Starting a home business can be one of the best ways for you to achieve the job satisfaction that everyone wants but few obtain. Working from home is not only an ideal way to spend more time with your family, but it also helps the environment by reducing traffic and pollution. Moreover, enormous advances in technology have made start-up costs much less prohibitive for budding entrepreneurs, which is why many have turned to the home as a means to grow their businesses.
Growing a home business, while exciting, introduces new challenges that must be met in order to obtain the success you desire. Unfortunately, the comfort of working from home often leads to poor organizational habits that can cause serious problems down the road, not only by adding unnecessary stress to your workday but also by damaging your bottom line. Learning to keep the “home” out of your home business, then, is essential if you want to achieve satisfaction and a steady profit.
The Home Business Motto
“Keep it separated,” should be the motto for all home business owners, yet so many remain unaware of this basic accounting rule until the IRS comes knocking on their doors. While the IRS only has the resources to audit about 1% of individual returns each year, nearly half of all the “red flags” that increase the chance of receiving an audit are small business-related, such as claiming a home office and deducting 100% of a vehicle for business use. Keeping these expenses separate from your personal life will make them easier to prove during an audit and save you money on accounting fees.
Customers also greatly appreciate doing business with a company that provides excellent service. For instance, 78% of U.S. customers surveyed by American Express in 2011 claimed that they did not complete a purchase due to poor customer service, and 70% stated that they would spend more if a company provided them with a great experience. Customers hate dealing with companies that are slow to process an order or have trouble responding immediately to a complaint, which is why keeping your home business organized and separated from your personal life will help prevent these unnecessary delays.
Five Separation Tips
Figuring out how to untangle the clutter of your home and business life presents a challenge if you are inexperienced, but here are a few essential tips that will significantly improve the way your home business operates:
Although keeping home and business separate in a home business can get complicated at times, it is one of the most important ways to secure your financial well-being.
Brandi Tolleson is a successfully self-employed freelance writer and tax accountant residing in Whittier, CA.