In the last few posts on the Money Mastery blog I’ve been trying to help you see why starting a small home-based business (in addition to keeping your W-2 job) is a good idea. You may be excited by this prospect, but I’ve found with my clients that choosing the small business venture that’s right for them is the biggest issue they face.
Most people want to make more money and save tax dollars but they have a hard time
deciding what type of business entity to form or what income source they should engage in to bring money into that entity. Some get so anxious to begin a business they jump at the first opportunity that may present itself, whether that be a neighbor’s invitation to become part of an MLM, or selling widgets they enjoy making out of their garage. Unfortunately these people rarely give meaningful thought about what they actually want to accomplish by starting a business and what they might enjoy doing in it initially to get it up and running.
On the other hand, some people are so tentative and conservative about launching out on their own that they spend months and months, even years, thinking about and planning for a new business and never actually get that business off the ground. Neither approach is very productive. For example, you can read all about how to ride a bike, but until you actually get on one, you’ll never learn to ride one! Adding training wheels and falling a few times can sometimes be the most effective way to learn.
One of the best ways to begin a business in a timely manner is to do the following:
Most people want to make more money and save tax dollars but they have a hard time
deciding what type of business entity to form or what income source they should engage in to bring money into that entity. Some get so anxious to begin a business they jump at the first opportunity that may present itself, whether that be a neighbor’s invitation to become part of an MLM, or selling widgets they enjoy making out of their garage. Unfortunately these people rarely give meaningful thought about what they actually want to accomplish by starting a business and what they might enjoy doing in it initially to get it up and running.On the other hand, some people are so tentative and conservative about launching out on their own that they spend months and months, even years, thinking about and planning for a new business and never actually get that business off the ground. Neither approach is very productive. For example, you can read all about how to ride a bike, but until you actually get on one, you’ll never learn to ride one! Adding training wheels and falling a few times can sometimes be the most effective way to learn.
One of the best ways to begin a business in a timely manner is to do the following:
1. Consider what hobby or activity, skill, idea, property, equipment or source of income you have that you can turn into a viable small business venture (regardless of whether you are a W-2 employee or not). I ask my clients to right down every idea.
2. Come up with two ways you can take advantage of the tax deductions allowed on Schedule C within these ventures. If you do not know how Schedule C works (itemizes deductions for the self employed), contact me and I will be happy to explain the value of deducting business expenses for the purpose of reducing taxes: alan@moneymastery.com.
2. Come up with two ways you can take advantage of the tax deductions allowed on Schedule C within these ventures. If you do not know how Schedule C works (itemizes deductions for the self employed), contact me and I will be happy to explain the value of deducting business expenses for the purpose of reducing taxes: alan@moneymastery.com.
3. Next, assess your own skills and abilities that would allow you to build that business. I like to help my clients do this by having them rate their ideas for possible businesses on a scale of 0 to 5 (0= none; 5=high) for each of the following:
$ Capital needed:
My knowledge:
My skills:
Ease in starting:
Average total score:
In my next post I want to explain just a little bit about what you need to do to assess the value of a business venture you are thinking of pursuing and whether it has the possibility of providing a return on investment.
