Up and Running

It’s a little hard to contain my excitement, so much so that I’ve not been sleeping much. When you decide to fully commit to being your own boss you do so in the face of regular convention. I’ve worked a “regular” job for over a decade. A lot can be said for the consistency of a bi-weekly or monthly paycheck so it’s important to know whether or not owning a home business is for you. When you decide to work for yourself full-time you have to do so accepting and expecting that it’s going to be very hard. My husband works a full-time job and although his benefits have not yet kicked in, we’ve been fortunate enough to have insurance through the Marketplace and so that’s taken a load off my mind. For all the bad things that there has been said about it, as someone who needed it and who now has a little more peace of mind deciding to work for myself.

This week I gained two potentially long-term clients. In one case it seems that it could be enough work and compensation that I can take the time needed to really ease into my business. When developing a business you must at least know what it is that you want to do, what services you’re going to provide, the price point you’ll be doing those services, etc. I use Elance. It’s a great way to find jobs and develop relationships with clients seeking servicing. So, if nothing else, you can do what you love part-time via this avenue.

I’ve also had to pay a great deal of attention to sunk costs. When you’re starting out and you don’t have much in the way of income to support monthly recurring costs you must be very careful. But, just because you need various services, it doesn’t mean that you can’t get them for free or at an affordable price. In my last post, Small Business Basics, I discuss some of the services I use for my business. In most cases there are free options provided by the providers. Thus, if you want to take it slow and very small, you’re able to do so at no cost.

When you’re ready to start taking on expenses, recurring ones, be careful not to go all in too fast. Just because the free option doesn’t always give you all that you need, you may want to simply learn to live with whatever the limitations of them are for a while until you’re completely sure that your business doesn’t become a money pit. I’ve recently increased my sunk cost. Here’s a basic outline of my monthly costs:

So, that’s already over $100 per month that I must pay regardless of whether or not I make a penny. When you then think of other personal living expenses, it can be hard making the decision to use the paid version of various services. Since I’m working from home there is the benefit writing off some of the expenses, the cost of doing business, on your taxes.

Speaking of taxes, you must be cognizant of what kind of tax impact there will be as a result of your business. If you’re a sole proprietor it is likely you’ll end up with a 1099-MISC at the end of the year. These are issued by January 31 each year by those who have earned $600 or more from a client. Usually you’ll fill out a W-9 and that information is used when creating the 1099-MISC. As this is often your income from doing a job it’s important to note that taxes are not typically withheld. And you know that Uncle Sam always needs to get his money. Therefore, it’s important to speak to a tax professional about whether or not there are any things you need to be sure that you’re not surprised by a big tax bill. Additionally, you can find information on the IRS and Small Business Association (SBA) sites.

It’s important to not feel intimidated by all the ins and outs of having a business but you must also be sure to prepare yourself in every way that you can by researching the things you need to know. A basic web search will provide some great information. However, it’s best to seek out and view credible sites like those of the IRS and SBA.

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