As more and more Americans battle with layoffs and a challenging economic environment, it is not uncommon to see a larger number of people going into business for themselves.
Whether it is the idea that they can make better money, set their own hours, or be their own boss, more Americans maybe than ever before are giving the idea of being an entrepreneur a shot.
In order to make a successful go of it, however, you need to put all your options on the table when it comes to making a good return on investment (ROI) for your business, trimming expenses wherever possible, and taking advantage of the various tax deductions that await you each spring.
Among the things to keep in mind if you’re thinking of starting (or are already running) your own small business are the following:
1. Take Advantage of Tax Deductions
For those that do a fair amount of freelance work, always make sure you save pertinent receipts from expenditures such as those related to your home office like a computer, printer, phone, paper supplies and mailing items, the electric bill, and mileage to cover events, and so on. It is important that business owners record all these items and others during the fiscal year so that they can deduct home office expenses come tax time.
The same holds true if you are attending work-related events like tradeshows, conferences, and networking events. Any travel expenses should definitely be tallied. Since being a contractor/business owner means your boss is not taking care of your required taxes on both the federal and state level, it is a good idea to set aside some funds for quarterly taxes.
2. Be Properly Insured
You would be amazed at those who do not realize the need for business and liability insurance. For example, say you operate a tax business out of your apartment and a client comes there in order for you to prepare their taxes. While on the property, they fall and injure themselves. Do you think the landlord has you covered? If you said yes, think again. You could end up finding yourself with a large legal bill should the individual take you to court for injuries they suffered while conducting business with you.
You also want to make sure you are covered if you are tasked with completing projects for clients like mailing out orders, etc. Shop around for a sound insurance policy that covers your business in more ways than one. In many cases, you can bundle your coverage by having your auto, health, renter’s or homeowners’ insurance with one company, saving money along the way.
Related Content: Are You at Risk?! When to Insure Your Home-Based Business
3. Stay on Top of Invoicing
With all that small business owners have to do in their daily lives, making sure they and their business get properly compensated may seem like a foregone conclusion, but you would be surprised how many business owners fall behind on invoicing their clients. A few missed payments here and there can add up to thousands of dollars not reaching their wallets.
Make sure you stay on top of billing your customers and do not hesitate to send out reminder notices should they not pay up by the bill’s due date. It is oftentimes a good idea to hire someone on the side or have a family member that is knowledgeable with accounting to handle such tasks.
Related Content: Invoicing: Are You Making it More Difficult Than it Needs to Be?
4. Frugality is Not the End of the World
Especially for those just starting out in the small business world, it’s important to only make the necessary purchases for your company until you have a steady stream of funds coming in. If you are working out of a home office or small retail space, you don’t need to go nuts on furniture and other items for your business. Remember, you are in business in the first place to make money, not to be giving it to someone else. Shop around for deals on office furniture, electronic items for the office, etc., so that you can get a good deal along with the needed equipment.
5. Know Exactly What You Are
Last but not least, remember that all small business owners begin as sole proprietorships. A sole proprietorship, in essence, has no boundaries between what belongs to the business and what is that of the individual. As your business hopefully takes off and gets bigger, the legal risk increases, too. It is wise to set up the business at the right time as a corporation in order to provide you legal protection in the event that legal issues arise.
Related Content: Four Reasons to Incorporate Your At-Home Business
These are just five tips that can help you, the small business owner, improve your chances of seeing your financial and business dreams come true.
Always keep in mind that owning and running your own business takes lots of time, effort, and vision. With the right financial plans in place, you can make it your business to be successful.
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Disclaimer: Unless otherwise specified, authors of The Work at Home Woman are not licensed legal, financial or medical professionals. The information on this website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. If you need specific legal advice, consult with an attorney who specializes in your subject matter and jurisdiction.
With 23 years of experience as a writer, Dave Thomas covers a wide array of topics from how to shop for a business phone to using social media to marketing your small business.