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Make Working at Home Work for Your Finances
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For more information contact:
Kelly Rote (713) 394-3201 |
Release Date: September 15, 2004 |
Many adults in today’s work force are choosing to trade in their desks and voicemails for play dates and carpooling once they have children. However, many start to miss the additional income and adult interaction that traditional jobs bring before long. Not willing to go back to work full-time, some resolve to join the growing ranks of those who operate home-based businesses.
Home-based businesses are ideal for those seeking to balance careers and families. In addition to the income potential, entrepreneurs enjoy independence and flexibility, hoping to achieve some balance between work and home life.
Unfortunately, statistics show that most home-based businesses fail often due to poor financial planning. To make working from home work for you, the experts at Money Management International (MMI) suggest the following:
Don’t underestimate your expenses. Fortunately, more than 40 percent of all home-based businesses require less than $5,000 for startup. However, there are many other costs associated with running a business. In your spending plan, don’t forget expenses such as childcare, insurance, postage, gas, and dry cleaning.
Manage your income. Most self-employed workers have sporadic incomes. If your income varies from month-to-month, determine your average monthly income. Then, if you have a month where you earn more than average, put the extra amount into a savings fund to supplement less lucrative months.
Avoid relying on credit cards. Borrowing from a credit card can quickly lead to costly trouble. If you need to use a credit card for business expenses, open an account specifically for that purpose. If you need money to launch your business, consider a small business loan instead.
Keep tabs on your taxes. Some self-employed individuals may have to pay up to a 15 percent self-employment tax in addition to their regular income taxes. To avoid tax-time surprises, periodically review your taxes throughout the year. Don’t forget to make necessary quarterly tax payments to avoid under-withholding penalties.
Keep accurate records. Complete all of your paperwork on time, particularly if you are billing clients or customers. Many companies will take several weeks to process invoices. Keep copies of all receipts for tax time. Because networking is so important, keep business cards and contact information in an organized manner.
Finally, realize there is no need to reinvent the wheel. The Small Business Administration (SBA) estimates that home-based businesses make up half of US businesses; take advantage of their resources at www.sba.gov. For help in establishing a monthly budget, use the free financial calculators at www.moneymanagement.org.
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Money Management International, is a non-profit community service organization that provides confidential financial guidance, counseling and debt management assistance to consumers. MMI helps consumers trim their expenses, develop a workable budget, lower their debt payments and repay debts. Services are available by phone. To visit with an MMI counselor, call toll-free 1-800-762-2271- 24 hours a day, 7 days a week. Spanish speaking counselors are available. Consumers can also learn more by visiting the MMI home page at www.moneymanagement.org.
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