Archive | January, 2016

Preparing Your Business for the New Year

Part of the preparation for the new year, of course is to close out the old year first. Especially for tax purposes you should be as organized as you can about everything. Even though taxes are not due until April the year actually ends December 31 and begins anew January 1. Don’t get caught off-guard with the April 15 deadline looming and then start scrambling around to find things.

pay the piper!

Particularly since we are talking about possible tax deductions that you can claim for your business expenses, that might make it seem a little bit more palatable to keep track of your expenditures as well as your income. You absolutely want to be able to document every penny you claim in case of an audit. They may be rare but they are always possible when you are self-employed and it will take you many years to live it down if you fail an audit.

It really helps to print out the previous year’s monthly bank statements and highlight any business expenses incurred, as well as payment processors such as Paypal.com and other places where your expenses are documented. Don’t have the denial attitude that you probably will never get audited and you will worry about it when and if it ever happens. You don’t have any idea when it will happen if it ever does and that is a real good reason you always want to be prepared.

You are responsible to keep your financial records for 7-years and you may as well have a folder for your taxes that can be prepared as part of filing your taxes each year. When you have your own business it really may be best to have your taxes done professionally as there are many forms that you need to fill out so that you get for example deductions for use of your home for business. You don’t want to miss anything in this regard just as you don’t want to miss reporting income that may come back to bite you someday.

Keep all paper receipts or printouts when you make purchases of equipment or office supplies, monthly affiliate program membership dues. and invoices for technical support, etc. These are all deductible for a business. It is actually a good idea to have a folder for tax receipts that you keep all year long and just drop things in it as they come in.

A lot of people don’t seem to know that you can file taxes for your business and claim deductions even if you have not made a profit yet. You can do this for a few years but then if you don’t make any money they will deem your business a ‘hobby’ and you won’t be able to deduct expenses anymore. (so one more reason to try as hard as you can to generate a profit with your business!)

p.s. be sure to check the IRS website for any changes or forms each year as well as your state’s tax website. Be sure your tax preparer is familiar with self-employment taxes.

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Keep it Real With Your New Year’s Resolutions

Just like your target goals, if you make them unrealistically high, you will do nothing but disappoint and discourage yourself when it is not possible to meet your expectations. This surely does not engender the motivation you need to develop a business. Keep your goals and resolutions doable. Think logically rather than to ‘shoot for the moon’.

keep it real!

There will be obstacles in any new endeavor and there will be times when you can’t see any results yet. This is just such a time when your awareness that you have not met your goals will start to weigh on you. You need to arm yourself with coping mechanisms like being realistic, that will allow you to stay positive no matter what it looks like.

One important thing to remember is it is not about one campaign or one weekend of working to promote your business. It is about being consistent over time. Although it is commendable that you took action you have to realize it is almost nothing in the grand scope of things. This is working hard vs hardly working. Take that one thing you did or those few days you expended some energy toward developing your business and use it as a plan for what you need to do all the time, maybe for a long time in order to see substantial results.

You can break your resolutions down into logical stages or levels just like your target goals. You can have short, medium and long-term goals that are achievable. To break this down into an easy example, you might aim to earn $100 a month in the short-term and plan to achieve $200 a month at 6-months in and plan on $400 in one-year. If you keep on extrapolating, (and working steadily) in a few years you will have a nice income from your home business.

This is definitely not to say everyone could progress at this level, but keep in mind it is proportionate to how much effort you can invest. Maybe if your level of action is lukewarm for example you should make your goals, $50, $100, $200 – Still doubling but at a lower amount. It’s all good. You are not competing with anybody but yourself.

Just remember, ‘nothing ventured, nothing gained’. You have to be really realistic about how much effort you are really making. It is sad yet comical to hear people whine and moan about having done so much work and not to see results yet. When you ask what they did it is almost nothing. This is sad because the person has magical thinking and expects something for nothing. It’s not logical to think you will get something for nothing. You should realize you need to be doing the work to build a business slowly and steadily over time. This is the way it is for most legitimate businesses in reality.

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Go to Play Not to Work

There is a new commercial on TV and it is actually from a technical college where someone earned a BS degree and is now able to repair electronic devices. Ho hum until he says, “I just love what I do and my wife says I am not going to work but going to play!” Now that stuck!

love what u do

That is actually a great way to look at things and is very relevant to the idea that we do best what we enjoy doing. This is especially important with a home business when you are starting out and have a full-time day job as well as any number of family and other responsibilities. Would somebody in their right mind add more to do if it either wasn’t necessary or wasn’t fun?

Being necessary never makes anything fun because we are forced to do it rather than choose to do it because we like it. If you can look at your home business start-up as a hobby and maybe by some stretch of the imagination can enjoy doing the research and etc. that is necessary to start a business, chances are we will be able to achieve something significant.

Of course if we really need the extra money we hope to earn from our new business, it can be a positive motivator. Many home business entrepreneurs start out with ‘extra’ money in mind but secretly plot to someday bring the business to the level that they can quit their day job and fire their boss. Don’t try this at home or at least don’t burn any bridges until you are really sure you have replaced your steady income from your day job.

It’s also a real good plan if you have reached somewhere near retirement age and have some benefits possibly even including social security. It is best to save everything as long as you can and accumulate as much as you can for the day when you are really too old to work. If you can save your benefits and live on what you earn from your home business that is ideal.

This may take a few different turns where for example at first it is the other way around and you support yourself on severance pay, early retirement, pension, 401K, savings, or whatever until you develop a business that is actually producing a steady income. Make this time as brief as possible because again you should be thinking in terms of saving as much as you can for the future when you may really be unable to work anymore but still need to live.

It is a very sad fact that statistically way less people than you would imagine have substantial savings for their retirement. Especially thanks to the last recession many that should be looking to retire are looking for part-time work for seniors. Another recession could happen at any minute so try to be prepared. It is a true fact that many people lost their entire life savings, retirement, real estate investments and everything else in the last recession just 8 years ago. Starting over at retirement age must be really heart-breaking as well as an extremely almost insurmountable uphill battle.

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