SueJPrice.com

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.

30 thoughts on “Start Your Home Based Business like a Business

  1. Don Enck

    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.
    Don Enck recently posted..A 10 Week Journey…Something Old…Something NewMy Profile

    1. Sue Post author

      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

  2. Linda G. Cox

    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
    Linda G. Cox recently posted..As you wish-My Profile

    1. Sue Post author

      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

  3. Darlene Davis

    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:)
    Darlene Davis recently posted..The Art of ProcrastinationMy Profile

  4. Sue Post author

    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

  5. Belinda Cunningham

    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
    Belinda Cunningham recently posted..Creating a link to an external URL in your menu bar of a wordpress blogMy Profile

    1. Sue Post author

      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

  6. Pingback: Business Mindset

    1. Sue Post author

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

  7. Louise Steiner

    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

  8. Sue Post author

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

    1. Sue Post author

      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

  9. Elizabeth

    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.

    1. Sue Post author

      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

  10. WEALTHY

    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. 🙂

    1. Sue Post author

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

      Sue

  11. Brook

    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!
    Brook recently posted..book keepersMy Profile

    1. Sue Price Post author

      Hi Brook

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

      Sue

  12. Blitz Accounting

    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.

    1. Sue Price Post author

      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

Wordpress SEO Plugin by SEOPressor