Unless you have been living under a rock for the last five years, you undoubtedly have been impacted in some way by the state of our global economy. It is a fact that many have lost homes, jobs, and in some cases their lives due to the economic downturn that has had a largely negative impact on the way that people live, work and think about earning a living. Though much is said about the negative aspects of the financial times in what we live in, I would charge that this is the best time, and most importantly a vital time to either begin a home based business or re-energize a business that may be dormant. There are three key reasons that I make this statement.The first reason is for tax benefits. Unless you plan on going to jail or living on ‘the run’ for most of your life you will have some tax liability and exposure if you earn an income. Many miss the point and think that if they can just make more money, all their problems will disappear and life will be great. There is nothing wrong with making more money, but what is more important is keeping more of what you make! Home business ownership allows you to make legitimate deductions that will lessen your tax burden and result in you keeping more of your money. Some of the most notable deductions that you can make for having a home business are: Home office (Space, and utilities needed in running the office), Office supplies, Furniture, Other equipment (e.g. computers, copiers, faxes), Software and subscriptions, Mileage, (Travel, meals, entertainment and gifts), Insurance premiums, Retirement contributions, Social Security, Telephone charges, and Child labor (as in employing your own children). This initial dozen are a great start, but by no means is a completely exhaustive list. You can build an additional income stream by having a home based business and keep more of your money in the process.The second reason for establishing a home based business is to create an additional revenue stream to compliment any full time employment that you may have outside of the home. CAGR, inflation, and all of the other indicators basically tell us that everything is more expensive today than yesterday and will continue to go in an upward trend. Plain and simple, it takes more money to maintain the same standard of living year over year. Most corporations are not increasing their pay to employees at the same rate as inflation. In fact, most pay less within recent years. To cover the gap individuals must become creative in producing additional income for themselves and their families. Home based businesses allow for almost a limitless variety of options to accomplish this task, while keeping overhead low and the potential upside high. Best of all, if the business is chosen carefully, it can become an asset that can be transferred from parent to child or other family members to create perpetual generational benefits.Last, but certainly not least, the home based business can be the ultimate ‘Plan B’ in case your full time work ceases. In the event of a lay-off, down-sizing, company closure, a home based business can provide the revenue to keep your home above water and repel creditors (mortgage companies, etc.) while you replace your lost income, or decide to invest 100 percent of your time and energy in your home based business. Having the peace of mind that additional revenue streams exist during tumultuous change in the corporate world is priceless. To under estimate the importance of having a ‘Plan B’ is like not having car insurance. You just don’t want to go there, because sooner or later you will need it. In addition, the security of having additional income in the face of medical emergencies or for retirement is huge. How many times do we read that medical emergencies are the number one reason for individuals filing bankruptcy or that people who should be retired have to continue to work because they simply can’t afford retirement?If you have not thought about starting a home based business, give it serious thought and find something that you believe in and go for it. If you have a business, but have not done anything with it for a while, get busy. Death and taxes are a reality that we all must face, but if you can reduce your tax burden and live a quality life as long as possible, I think we all can agree, would be a great thing.
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