FROM BUSINESS KNOW-HOW...
Whether your home-based business is by choice or necessity, you need to focus on three keys to have a winning game plan:
As the owner, you get to make the initial decisions on how things will work. However, you have to understand the IRS defines tax implications and "business physics" will define your economic outcome so choose your course wisely!
Defining Success (3 types of home businesses):
Passion over profit - This is the entrepreneur that loves the idea of a product or service they have personally experienced and they want to share it with all the people they know. It is great to have passion, but you will need profits to make the business sustainable unless you like working for free and have other sources of funds to keep plowing into the business. The IRS may have something to say about whether losses will be deductible if you fail to meet the general rule of profits 2 out of 5 years. It is expensive to argue your point with the IRS if you do not meet the guidelines so your argument had better be valid and worth it!
Profit to support family - With current unemployment rates, there are record numbers of home businesses being formed. While it does provide a great opportunity to be your own boss, you still need to treat it like any business startup and follow sound business principles. The early stage will be to make a profit to replace your wages. As we will cover later, the profits you hope to live on will sometimes be in conflict with other expenses that the business needs to pay. This will add to the complexity of managing cash flows as you and the business compete for use of the same dollar. As you gain stability and success, you can make your market wage plus make a profit on top of that.
