When you start your own business, or think about starting your own business, there’s a lot to be excited about.
For most of us, it’s a dream come true, a chance to get paid for something we’re passionate about, a new door to some long-anticipated financial opportunities.
How our new “baby” will effect our yearly income tax filings and what’s the most advantageous way to structure our business are issues no one tackles with much excitement, if at all.
Truth is, especially as stay at home moms, most of us go into our business with more of a “hobby” than a “business” mentality.
At least at first, I’ll just be bringing in a little side money, the thought goes, so why not just deposit it in my checking account and get on with those home renovations and vacation weekends I’ve been longing for.
While rushing to get your new website up, yet dragging your feet about getting to the bank to set up your business account is understandable, it’s a big mistake.
Amidst all the excitement of your budding empire, two of the top things on your to-do list should be setting up a business bank account and consulting with a professional accountant.
Both of these tasks are inexpensive or even free.
Before we go on to talk about why they’re so important, let’s add a little disclaimer:
Here at Kids Party Characters, we are NOT accountants. And we didn’t ask our accountants to write this article.
We’re sharing some of the advantages of being a work at home mom that we’ve found, through consultation with our accountants.
That doesn’t mean they’ll apply to you, but they could.
It’s certainly worth talking to an accountant about these, and other ideas she may have for maximizing the tax benefits of working from home.
What you shouldn’t, can’t, and please don’t do, is read this article and go fill out your own tax forms based on this advice.
Now that we have that out of the way . . . on to the good stuff!
Tax Benefits of Being a Business Owner
The potential financial benefits for parents who are home-based business owners are pretty fantastic and we’ll cover those in a minute.
But first, let’s look at benefits even non-parents may be able to take advantage of as small business owners.
1. The Home Office Deduction
If you have a space dedicated to your business, that means not just a chair at the kitchen table, you can take a deduction for that space.
Even better, you may also be able to deduct a percentage of your:
- Utilities
- Trash collection
- Pest control costs
- Lawn care costs (if you even have meetings at home or clients come to visit)
- Homeowner’s insurance
This home office deduction is the biggest tax advantage for non-parents.
2. Travel and Meal Expenses
Mileage, airfare, and hotel expenses are all deductible whenever you travel for business purposes.
Your meals are deductible during such travel too, as well as those you eat while “at work” during the day.
You may want to get a separate receipt for everything you purchase at the store for your lunches. This makes it easy to keep track of and document your lunch expenses.
3. Office Supplies
You probably won’t have a lot in the way of paper, staplers, and other things you commonly buy at an office supply store, but keep your receipts when you do go because it does add up.
Your major benefit here will come from bigger items you purchase such as your computer, printer, and any software you need.
A new office chair, lamp, or desk for your office would also be deductible.
Another one people often forget is their cell phone and internet bills. If you use them 20% of the time for business, 20% of your bills are deductible.
Of course if you’re one of those rare folks that still has a landline phone, same rule would apply there.
4. Continuing Education
Ever wonder why people have seminars in the Bahamas?
Deductible business vacations are great, just be sure it’s actually business and not just a vacation where you have a one hour business meeting scheduled one day.
If you attend a seminar or conference your travel expenses and expenses while you’re there are deductible, just don’t try to include the jet ski rental or scuba excursion you took.
It’s a good idea to save the agenda and print the seminar’s sales page or whatever evidence you can get your hands on that you were engaged in business learning and or meetings for a major portion of every day.
Trade magazines, paid forums, and other professional subscriptions (online and offline) are also deductible here.
Now For the Really Good Stuff
Finally, it pays to be a parent!
The benefits of putting your kids to work in your business are incredible. And they don’t have to be of working age to do this.
Younger kids can clean and organize your office.
As they get older, your kids can take on some customer service, social media posting, transcribing, whatever their strengths are.
You may even get lucky and have your own in-house graphic designer.
Even babies and toddlers can be a part of your business if you choose to use them in your marketing. This could include having their pictures on your website, on business cards, or in other advertising.
When your kids work for you, you’ll want to pay them and have their wages go into an account you have set up for them.
You can then get the business deduction for their wages and they can pay for things like their music lessons and sports activities using their own money!
Your Business Checking Account
Earlier we talked about opening your business checking account as one of your first tasks when setting up your business.
You’ll want to talk to your accountant, but even when you’re a tiny business, it’s probably to your advantage to set yourself up as some type of business entity such as a sole proprietor.
You’ll need a business account to do this, and keeping all your business income and expenses separate just makes it easier and avoids any confusion at tax time.
You should also have a single credit card that you devote to only business expenses for this same reason.
Want More Tips for Growing or Starting a Successful Business?
All the details that go into your business can be a little overwhelming.
Certainly you can be successful through trial and error, but trying to go it alone and figure it all out is the death of many well-intended startups.
Having a mentor allows you to cut out most of the mistakes and go straight to the moneymaking phase of your business.
Kids Party Characters founder Cheryl Jacobs has made the mistakes and now runs three successful businesses.
Cheryl is passionate about helping other entrepreneurs experience more success in less time.
She especially understands the challenges of the work at home mom, who already has one full time job raising her children.
In an effort to cut down the learning curve for new business owners, Cheryl is offering memberships to KidsPartyCharacters.com.
Membership allows you an exclusive territory to book parties, the right to use all of Kids Party Characters costumes, and access to our acting coach and casting director.
You also get full training and support from Cheryl and the team at KidsPartyCharacters.com.
If you’d love to have a business that still allows you to be a stay at home mom, or if you’re an entrepreneur looking for a second income stream, schedule a no-pressure chat with Cheryl right here and she’ll talk you through whether this is the right opportunity for your life.
What to see more about all the fun we have and magic we create at KidsPartyCharacters.com? Follow us on Facebook for daily updates.
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