3 Important Facts Re: Home-based business

Three essentials can make a big difference for your home-based startup business.

Outsource everything but the core functions in your home-based business

You started your a home-based business because you wanted to do something unique, and something you enjoy.  Therefore, you need to keep your eye on this and continually clear the way for you and your company to focus on this “core competency” – just like larger companies do.

“Small businesses have many different responsibilities that you should outsource whatever you can so that you can make the most money doing what you do best.”

For example,  if you came up with a product to manufacture, and the key to your business success lies in sales and marketing, farm out production. If you’re a consultant whose magic lies in your vision and your interaction with clients, outsource your accounting and other “back-office” functions.

Fully Leverage the Internet

Taking advantage of the Internet can help you operate your home-based business with far more efficiency.

In fact, the biggest challenge for home-based operators is to keep up with the many new ways they can make the Internet work for them. These days home-based businesses can send out e-mail blasts to their customer database – announcing a promotion or a new product – just as easily as any huge company.

Take Advantage of Home-based Business Tax Breaks

One of the major advantages of owning your own home business is the tax benefit that you receive.  The federal government has arranged the tax code to provide incentives to entrepreneurs to encourage the growth of new businesses.  It is important to understand these incentives in order to take full advantage of them.  The following information is an overview, and not a comprehensive tax course.  Therefore, you should seek the advice of a competent and professional tax advisor.

Business Use of Your Home

The IRS has strict rules regarding deductibility of part of your home expense for business purposes, but if you meet the requirements, you can save substantially at tax time. The tests to determine the deductibility of part of your home as a business are as follows:

You may take a limited deduction for business use of your home if you use part of your home or a structure at the same location exclusively and regularly:

  • As the principal place of business for any trade or business in which you engage;
  • As a place to meet or deal with patients, clients, or customers in the nor mal course of your trade or business; or
  • In connection with your trade or business, if you are using a separate structure that is not attached to your house or residence.

Exclusive use means only for business.  If you use part of your home as your business office and also for personal purposes, you do not meet the exclusive use test. Regular use means on a continuing basis.  Occasional or incidental business use of part of your home does not meet the regular use test, although that part is used for no other purpose.

You must be doing work in your home for the purposes of making a profit, rather than as a hobby.  If you do not actually make a profit during a certain year, you may qualify if the business is active.  (A passive financial management activity such as investing in real estate or stocks would not qualify).  Your home must be your principle place of business and/or the place where you meet with clients and customers and/or the place where you store inventory for resale at wholesale or retail.

There are other rules and exceptions to these rules, but the idea is that in order to deduct a part of your home for business purposes, you must designate a room or part of a room that is used regularly for your business, and is used for no other purposes.  If you can do that, you can deduct the expenses for painting or repairing the business part of your home as direct expenses. You may also deduct expenses that apply to your entire home by calculating the percentage of your home dedicated to your business and applying that percentage to your expenses.  These may include:

¨            Real Estate Taxes

¨            Deductible Mortgage Interest

¨            Rent

I discuss “Tax Tips”, Marketing, Business Planning, and more in great detail in my book, “Biblical Entrepreneurship”, which can be purchased at – https://kbooker.wordpress.com/2010/02/25/biblical-entrepreneurship/


Starting and maintaining a home-based business can be challenging, but by maximizing outsourcing, the Internet, and tax advantages, you can quickly add momentum and sales that will take your home-based business to the next level.

* * * * * * * * * * * * * * * *

Karmen A. Booker is an Attorney, Business Consultant and Chief Consultant for Compu-Perfect Professional Services, a business consulting firm specializing in business incorporation, establishing limited liability companies, contract drafting & reviewing, and more.  CALL ATTORNEY BOOKER at 

(301) 408-1082.  View her website at www.compuperfect.net

She is also the author of “Business Tips” Report where you will discover tips that will put you on the Road to Business Success, Tips for creating and implementing a marketing plan, and more. This report and other books she has authored are available for online purchase at www.kbooker.wordpress.com by clicking on the respective report and book covers on the right sidebar of the blog site.



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