Start Your Home Based Business like a Business

Start you home based business like a real business from day one. If you treat it like a hobby it will pay you like a hobby. Start with the end in mind. This includes setting up proper accounting systems and records. This can be the “boring” part for many people but if you don’t do it properly it will come back to bite you.

In my days working as a CPA I used to do many Network Marketers tax returns. Many of these people were doing the business part time and had no separate records. It was a mess and took a lot of time for me to sort out.
accounting overload

Here are 11 tips for setting up correctly from day one:

1.    Treating your business like a business from day one means setting up a separate bank account for it. The business should have its own financial statements.

2.    If you use credit cards use a separate one for the business expenses.

3.    Set a budget and stay on top of it. Know what you are spending.

4.    Get receipts for everything. They all add up.

5.    A percentage of many of your home expenses will be tax deductible – get advice on this from the beginning.

6.    Discuss with your accountant the method you will use to claim for any motor vehicle expenses. It is important to set that up correctly.

7.    Keep your accounting records up to date. If bookkeeping is not your thing hire a bookkeeper. There is nothing worse than falling behind with your financial affairs as it is then a huge job to bring it up to date (and can be costly).

8.    Hire a good accountant. Find out the best structure for you from the beginning.

9.    Understand your taxation obligations and make sure you provide for them in your budget.

10.     Know what you are making, what your profit is and where you are financially.

11.    Cash is King! Cashflow is the lifeblood of your business.




coded by nessusSue J Price

{ 27 comments… read them below or add one }

Don Enck July 1, 2010 at 11:38 PM

Sue,
Great information for anybody that is in business. Proper bookkeeping and accounting can mean the difference between profit or loss and a sizable tax burden or not. I know in my case that the first few years staring out I was doing some of this on my own. I also know I made mistakes and missed things I shouldn’t have. As I’ve grown I’ve enlisted the services of the professionals you suggest. Really makes all the difference in the world and now I also sleep a little easier knowing that I don’t have the books to do hanging over my head.
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Sue July 2, 2010 at 11:36 AM

Hi Don
Your experience is very typical of anyone starting out in their own business. The most scary examples are people who do nothing though. Meaning they forget they need to do tax returns etc.
Thanks for your comment.
Sue

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Chris Bernardo July 2, 2010 at 3:27 AM

Sue,

Great tips you share on treating your Home Based Business just like that. Staying within budget you set is key, too many people throw money down the drain without setting one.
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Sue July 2, 2010 at 11:40 AM

Hi Chris
Thanks for the comment and I totally agree with you.
Cheers
Sue

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Linda G. Cox
Twitter:
July 2, 2010 at 3:51 AM

Sue~
I really like this post! I’m working on one of my own and I’m going to link it to this one! You write with a natural flow, easy to read and in an understandible way! Thank you!
~Linda
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Sue July 2, 2010 at 11:37 AM

Hi Linda
Thanks so much for the lovely feedback on my writing style. I tend to beat myself up as not being so good at it. But since I have been blogging I am feeling better about how I write.
Thanks also for saying you will link back to this one.
Sue

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Karla Setchel July 2, 2010 at 1:29 PM

This is great info Sue! Thanks :)
Karla Setchel
http://www.KarlaSetchel.com

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Darlene Davis
Twitter:
July 2, 2010 at 2:44 PM

Okay Sue,
You’ve hit me right where I needed to be goaded into bringing my accounting up to date. Sad to say that this year’s has not been entered in QuickBooks. There is no excuse for it, and your article has pushed me to the point where I’ll take this long weekend and bring it current. Great reminder—exactly what I needed. Thanks a bunch:)
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Sue July 2, 2010 at 3:21 PM

Hey Darlene
Good on you. It is such a job to do if you get too far behind and easy to keep it up to date. Years ago when I was in tax practice I let our own affairs get really behind and it was then a big job. It was a bit like that saying “the baker’s wife has no bread”.
Sounds like a great weekend job.
Of course you guys have Independence Day – it is our wedding anniversary on the 4th so we are going away for the weekend.
Have a good one.
Sue

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Belinda Cunningham July 5, 2010 at 5:42 PM

Sue,
I love all this good accounting advice!!!! You know the one I really need to get into is not so much from a financial perspective but mental – treat your business like a business. I think I still see it as a hobby and although I have applied all the tips you have given I need to work on the mental attitude and take myself more seriously.

Belinda
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Sue July 6, 2010 at 10:41 AM

Hi Belinda
I think the mental bit is perhaps the most difficult. I think it has to do with working from home. If we start a traditional business and are renting premises and paying overheads we immediately see it differently. I think the thing here is to see our home based businesses the same way.
I am sure you have heard the saying “treat it like a hobby and it will pay you like a hobby”.
i also think that Social Media is so new it can seem to me at times like I am just chatting with friends :-)
Sue

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Toni King July 7, 2010 at 9:23 PM

Hi Sue,
Some excellent advise here.
A well functioning admin is essential to having a smooth sailing business.
Thanks for sharing these valuable tips.
To Success & Abundance
Toni
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Sue July 8, 2010 at 10:31 AM

Thanks Toni
I agree it is essential and the part of business many people do not like.
Hope your week is going well.
Sue

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Louise Steiner
Twitter:
July 7, 2010 at 9:42 PM

Hi Sue
Thank you for sharing those valuable tips on getting organised. I pride myself on treating my business as a business, and yet I am guilty of not implementing all the points you have raised. So it is time for me to make some changes….thank you for bringing this to my attention.
Louise

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Sue July 8, 2010 at 10:33 AM

Hi Louise
For those of us in Australia it is a good time of year to take stock of our admin.
Regards
Sue

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Andrew Walker September 1, 2011 at 7:50 PM

Hi Sue. It’s a very nice share here. Yes, we have to know how to start it well, so that we can do it well too. Thanks for sharing this with us.
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Sue September 9, 2011 at 9:54 AM

Andrew it amazes me how many people do not start their home based business like it is a real business but rather treat it like a hobby.

Thanks for commenting and have a great day.

Sue

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Elizabeth February 10, 2012 at 10:03 AM

One thing that you I would have added to the article is that by keeping neat organised records like you have suggested, their accountant is less likely to hit them with a big bill. Sort through a mess takes *time*, and time is money.

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Sue February 11, 2012 at 3:22 PM

Thanks for adding the very valuable additional benefit Elizabeth. That is such a good one. In my days working in public accounting I can remember sorting out some awful messes! And yes the fees then add up.

Sue

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WEALTHY April 20, 2012 at 3:20 AM

Great work! Whether to supplement your income, or launch the business that will take you to the top, the work from home industry is rich with opportunity and possibilities. :)

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Sue April 21, 2012 at 3:10 PM

Thanks for your comment. Yes the home based business world offers many opportunities.

Sue

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Brook August 25, 2012 at 4:12 AM

Hi there would you mind stating which blog platform you’re working with? I’m planning to start my own blog
soon but I’m having a tough time deciding between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design seems different then most blogs and I’m looking for something completely unique.
P.S Sorry for getting off-topic but I had to ask!
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Sue Price August 25, 2012 at 1:40 PM

Hi Brook

I am using WordPress and use the Thesis premium theme.
Let me know if you have more questions.

Sue

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Blitz Accounting March 9, 2014 at 7:22 PM

Hello there, I’m a freelancer and been doing outsourcing job since long time, and just recently I’ve come up with a consideration to make job a home based business. To make it happen successfully whatever tips you’ve provided guided me a lot to sort out best business development ways. Thanks for the helpful information.

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Sue Price March 15, 2014 at 12:59 PM

I am happy that my information was helpful. Thanks for letting me know.

Sue

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Harry April 3, 2014 at 6:19 PM

You’re very right Sue that cash flow is king. Most businesses, especially home based ones tend to forget that along the way and sometimes end up spending on things that are not that important and hurting themselves at the start itself.
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Sue Price April 4, 2014 at 10:25 AM

Hi Harry

I think the thing is many home based businesses are started while people are still working and often treated more like a hobby. I agree with you spending on things that are not important is not so wise.

Thanks for finding my blog and for your comment.

Have a great day.

Sue

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