Owning a Home Business
Does the thought of owning a me business scare you? Do you think it is impossible? A good person to talk to is your Accountant and ask him or her what the advantages of owning a home business is. There are many Tax advantages and other possible advantages. Below is a little but of information on owning a home business:
SMALL BUSINESS RESEARCH SUMMARY
Home-Based Business and Government Regulation by Henry B. R. Beale, Microeconomic Applications, Inc. 2004 [188] pages. Washington, D.C. 20016 under contract no SBA-HQ 02-M-0464
This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts issued by the U.S. Small Business Administration’s Office of Advocacy. The opinions and recommendations of the authors of this study do not necessarily reflect official policies of the SBA or other agencies of the U.S. government. For more information, write to the Office of Advocacy at 409 Third Street S.W., Washington, DC 20416, or visit the office’s Internet site at www.sba.gov/advo.
Previous research published by the Office of Advocacy has documented the disproportionate impact of federal regulations on small business: businesses with fewer than 20 employees pay more per employee to comply with federal regulations than business with 500 or more employees
(Crain and Hopkins, 2001). The current report continues
this inquiry by investigating the impact of regulations
(federal, state, and local) on the smallest of
firms, home-based businesses. The home-based business
sector is substantial in size: 5
businesses are based in the home (Pratt, 2000). Some
home-based ventures are the incubators of successful
ventures that evolve to locations outside the home,
while other occupations are well matched to the home
environment—bed and breakfasts and infant and toddler
day care, small offices, or cottage industries.
Overall Findings
At the federal level, Internal Revenue Service regulations
penalize home-based businesses in their treatment
of deductions. At the local level, zoning laws
and prohibitions present home-based businesses with
a significant entry barrier. The report notes, however,
that some states have improved the environment for
home-based businesses.
Highlights
• The tax code treats home offices as commercial
buildings. Claiming a home-office deduction is complex;
the depreciation is spread over an unrealistically
long time; and returning the space to residential
use generally entails penalties.
• In order to qualify for a deduction, the tax code
requires that a home office be used exclusively for
business. Such a requirement ignores the realities of
family life and offsets many of the advantages of
running a business out of a home.
• Deductibility of other business-related expenses
(such as utilities and legitimate maintenance) is contingent
on the deductibility of the home office.
• The tax code allows deductions for other equipment
only to the extent that they are used in the business,
regardless of the necessity to the business. This
requirement penalizes home-based businesses for
their small scale, creates recordkeeping burdens, and
is inconsistent with exclusive business use of an office.
IRS assistance covers far too many topics that are
not relevant to most home-based businesses. Inadequate
tailoring to the needs of home-based businesses unnecessarily
increases the familiarization and filing burdens on
a home-based business.
• Locally, many zoning codes incorporate outright
prohibitions, prescriptive requirements, or limits on
various aspects of home-based businesses (e.g., number
of employees, visitors, parking, exterior changes,
or specific industries). Some jurisdictions, however,
have adopted more flexible and efficient zoning
codes based on a business’s performance and its relation
to the character of the neighborhood.
• Few local jurisdictions have utilized the different
residential zoning categories (pertaining to density
and type) as a means of providing more flexibility in
home-based business regulation. Jurisdiction-wide
restrictions, which appear to have been designed to
protect the most vulnerable neighborhoods, are far
more common.
Scope and Methodology
The researchers used evidence available in
Advocacy’s database and thoroughly researched state
and local websites. They discussed a number of
issues with tax professionals as needed. The report’s
seven appendixes present extensive data on homebased
business regulation, including a comparison of
regulation in six states: Arizona, California, Illinois,
Iowa, Pennsylvania, and Vermont.
References
Mark Crain and Thomas Hopkins, 2001.
Impact of Regulatory Costs on Small Firms.
Washington, D.C.: U.S. Small Business
Administration, Office of Advocacy.
www.sba.gov/advo/research/rs207tot.pdf.
www.sba.gov/advo/research/rs207tot.pdf.
Joanne Pratt, 2000Business Administration, Office of Advocacy.
Possible other advantages of Owning a Home Business
We know that owning a home business of course have tax advantages but it can also help with; 1. You could increase your income. 2. Could grow into a business that you could do full-time someday. 3. You may be able to buy items that you use currently at a lower cost. 4. Give you more security in your Finances. 5. Can help teach your kids good lessons about money, budgeting, expenses and more. 6. Helps get you out of your comfort zone and be more of a risk taker. 7. Help you get over any fears of making mistakes. 8. Help you be a better communicator. 9. Help you be better at setting goals. 10. Help you be better at controlling expenses for your personal budget also. The list can go on. But yet most people are afraid to do it. Some people that start a home business and it may fail to take off or they don’t enjoy it and they close it up. Some times they try again or they may never try again. A key is to never give up, some say only one out of ten will make it.
Cost of starting a Home Business
Cost can vary depending on how large you want to go. But there are a lot of low cost Home Business that can got less than $50 to get started. Some examples of low cost businesses could be a networking business or opening a E-bay store. There are websites that you can start up and have a hosting cost of $10 per month. There are many businesses you can start with very little cost to start it with and you still would enjoy the benefits. Let me know your success stories, your ideas and your suggestions and thoughts.
Have a great day.
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