Original Article Written by Lynn Richardson for Global Grind…
I realize that everybody needs multiple streams of income, and at least one of those streams should be from a home-based business. The main reason is this: when you have a home-based business and properly document your expenses, you can Get Your Money Back when tax season arrives. In addition, America is no longer the industrial society it was 50 years ago, which allowed baby boomers to get good factory jobs and retire in 40 years; many jobs are now overseas and America is now a service society – you have to be in the business of providing a service that is in demand if you want to make it. The wealthiest people in the world (Oprah, Bill Gates, Warren Buffet) have many streams of income . . . that’s why they stay wealthy!
How do you get your money back and start your home-based business? Turn your hobby or gift or talent into a business. Start consulting, teaching, serving, or whatever you do. Most businesses do not require a license or a tax id number, but check with your local city and state commerce departments for registration and permit requirements. In order for your business to be recognized as a business and not a hobby by the IRS, you must have the INTENT on making a profit (you can have a loss and you do not have to make a profit, only the intent) and you must run your business like a business by keeping good records. KEEP ALL OF YOUR RECEIPTS. When you get a receipt, stop and write on the back: who was involved, what you discussed (if it was a dinner meeting), where you were, how much you spent (because receipts fade) and when the event took place. You don’t need a receipt for expenses under $75 (unless it’s for a hotel room) but I suggest you keep them all anyway. Put them in separate envelopes, each month, separated by meals, auto, travel, supplies, salaries, etc. Plus keep a small “tax diary” to record your daily business expenses and mileage — the IRS will rarely dispute anything in a “tax diary”.
Have you ever invited people to your home to eat and have a good time? Well, if you have a home-based business, it’s called a business dinner party! Have information about your business near the food. Take pictures of people looking at your business cards. Answer questions about your business and always ask for referrals for your business. When guest ring your doorbell, greet them by saying “How’s business?” Get it? I know you do! Now, you can write off what you spent on meals, invitations, and other items related to your dinner party. Whenever people come to my home to eat . . . IT’S ALWAYS BUSINESS. Remember my mantra, for me, everything is business. And the good thing is this, my business actually grows as a result, I get to interact with people and have a good time, AND I get my money back at tax time! Finally, you can use a separate debit card as a separate tool to track all of your business expenses – keeping these transactions separate from your personal expenses like rent and groceries.