Start a business during one of the most daunting and fiscally disastrous times in U.S. history? You must be crazy – like a fox, that is. The biggest impact the fiscal cliff could have on an average tax-paying American is in their wallet. To combat your own personal financial concerns, starting a small business that can generate even a few hundred dollars of income can be just the trick to forging a new road toward success.
Reason #1 – Combat increased taxes by generating new revenue streams.
According to Entrepreneur.com’s Mark Kohler, “increasing your cashflow can give you the opportunity to write-off expenses that would have otherwise been considered personal.” Additionally, the supplemental income can help to combat any increased taxes or deduction losses you may be facing as a result of the fiscal cliff, should it occur. By covering your anticipated losses with new revenue, you may even find that your small enterprise can grow to become your full time job and support not just you but other family members or employees.
Reason #2 – Find alternative career options.
If you’ve been considering a new career path for some time, now is a great time to test the waters with your own business offering. Whether it’s a service-based company or a retail environment, starting small or even micro in nature can be a great way to see if business ownership is truly right for you. Many small businesses are started in the home today. With technology options such as the Internet and mobile credit devices, bringing your enterprise to the customer’s door is easy. There’s also security in knowing that you can keep your current job while starting your new small business so that you have a protected and consistent income stream during the more challenging start-up phase.
Reason #3 – Health care options a plenty.
Not directly part of the Fiscal Cliff, but part of the 2013 and 2014 political scene, finding more affordable health care will become a little easier, especially if you have a small business. If you don’t have company-sponsored health care offered to you through you or your spouse’s employer, starting a small business and obtaining health care through a health care collective may be a viable option. You’ll also be able to write off a portion of your health care coverage costs including the premium.
Reason #4 – Protect for your family’s financial future.
What better reason to start a small business than to keep you and your family in control of your financial future? While the Fiscal Cliff may be tapping into your short term cash flow, it will also be dipping into your long term plans for paying for your children’s college, your retirement and other life goals. Generating a second, or even a third income can help you better insulate your wealth and provide security for you and your family well into the next generation.
Reason #5 – Regain a feeling of control.
All of these government and political decisions can leave us feeling like we have no real say in how our futures are drawn. Rather than sinking into a sense of hopelessness about the future, starting a small business can put you in the driver’s seat of your own destiny again. How you build your business and generate income is completely in your hands.
· Develop a business name and write a basic business plan. Learn more about how to write a business plan by visiting our how to guide.
· Go to the IRS and request an Employer Identification Number (EIN). You can also use your social security number for sole proprietorships using a ‘Doing Business As’ (DBA) name. Just be very clear on all banking that the DBA is included and the business is a separate entity from your personal banking.
· Open a bank account and maintain separate accounting from your personal finances. The IRS will look for a clear delineation between your personal finances and your small business’ accounting. Using a software program like Quickbooks to help itemize expenses will make year-end accounting all the easier. If you’re not sure where to begin, talk with a small business accountant like a PASBA member.
· Go online and secure a web address (URL) for your business. Additionally, go to the top social media outlets such as Twitter, Facebook and YouTube to establish your username/avatar for the business.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations. To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.
Copyright Information 2013 Professional Association of Small Business Accountants