criteria are also sometimes required, such as hiring local help. Check with your local (city or county) government for more information about these zones in your area.

For possible funding sources beyond your local bank, check with your local Small Business Administration office (or go online at www.sba.gov). Enterprise Zones can be found by contacting your state or local government offices.

5. Results count. Paper gets recycled.

Learning comes in many, many forms. Experience in the real world, trying something new, independent reading and study, travel, volunteering, raising kids, and many other activities all offer opportunities for learning valuable skills. Don’t get me wrong – college degrees are very valuable. But running your own business is a highly pragmatic endeavor. For someone who holds any type of formal academic
diploma, the actual degree is usually not as important as what you have learned to get it.

In some professions, licensing is required, often in a process that includes coursework, experience, and a college degree. But if you are considering being an accountant, for example, you should already be aware of the requirements and possess any licensing you need. If you are in a field in which licensing is key, and you don’t have it, you might want to wait (or consider a line of business in which licensing is not required).

And if you have not had the opportunity to obtain a college degree, don’t sweat it. Did you know that Bill Gates dropped out of college? Dave Thomas, who started the Wendy’s fast food chain, never made it to high school. Some studies have shown that college graduates earn more, but these studies have,
overwhelmingly, focused on people who are employees, not business owners.

Work From Home Business To do list

- Determine whether you’re financially and psychologically ready to start a home business.

- Examine your skills in self-discipline, organization, and perseverance.

- Explore your abilities in customer-relations, creative thinking, and leadership.

- Think about your interest in ongoing professional growth and development.

- Determine where and how you can achieve improvements in your home business-readiness.

A home business is not a “one size fits all” venture.

Much of owning and operating a home business is personal and really all about you: who you are, what skills you bring, what you enjoy doing, and what your goals are. Deciding what business to own and operate and how to go about doing so, is a process as unique as your fingerprints. The business model your brother-inlaw swears is an infallible income magnet might require skills, experience, or chutzpah that you simply do not have.

Or you might simply be bored to tears at the thought of operating such a business – even if you could do it well. The business that makes you blissfully happy will drive another person crazy. (And that is a good thing because the person who would be driven crazy by your business is more willing to hire you to do the very task he hates!)

For this reason, your home business should be what makes you happy, what will motivate you to work long hours (besides avoiding bankruptcy), and what will make you happy to do day after day. The business you choose must be directly tied to you – not only to your skills and experience, but also to your own likes and dislikes, enjoyment, dreams and goals. Whether a particular business is suitable for you can only be answered by you.

2. Home businesses can survive with some minor mistakes at the beginning – but will certainly fail if owners expect the business to “run itself.”

Home business owners work hard, day after day. Depending on whether your home business is a full- or part-time venture, you can expect it to take more than 40 hours per week to run, and it could consume every spare moment you have. This is especially true during the first three years.

Yes, you will be able to attend your children’s soccer games on a Tuesday afternoon, or attend a matinee on the occasional Wednesday – but that will probably mean working more hours some other day. Do not confuse a flexible schedule with the lack of a schedule. In this sense, owning your home business is much like driving a car. There are a few big mistakes that might hinder your journey (such as not having a full gas tank, or, in the case of a business, not being fully funded to meet business and living expenses). But when you’re on the road, you can’t stop looking out the windshield! In fact, as you drive, you are constantly adjusting your car’s speed, direction, and position on the road to keep it heading in the right direction and moving safely through changing road and traffic conditions.
Owning your business is just like that.

After you get the business moving, you will need to adjust and revise a host of issues, from pricing and marketing to customer expectations to file storage. And, everything changes. Your customers change. The economy changes. Seasons change. Technology introduces changes to your particular industry or market sector. Just as you should never take your eyes off the road, you should never take your eyes off your business.