Are You a Boomerpreneur?

So you're thinking of starting a business.  You're retired and bored.  Or you need to supplement your retirement income.  Or maybe your nearing retirement age but know that you won't be able to afford it.  Congratulations!  Starting a business at our age can be rewarding in many ways.  But the first thing you need to do is ask yourself a question.  Are you ready to be a Boomerpreneur?

 

Be honest now.  Are you ready to face the challenges and, yes, risks, of starting a business at this stage in life?  Are you self-motivating?  Is your family supportive?  If you answered no to any of these questions, then it will make reaching your goal much more difficult.

 

Here's a quick checklist.  How many of these can you answer with a "yes."  The more yeses, the better your chances of success!

 

1. Are you self-motivating?
2. Do you have a support system (family, friends, or hired employees)?
3. Do you manage your time effectively?
4. Are you willing to take some risks?
5. Do you communicate effectively?
6. Do you have something that you are passionate about that you can turn into a business?
7. Are you ready to set goals and create a plan to reach them?
8. Do you have the financial means to start your business without touching retirement savings?
9. Can you manage your finances wisely?
10. Can you promote yourself and your business?
11. Are you healthy enough to put in the hours and do the work?'
12. Do you have or can you learn the required skills?
13. Are you organized?

If you didn't answer yes to most of these, then you may want to rethink becoming a Boomerpreneur.  It does take most of these to be successful.  Starting a business isn't for everyone.  

 

However, if you are only lacking a few of these, then congratulations!  You may be ready!  The skills and traits you have can significantly contribute to your success.  And you may be able to learn or acquire what you lack.

 

So, are you a Boomerpreneur?  If so, let's get started!  Not sure how?  Visit my Boomer Business Ideas website for ideas and information.  Of check me out at MelodieannWhiteley.com to learn more about a very simple yet profitable and rewarding business that you can start today.  And welcome to the world of the Boomerpreneur.  You're going to love it here!      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It’s the Little Things that Really Add Up

Sometimes, saving money on your tax return comes down to little more than keeping good records. And that means tracking all those little expenses, because they can add up throughout the year. Sure, you know to deduct that new computer you bought, and the money you paid the accountant, and you’re even taking your home office deduction. The question is, are you capturing all the small expenses, too?

Frequently Forgotten Expenses

It’s staggering how much goes into running a small business, and how quickly things can become tangled between business and personal accounts – especially for sole proprietors. Think about it. You’re doing your grocery shopping and remember you need a new desk calendar, so you toss one in your cart. Or you’re Christmas shopping on Amazon and see a good deal on printer ink, so you stock up. Or maybe you’re meeting a potential client for breakfast and while you remembered to deduct your meal, you forgot about the mileage to get there.

These types of common but small expenses can quickly add up to a major tax deduction. The trick is remembering to deduct them, and keeping solid records. Some of the most common (and often overlooked) business expenses include:

• PayPal and other payment processing fees. If you get paid via PayPal, then you know they charge around 3% of each transaction for the service. These fees add up fast, so make sure you’re keeping track and adding them to your tax return as “bank fees.”
• Dues and subscriptions. Do you belong to paid forums or membership sites related to your business? These charges are deductible as well.
• Office supplies. This includes small stuff like paper and pencils and printer ink, along with big-ticket items like furniture and computers.
• Domain names and hosting. Your Hostgator bill, GoDaddy purchases, etc.
• Advertising. Whether you do pay-per-click via Google or Facebook, buy solo ads on mailing lists, or pay for post placement on other websites, it’s all deductible. And don’t forget your mailing list provider!
• Commissions. Do you have affiliates? Deduct those payments!

Keeping Good Records

The key to making the most of your tax deductions lies in keeping good records. For most small businesses, the simplest solution is to use a software program set up specifically for this purpose, such as Quickbooks or Peachtree. No matter what solution you choose, though, make sure you consistently record your expenses. The last thing you want to do is scramble at the end of the year to find receipts and enter data. That would be a nightmare.

Instead, set aside time each week (or more often, if necessary) to update your books. If you find it overwhelming and you tend to put it off, consider hiring someone to maintain your accounts for you. Remember – what you pay him or her is deductible as well!

Finding all those hidden expenses can mean the difference between a huge tax bill and one that is more manageable. While the things listed here will get you started, it’s a good idea to also speak with a tax professional. Make sure he or she fully understands the nature of your business, so he or she can ask the right questions and make appropriate recommendations for your business write-offs.

It's a Family Affair! How to Save on Your Taxes By Hiring Your Kids

For small business owners with kids, the most often forgotten deduction is sleeping in the next room: your children. Sure, you deduct them as a dependent, but if that’s the only tax savings you’re getting, you’re missing out.

As a business owner, you can legally hire your children and avoid paying many of the taxes that go along with having an employee. Things like income tax withholding are not required for the underage children of the business owner unless you are a corporation. Sole proprietors and LLCs do not have to deal with payroll, even though technically your child is an employee. You also don’t have to cover them on your worker’s compensation insurance.

Even better, your kids don’t have to pay income tax on the money they earn. To a point, anyway.

All that said, though, there are a few rules you have to follow.

Work, not Just Chores

You have to be careful that your kids are actually working in the business. Things like raking leaves and doing dishes won’t qualify – unless your business is a lawn service or a restaurant, that is. Instead, have them do tasks you would normally either do yourself or hire outside help to handle.

Depending on the ages of your kids, such tasks might include:

• Internet research
• Video editing
• Site updates
• Basic graphic design
• Addressing envelopes
• Simple bookkeeping

You will also need to be able to show proof of hours worked, and that the pay was reasonable. In other words, you can’t pay your child $50 an hour for a job that – if anyone else were to do it – would normally pay $10 an hour. Set up a timesheet, and make sure he or she fills it out and turns it in every pay period, so you can have it on file.

Paying Your Kids

Each pay period, you’ll pay your children just as you would any other employee or contractor. As we already said, there’s no payroll tax or other deductions to worry about, so they get paid everything they earned. Even better, your business can claim the expense.

What about income tax? Your kids (and everyone else, for that matter) can earn up to $5,950 tax free. That’s the standard deduction, and it applies whether you pay your child or a total stranger, so it just makes sense to keep that money in the family if you can.

Not only that, but since you’re the parent, you still get to claim your kids as dependents. So your kids earn money tax free (which is a great way to start teaching them about budgeting, etc.), your business claims the expense without worrying about payroll taxes, and you claim the deduction. It’s a perfect system for getting work done while at the same time saving a substantial amount of money on taxes every year.

Home Office How-To

When you run a small business from your home, you might find very little in the way of deductions to help save on your taxes. This is especially true if you work online, where it’s unlikely you’ll have the cost of physical goods, shipping costs, or employee wages to help offset your income.

There are a few things you can claim, though, to help minimize the money you pay to the IRS. One of the biggest is your home office.

It may seem a bit soon to be thinking about tax season.  But in reality, some planning now can reap benefits next April!  So let's take a look at how to get the most out of your home office deductions.

What is a Home Office?

As far as the IRS is concerned, a home office is a portion of your home set aside exclusively for business use. You must be able to show that your home office does not serve any other purpose, so you can’t claim the area around your kitchen table as a home office, even if that’s where you do the majority of your work.

You must also be able to show that your home office is the principle place of business. If you rent an office outside the home, and only use your home office occasionally, you may not qualify for a home office deduction. 

How a Home Office Deduction Works

Generally speaking, your home office deduction will be calculated as a percentage of all the expenses you incur in your home. For example, if you’re using a spare bedroom as your home office, you would measure the square footage of the bedroom and divide that by the square footage of the entire home to determine what percentage of space you are using for business.  

Using that figure, you calculate how much to deduct from your taxes for such things as:

• Mortgage interest
• Home repairs
• Utilities
• Depreciation

In addition, if you conduct business online, you may be able to deduct the entire cost of your Internet service.

More Deductions to Consider

In addition to your home office deduction and all it includes, don’t forget the things that actually make that room an office. Your desk and chair, filing cabinets, printer, computer, and everything else you need to operate your business are all deductible. Your accountant will be able to advise you about whether it makes sense to count these items as an expense or to depreciate them over a period of years, but do keep track of all money you spend on office equipment, as he or she will need to know.

When you’re self-employed, it can seem like you’re paying huge amounts of taxes. That’s because some of the tax burden used to fall to your employer, and now you’re responsible for all of it. Taking advantage of the home office deduction is one way to help offset those higher taxes, so be sure you’re claiming every square foot you’re entitled to.

Planning for Tomorrow

When you’re a corporate employee – if you’re lucky – you have a company-matched 401K and maybe even a fully funded pension plan. When you’re self-employed, saving for retirement is all on you. And unless you want to still be working when you’re old and gray, it’s a good idea to start saving sooner rather than later.  Granted, if you have the right type of business, then working past traditional retirement age may be something you choose to do.  But a good retirement plan can mean the difference between working by choice or working from necessity.

The good news is, the government makes it easy – and tax free – to build up your own personal retirement account.

401K or IRA

A 401K is a special type of retirement fund set up and administered through an employer. Some companies offer to match a percentage of every dollar you contribute, making this a nice, pre-tax benefit.

IRAs, or Individual Retirement Accounts, are set up with the help of a bank or financial planner, and are also non-taxable. That means that if you’re paying 30% of your net income to the IRS (not uncommon for self-employed folks) you can save 30 cents on every dollar you contribute to an IRA.

There’s a limit to how much you can invest in a retirement account. For individual 401Ks (available only to self-employed persons with no employees), the maximum you can stash away pre-tax is $17,000. For IRAs, it’s $5,000.

Before you start stashing money away, though, remember that this tax savings does come with a price: You can’t touch the money you invest until you’re 65, or you end up paying not only the income tax, but penalties as well. In addition, you will have to pay income tax on that money when you retire. There’s no escaping the tax man entirely, unfortunately.

A Sound Investment?

There’s another benefit of a retirement savings account: the potential to earn substantial interest rates. Because you have the flexibility to divide your IRA funds up among various investments, you can potentially see returns as high as 10 or 12%. That’s a far cry from the 1% your savings account is offering.

Of course, there’s no guarantee that any investment will earn money. Just talk to anyone who was close to retirement age when the economy took a downturn in the early 2000s. Many people saw their 401ks and IRAs dwindle away to nearly nothing, while they stood helplessly by and watched.

But for saving on your income tax as a small business owner, an IRA or individual 401K is ideal. They’re easy to set up and have few costs involved, plus they give you the freedom to invest your money in high-earning stocks or to choose safer bonds.

We have been building our retirement savings for years.  It is comforting to know that if we should ever want or need to stop working altogether, we will still be able to live quite comfortably.  If you are unsure how to get started planning for your tomorrow, contact a trusted financial advisor for help. 

Choosing Your Business Structure

Chances are, when you started out working online, you didn't put much thought into your actual business setup. You probably just set up a PayPal account, added some “buy” buttons to your website, or maybe created an invoice or two for clients. Before you knew it, though, you were thinking about quitting your job, and suddenly, filing taxes was a huge concern. 

The truth is, many new entrepreneurs are well on their way to having a full-blown business long before they put any thought at all into legal business structures, and that can really mess with your tax bill. In most states (and we’re speaking of the US, here) you have three choices when it comes to business entities:

Sole proprietor. This is where you started when you sent your very first Pay Pal invoice. When your business is structured this way, you are your business, and your business is you. There is no separation of funds, either for tax paying purposes or in the event of a law suit. You file your taxes just as you always have, but you’ll also need to add a Schedule C to record your business profits and losses.

Limited Liability Company. A small step up from a sole proprietor, the limited liability company (or LLC) affords you some degree of protection from debts incurred by your business. However, you still file your income tax return as if you and your business are the same – because as far as the IRS is concerned, you are. LLCs are regulated by the state, and not recognized by the federal government.  This is the structure I chose for my company, Boomer Businesses LLC. 

When you operate as either a sole proprietor or an LLC, you are responsible for paying the entire amount of your taxes. That means that the percentage of Social Security tax your employer used to pay is now your responsibility.
 
Corporation. When you incorporate your business, you are saying that your business is completely separate from you as an individual. So separate, in fact, that you’re actually an employee.

The good news is, corporations don’t file income tax returns, and you won’t receive 1099 forms from your customers. The bad news is, you will be required to pay yourself a salary. That means that every month, you (the corporation) will be required to send withholding tax to the IRS
.
This can mean savings for the entrepreneur, because now the corporation has to foot the bill for half your social security tax. But the added burden of dealing with payroll and even more government paperwork means it might not be worth it to you. 
 
The best advice? When your business turns from a hobby – meaning you’re earning more than pocket money – into a real business, it’s time to talk to an attorney or qualified accountant. They’re the ones who can best advise you about the business entity that makes the most sense for you, your financial situation, and your business goals.

Get Caught Reading Books to Grow Your Business

Every May, I celebrate Get Caught Reading Month by sharing some of the best new business books that I have read recently.  And this May is no exception.  There were several books written this year that need to be part of every booming-preneurs reference library.  If they aren't yet part of yours, I have only one question for you.  Why not?

Let's start the list with yet another winner by the ever-amazing Felicia Slattery. #1 on this year's list is "Kill The Elevator Speech."  I know what you're thinking.  You've spent countless hours perfecting your elevator speech.  Isn't that what all the business experts tell you to do?  And now someone is telling you to throw it all away?  Yes!  And when you read Felicia's book, you'll understand why the elevator speed needs to go the way of the dinosaurs.  Because it just isn't made for today's business environment.  Follow Felicia's advice instead and start really connecting with your prospects.

If you follow me on any of the social media sites, then you will often see me exchanging banter with a wild-haired fellow who is often in the company of rather large poodles.  Well don't let the silliness deceive you.  Beneath all that lurks the mind of a business genius.  And he has written book #2 on my list - "Trust Funnel:  Leverage Today's Online Currency to Grab Attention, Drive and Convert Traffic, and Live a Fabulous Wealthy Life" by Brian G. Johnson (aka The Poodle Wrangler).  Every business person has heard that people do business with those they know, like, and trust.  Getting to know someone is relatively simple.  It isn't even hard most of the time to get them to like you.  The tricky part is getting them to trust you.  Brian will show you how to do that and how to create your own "trust funnel". 

Two years ago, I had the opportunity to meet Debra Jason and I was instantly impressed with her knowledge, spirit, and eagerness to share.  So when she published her book, "Millionaire Marketing on a Shoestring Budget: How to Attract a Steady Stream of Happy Clients, Make More Money and Live Your Dream," I knew it would be a winner.  And I was right!  I wish I had this book when I was starting out because it tells you exactly what you need to do to successfully market your business.  The exercises at the end of each chapter will help you put your business on the right track.  All you have to do is follow them.  Does that mean experienced marketers don't need it?  Absolutely not!  Debra can teach you a few things too.

Product launches.  Everybody does them.  But not everybody does them well.  If you are getting ready to launch your new business, or a product or book, then you want it to be successful.  Read Jeff Walker's book, "Launch: An Internet Millionaire's Secret Formula To Sell Almost Anything Online, Build A Business You Love, And Live The Life Of Your Dreams" to learn how to make it more than just successful.  Follow his advice and you'll be off-the-charts, out-of-this-world successful!

What recommended reading list would be complete without a book by Joel Comm?  This year's recommendation is the newly updated "Twitter Power 3.0."  Using Twitter for business is a skill.  And Joel teaches it like only he can.  If your tweets consist mostly of links to your blog posts with the occasional retweet thrown in, you're doing it wrong.  Let Joel show you the right way.  Whether you are a Twitter novice or an old-timer with a large following, there is something in this book for you.

Now - get caught reading!