Start a Home Based Business

 In today's rapidly changing economy, many people are realizing that their dream of "having a job with a company forever" is an illusion. Companies continue to downsize and capsize and they are doing it more now than ever before. Even government jobs are not "safe" as federal and state agencies are getting into the act with layoffs and attrition of jobs.

Management positions are shrinking and there is no such thing as loyalty between companies and employees anymore. Sitting around in the same job with the same company does not guarantee any kind of financial stability or security. These workplace circumstances aggravate the already tryingly long commutes in rush hour traffic and the long hours spent trying to advance your position and pay. This doesn't even take into account the rules, policies and sometimes unfavorable boss you have to comply with everyday.

Finally, if all this isn't bad enough, under recent tax laws employees are shafted more than ever with limits and thresholds for their employee deductions and higher social security tax limits.

All this has resulted in more couples working than ever before and, on many occasions, working more than one job. It is now almost impossible to have only one job in the family and make ends meet! Today, many households need two if not three incomes just to survive.

On Friday, August 1, 2008, the Bureau of Labor Statistics announced that the nation's factories and offices shed 51,000 jobs and the unemployment rate climbed to a four-year high of 5.7 percent. This is the seventh straight month of a contracting labor market, and the unemployment rate has climbed by a full percentage point since July 2007.

Sadly, having more than one job does not always increase the size of your bank account in the amount that is necessary. Why? Mainly because of tax laws. A good example of this was well illustrated in 2004 by Jane Bryant Quinn in her Woman's Day article on "How to Live on One Salary."

Ms. Quinn's example assumed that one spouse, the husband, was earning $40,000 per year and this was the only income for the family. The situation wasn't working. The couple had more month than money. (Sound familiar?)

So what did the couple do?  Well like most of us they decided it was worth it to have the wife and mother go out and get a second job instead of her full time job of MOM to her kids.  Sounds like the perfect solution doesn't it?

The PROBLEM was the second job didn't fill up the bank account like expected.  Making just over minimum wage brought home $15,000 but after paying the increased taxes, cost of commute (GASOLINE), new clothes, eating out, DAYCARE, and the other unforeseen costs of working outside the home, the family only added about $1500 to their bank account.

So was it really worth it to go to work for corporate America.  All the extra stress, the commute, the time away from children....  And for this the Government made more in extra taxes than the family did in income.

No wonder more and more people are starting home-based businesses. In fact, there are currently over a hundred million people working from their homes and the number is growing every day. Working from home has become and will continue to be one of the greatest mass movements in the U.S. in the coming years.

A Home-Based Business Makes more than "Cents", it can make Dollar$ too! 

There are many reasons why so many people are favoring home-based over traditional business.

There is no commute (you work out of your home), you are your own boss, there is much lower overhead compared to starting a traditional business, no employees (or few), many tax advantages instead of tax increases, and far fewer government restrictions. It is for these reasons, according to Entrepreneur magazine, that 95 percent of home-based businesses succeed in their first year and achieve an average income of $50,250 per year with many earning much more.

There are really two sets of tax laws in this country. One is for employees, and it allows deductions for individual retirement accounts, 401(k)s (if you have one set up by your company), interest and property taxes on your home (which some in Congress want to do away with ), and charity.

Then there are the laws for home-based business people who conduct their business either full-time or part-time. They can deduct, with proper documentation, their house, their spouse, and even children (by hiring them), their business vacations, their cars, and their food with colleagues. They can also set up a pension plan that makes any government plan seem paltry by comparison.

For our example family - and for you - the meaning of all this is simple:

They earned an extra $15,000 in salary as an employee, but took home less than $1,500. They could have netted the entire $15,000 had the wife earned it in a home-based business!

This is an increase of almost 13 times her take-home pay as an employee.

By having a home-based business many of your everyday expenses become deductible. This concept is known as "redirecting expenses." With a legitimate home-based business, you can now deduct some of the expenses that you incur anyway.

The tax benefits of a home based business can increase the money in your pocket even if you don't make a penny from you home business.  

If you don't have a Home Based Business, START ONE!

In addition to all the benefits mentioned above, you can subsidize part of your home business with your tax savings. So while you are growing your home-based business you can use tax savings to grow it bigger. If your home-based business produces a tax loss in the first year or so, you can use that tax loss against any other income you have. It can be used against wages earned as an employee, dividends, pensions, or interest income-or you can use the loss against your spouse's earnings if you file a joint return.

If the tax loss exceeds all your income for this year, no problem. You can carry back the loss two years and get a refund from the IRS for up to the last two years of income taxes paid, or you can carry over the loss twenty years. You read it right: You can offset up to 20 years of income!

For example, if you earn $50,000 in your current job with some company and you start a home-based business that generates a tax loss of 10,000, you only pay tax on $40,000.

You can never lose a properly documented business deduction as long as you run your legitimate business like a business with a bona fide business purpose and have an honest expectation of profit. Make also sure that all your expenses are ordinary and necessary and reasonable. If its required for you to do business it can be deductible.

A home based business is a great financial opportunity and the light at the end of the tunnel for many of us. The tax advantages alone can make a home-based business the single best financial move you could ever make.

Can you make money in a Home Based Business?

Research has constantly shown that it is rarely the business that determines success or failure. It is usually the business owner.

Why does one person succeed and another fail at the same business?

The answer is usually very simple and can be summed up with just two words: Knowledge and Action.

Some people love the benefits of having their own business, but they don't take the necessary action to maintain a business. The result is business failure.

Some people believe the hype that they see on the Internet or late night TV about having a business and making money without doing any work. Money just magically shows up. Again lack of knowledge and ACTION. And again business failure.

Then there are the people who are always working. They take action but still fail. The reason is that they are not taking the correct actions, the knowledgeable actions that will bring the desired results. Again, business failure.

If you want to grow palm trees, you don't set up your business in Alaska. No matter how hard you work at it you won't have great success. But move to Florida and things will definitely improve.

The point is that most people get very excited about starting their own home-based business. They see how it has made some other guy a millionaire and so they jump without looking.

They start a business without all the necessary knowledge.

Quite often you can start a home business with very little upfront money so its easy to 'jump'.

But imagine you were going to open a restaurant or a daycare. These are large undertakings and you would do some research upfront to make sure it would work and you would stick with it even when it started out slow. (As all new businesses do). You would stick with it because you took the time to do your research and you have invested time and money into it so you can't just quit at the first rough patch.

However, since many home businesses are so easy to start, many people quit before they acquire, through experience, the knowledge they need to really make it work.

All businesses take time to grow and make money. The advantage of many home businesses is that they allow you to start with little money down, and without quitting your current job. You have the time to grow and learn. You just need the determination to stick with it.

And don't forget, you are getting substantial tax breaks so even when it doesn't seem like you are making money you really are.

And now to the BIG question...

What Business Should I Start?!?

The real problem with MLM is not MLM itself, but some of the people it attracts. Network marketing is just a business model, and it really amounts to "micro-franchising". Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that.

But those same things that make it attractive make it attractive to many who are NOT really prepared to become business owners.  You must realize this is a business, a job, and it requires work.

It is not impossible, it is very possible.  You just need the desire to learn, to be trained and the determination not to quit at the first sign of adversity.

Network marketing/MLM is a great opportunity for people to have their first business, their first sales role, etc. As long as you recognize it for what it is: it's a business, and you are a business owner. And if you've never owned a business before, if you've never done sales before, if you've never networked before, you need to learn about how to do so, not just from the network marketing/MLM experts, but from established experts in sales and networking and business ownership.

Network marketers who are serious about building a business should be reading and learning about business fundamentals, the latest sales and marketing techniques, strategies for networking and business development, etc.,  Act like a small business owner, and people will treat you like one.

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