Your Questions About Home Based Business

Daniel asks…

Home based business with Adult Only Emphasis?

I have heard and now am researching for an Adult Only Emphasis based home business. What are my options?

admin answers:

Passion Party!

Robert asks…

If I have a small home-based business and I have not filed any taxes in 3 years, what are the penalties?

Let’s say that I’ve calculated most of the 2003 year and have concluded that I didn’t owe any taxes for 2003 and 2004 but instead am due a refund.

I’m working to get a good accountant but find that most don’t know about tax shelters, estates, or any of the small business (home based) irs laws.

Please, this is serious. Don’t respond if you don’t have a quality answer for me.

admin answers:

You will not be assessed any interest or penalties for filing late since you are due a refund, and you will not be paid any interest on the refund either.
As to tax shelters, most have to be registered with the IRS. Estates and trusts are a unique animal and are usually only in demand from high income individuals. I find it hard to believe that a CPA would not understand the home-based business rules since that type of enterprise has been popular for many years. You didn’t state what part of the country you are in, and many states (and counties) have funky rules regarding these businesses. You should contact the home office of the company you represent to request referrals of accountants in your area. Good luck

Joseph asks…

What would drive you to start a home-based business and why?

There are so many people in the U.S. losing their jobs and although entrepreneurship is not for everyone; what would drive you to start your own small business? Home-based or otherwise?

admin answers:

Several things compelled me to start my home-based business
1. Ability to work from home
2. Low start up costs and low overhead
3. Freedom to set my own hours
4. My income is not limited by a wage or salary scale
5..No worry about being fired or laid off
6. Income Tax advantages

Sandy asks…

Ending a home based business – what are the tax implications?

I’ve been writing off my home based business for the last few years. If I stop using that portion of my home solely for my business, how do I indicate that on my taxes?

Additionally, does anyone know of any resources that indicate what the implications are of stopping a home based business write-off?

I see lots of information on how/what to write-off for a home based business, but can’t seem to find anything on what to do when that ends.

admin answers:

You don’t show on your tax that you ended the business, but keep track of the depreciation allowed or allowable while you were claiming the home office deduction – you’ll need that number when you sell the house.

Mary asks…

Home-based Business. What if I have next to nothing coming in for how much I am deducting in taxes?

I am looking into setting up a home based Business as a part time thing. I have a day job and I would like to do this music endeavor on the side. I want this to be legitimate but I know I will be making very little money and writing off a lot in tax deductions. Does anyone have experience in with this type of scenario? Is there a reasonable expectation that IRS has around how much revenue needs to come in for how much you are writing off? I don’t want the Business to appear fraudulent although I have more to gain from a tax deduction basis.

admin answers:

The rule is that a business should make a profit in three of any five years. That is not closely followed! When the IRS does look at a business that has lost money for some time they are looking at the efforts being made to conduct the business in a manner that would produce a profit. Empirically they are less concerned about such a part time business when the individual is making a substantial taxable income and this “side” business is not used solely to cover that income.

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Your Questions About Home Based Business Insurance

Daniel asks…

I started a small home based service business, what will I need to get general liability insurance?

For a general liability policy will the insurance company require certain proof or is it a simple policy to obtain?

admin answers:

Try the Business Opportunity Search Engine for liability insurance.

Your results from the community powered Business Opportunity Search Engine are much more focused than a general search engine and they will continue to learn and adapt, anonymously and automatically, based on the search behavior of every search you request. Http://www.businessopportunitysearchengine.com

Mandy asks…

Does anyone know what insurance companies are covering home-based businesses?

Specifically, I am starting a home-based e-commerce store, and my insurance broker has told me that he is unable to find any carriers that will cover product liability for a home-based company. I know there must be some carriers out there that will, because there are thousands of similar companies to mine out there. Any suggestions?

admin answers:

All the companies I represent for commercial insurance do not have a problem with home based businesses per se. It all depends on exactly what service or product you are offering.

This type of insurance needs to be done by an independent local agent that specializes in commercial insurance — none of the big name companies that specialize in auto and home insurance will likely help you with this, i.e. Allstate, State Farm, etc.

You can find a local agent through the website for the Independent Insurance Agents & Brokers of America at http://www.iiaba.net/agentlocator/findagent.aspx. All you need to do is type in your state and zip code, i.e. They do not keep any of your information or farm your information to anyone. Once you type in your state and zip code, you will be able to pull up a list of agents that are local to you and review their websites, the companies they represent and their specialties so that you can choose the agent that will best serve you.

I hope this information helps and wish you the best of luck with your business.

Mary asks…

What is the average home business liabilitly insurance monthly premium?

This would be an internet based business run out of my home, with $2000 in sales a month.
More specifically, this would be for a home based internet business that does $2000 a month in sales, in Illinois and makes no original products, but resells them. I have heard that companies who manufacturer the products hold the liability, not the reseller, is that true? Does it reduce my liability that I do not make the product I am selling?

admin answers:

It is absolutely not true that the manufacturer holds all the liability. If you sell the product that caused an injury, you are going to be just as liable as the manufacturer for the injury.

Lawyers are going to try to find as many deep pockets as possible, so they will do after you and whatever you have and your insurers.

So be sure to buy plenty of liability coverage.

Lizzie asks…

What type of insurance would I need for a small home based custom sewing business?

To protect my own personal assets from being seized by a potential lawsuit should an accident occur at a residence or business. Thank you. Karen H.
Apologize for not enough info. My business includes installation (e.g., window treatments, etc.) at residences and commercial sites. Thanks!

admin answers:

Dan, I suggest you join the “sewbiz” list at quiltropolis and search the archives there, and consult with other business owners there. Good, knowledgable, supportive group that sews everything from dog booties to wedding gowns to home dec.
Http://www.quiltropolis.net/maillists/maillistsdetail.asp?catid=Business

James asks…

Health Insurance – Private vs Group Policy for small home-based business?

I am currently investigating my options for providing health insurance coverage for my family. I am self-employed and planning to register an LLC for my work as an independent contractor and my wife’s employer dropped their health care benefits earlier this year. I have several questions if anyone has experience in the area of small business and/or private health insurance.

1. Is it correct that if both my wife and I are paid employees of my LLC I would be able to qualify for a group health insurance policy for the 2 employees – even if it is just me and my wife?

2. Will we be more likely to secure better health coverage (i.e. maternity, lower deductibles, etc) with a group policy than an independent family plan?

3. Are there any prohibitive costs which would make this approach unreasonable compared to private health insurance?

Any other suggestions are welcome, I want to begin comparing rates but need some guidance first. Thanks in advance.
Thank you for the information, I will investigate this further with an agent next week. Indeed I do not know the policies in my state (Ohio) but the individual who recommended this approach to me found great benefits in Connecticut.

As a new family we can’t take the chances of not having adequate health coverage. All the private plans that I investigated required riders for maternity coverage so it would be nice to get an expert opinion.
Thank you for the new responses. The purpose of forming the LLC is to protect my personal liability in the event that a future client would take legal action against me for whatever reason. I was curious about this approach since it was suggested by someone I trust, though I was not sure it would hold up in an audit.

It seems that it might be better to just buy a private plan and then take the deduction for self employment health insurance, as long as my wife’s employer does not provide health insurance benefits. Is that a better approach?

admin answers:

Most companies will offer group coverage for 2 employees. It is worth looking into but don’t expect that a group plan will be any less expensive. Depending on your state regulations groups are mandated to cover certain procedures, such as mental health, that you may not want or need, which will increase the premium. Contact a local agent that can do quotes for both group and individual from a number of companies.

Group policies of fewer than 10 employees are individually underwritten and the premium is based on those results, just like with individual policies. Companies can decline to offer group policies based on those results as well. Group policies choices are limited compared to what is available with individual policies. You will not be more likely to secure better coverage because of those limitations.

You can deduct the premiums of either type on your taxes.

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Your Questions About Home Based Business Magazine

Steven asks…

Anyone know of a home based business review site that is reputable?

I’m looking for like a public, reputable published review of the biggest home based businesses. Something like wall street journal or money magazine or something that I know isn’t biased or sponsored by some business featured.

admin answers:

I recommend you do a little research with the Business Opportunity Search Engine

Being community driven it’s a cross between a search engine and a Wikipedia. You can add, delete and improve the results for much more focused answers than a general search engine can provide.

Michael asks…

I have a home based business can i get sued!?

I have a home based business very small selling magazines on the internet and door to door. Its a LLC, partnership with a friend of mine, if he was working and got i a car wreck and hurt someone and they sued the company could i lose my house because its the business address AKA Business headquarters.

admin answers:

If it was a company car, then I would bet they’d sue the company, if you were out on company business. The company could lose its assets, but since it’s an LLC, your personal assets are safe.

But seeing as how this is probably a personal car on personal business, you’d be liable on a personal level, if you didn’t have liability insurance to cover it.

Donna asks…

anyone know any thing about these home based buisnesses where the company pays you to stuff envelopes?

I have a Home business connection magazine, there are several ads in there from these companys or organization who claim they will pay you to stuff envelopes and send them out to receive 2 dollars per envelope that you mail, my question is does anyone out there know if these are legitatmate or not, and please i only want answers from people that know what they are talking about not from someone who has never delath with it and just wants to give me a closed minded guess, thank you

admin answers:

Tried it once, turned out to be a scam. Now that was years ago, but I doubt they have changed.

I would suggest you call the BBB in your local area and see if they have any record of these companies.

Joseph asks…

Valuing a small home-based business – your guesses!?

I’m interested in buying a community magazine which is 2 years old. It is a franchise & the original setup costs (and costs if the business is unsold & closes) were £250 + £125 a month, now just £25 a month ongoing fee. Profits seem to be about £4k per year and there are no business assets. There is a network of distribution points, contacts for printing etc. & booked advertising of £2k for the next 2 issues of the magazine. The owner doesn’t pay himself a wage so the profit excludes wage costs.

What would seem a fair valuation, given the above? In theory, turnover for the magazine could be £40k per annum according to the parent company but turnover has been only £12k pa so far.

This is a home-based business and I would be buying the name & the reputation – it’s a free magazine.

Any help greatly appreciated!

admin answers:

Be over cautious. Franchisees usually have a hard time of it whilst the franchisor takes the lions share. Remember you are tied to their products, strategies etc. Is it a good franchise. The business would only seem to be worth a nominal amount. Could you not do this outside of the franchise? What benefits is the franchisor giving? Assume you are not running the business. How much would you make as profit if you had to employ someone to run it? Don’t throw your self-employment in for nothing.
Is it a distress sale? Could you take the business on for free, or a nominal sum and then pay a percentage of your first one/two year profits?
Sorry if I sound too negative; if you think you can make a good go of it, do so. Be ruled by your head, not your heart!

John asks…

I want to submit a press release for my virtual assistant small business; what are some good sources?

I’ve already posted a press release to my local newspapers and have gotten contact information for the larger newspapers like the Washington Post, New York Times and Baltimore Sun. I am looking for things like trade magazines and community publications that other small business and home-based business owners read, since they are my target market. Any help is greatly appreciated.

admin answers:

Depending on your situation and budget, you could be better off using one of the services below. I have no affiliation or attachment to any of them.

Most if not all news agencies, media, and associated writes subscribe to Newswire type services. They rarely use Press Releases sent to them by individuals. There are too many reasons to cite here for their behavior, but it is the norm.

Individual contact and getting your release picked up is almost impossible unless you are an exceptional person pushing an exceptional cause or product

The time cost required to get all the media is enormous compared to paying one of these services $200 US $ and getting them to post it ‘on the wire’ where editors, reporters and other writers can pick it up. They all subscribe to the Newswire.

Getting free publicity by using Press Releases is recommended by a myriad of books in marketing, hence the press is contacted by countless others doing the same. To get the attention, you can use what celebrity agents do, they create something that is news worthy.

A media person will pick up your ‘story’, if you offer them something they can write or speak about. Look carefully and see what you can do to help them.

The sources of media contacts at the library are usually out-of-date, so look at the current publication of the outlet you want and it should have the contact info in one of the section. Usually this information is part of the editorial page.

Good Luck

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Your Questions About Home Based Business Insurance

Steven asks…

How much is home-based BUSINESS insurance?

I am considering doing waxing hair removal at home.

All I need as insurance is a liability that protects me in case a client decides to sue me.

How much do you think I would need to pay for that, a month and/or year?

How do I prevent my premiums from going up?

admin answers:

Liability insurance will cover your home business for accidents that happen in the course of your business activities (waxing) on your premises. General liability insurance will cover medical payments and lawsuits resulting from injuries sustained by clients on your business premises. Professional liability insurance will protect you if a customer claims to have suffered personal damages through your professional services. You can find out more about obtaining the correct home business insurance for your service at the site below.

Besides that – there is a way you might want to consider to SAVE on Taxes!

Joseph asks…

Small Home-Based business insurance?

How much do you think it would cost to get liability insurance for a home-based computer repair/media digitization business? What are some good insurance companies?

admin answers:

You can get a Business Owners Policy (BOP) that will likely run you no more than $500. Your homeowners policy may provide some coverage, but the BOP is best. Many carriers will sell a BOP policy.

Helen asks…

What kind of insurance do I need for a small home based online retail business?

I have a home based retail business that sells products online. I keep inventory in my home. What kind of insurance do I need? Does anyone know what the costing runs about?

Nicole

admin answers:

You’re probably not REQUIRED to have any, by anyone. But here are some possibilities: general liabiltiy, in case you get sued. Property, in case of fire or theft, that wipes out your inventory. ECommerce, for internet fraud/wire fraud.

Cost is going to vary wildy from $1500 a year for start up, to tens of thousands, depending on sales, type of materials sold, where you get them from, and where you store them.

You’ll have to talk to a local agent to get specific quotes.

Ken asks…

Can a person deduct healtcare insurance premiums with a home based business?

admin answers:

If you are self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, all of the amount paid for medical and qualified long term care insurance on behalf of yourself, your spouse, and your dependents.

The insurance plan must be established under your trade or business and you can only deduct an amount equal to or less than the earned income from the business.

You cannot take the deduction for any month in which you were ELIGIBLE to participate in subsidized health plan maintained by your employer OR your spouse’s employer (even if you declined such participation).

Use the worksheet in the 1040 instructions. See page 24 in the instructions at the link below for more details.

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