How seriously should you take your home based business?

Alright, I admit that this might seem like a particularly stupid question. But you would be surprised at how casual too many people are when it comes to setting up their home based business. And I am not referring to their diligence when it comes to goal setting, reading mindset books, or tapping into the training. I'm talking about the work that must be done before you even get to that stage. It really is critical that you are properly set up from the very first. Just because you work an online business from home, it doesn't mean that the you are exempt from the same rules that apply to brick and mortar businesses. You can't hide online. Now, I make this point for a couple of reasons. Firstly, you are running a legitimate business, and for taxation and compliance purposes, it is important that you dot the 'i"s and cross the 't"s. Pain in the neck though it is, the set up administration must be done for you to operate your business legally (can you say "random audit"?). Secondly, from a psychological perspective, if you don't make the commitment to set yourself up properly from the first, if you are "dabbling", or just "having a bit of a go to see what happens", I promise you, you will not make a cent from your business, and you will waste a lot of time, energy and money to figure this out. Being set up as you intend to go on is a critical element of a sound business strategy. A profitable business is a marathon. It is a long term commitment. The network marketing industry does a very good job of facilitating the notion that you can expect to see results and profits immediately after purchasing the product and signing on the dotted line. Now, this is not a bald faced lie, because some people (very, very few I'll add) do run their businesses hard and smart straight up, and enjoy incredible results. But for the average person coming into business for the first time, this is highly unlikely to be the case. Tempering your expectations and having a realistic understanding of what you are getting involved with, and what your commitment is to the process is also important. So, where to begin? I can speak about what this process looks like for someone in Australia, the general principles will be the same wherever you are, but you will need to seek specific advice from your own local tax professional or accountant, in the context of your local business laws, and existing financial and employment circumstances. The first thing you will want to do is set up a company structure to run your business through. We personally use a Trust, which provides us with protection from personal liability (very important, we live in a highly litigious society, unfortunately). Check with your own accountant regarding what would be the most appropriate structure for you. Most accountants are very helpful regarding the steps you need to take, and the information you will need to supply to get this going. The next thing you will need to do is set up a business bank account in the name of your newly formed company. You must keep your business and personal finances separate. Check with your own banking institution regarding products that will be appropriate for you. Evaluate business banking facilities that have a credit card attached, and think about whether they have a rewards program that includes Frequent Flyer points. If you are working your business Internationally, you will be wanting to attend conferences and company events. Having a Frequent Flyer rewards program can help you with the cost of your air tickets, or may enable you to upgrade on long haul flights. When you establish a company structure and business bank account, you will need to apply for an ABN (Australian Business Number). You can do this fairly simply by logging on to www.ato.com The first reason why you will need an ABN, is to comply with Government regulations for all business owners. The second reason is for the purposes of verifying an online merchant account. As you can imagine, money laundering is an illegal practice that is rampant online, and merchant facilities such as Paypal are legally required to make sure that their account holders are not using accounts for this purpose. When you set up a business account with Paypal (or any other merchant facility), you will be asked to supply your business bank account details as well as your ABN. Failure to do this can lead to your funds being frozen. This is obviously not something that you want to have happen. Next, you will want to make sure that you have an economical communication plan in place. It is a good idea to establish a phone line just for your business (nothing is more unprofessional than having your five year old pick up the phone to a business prospect). If you have a separate phone and broad band account in your business name, you will be able to run these expenses through your business. It is possible to claim a percentage of your home power bill on your business tax return, but before you go ahead and put this in place - check with your accountant. Be aware that if you sell your home at any point in the future, the tax office will put up their hand to take a chunk of capital gains tax on the sale. It may not be worth your while to run utilities through your business if you own your home. You will need to also seek advice from your accountant about the necessity for you to submit a quarterly BAS (Business Activity Statement) to the ATO. Your own particular circumstances will be the deciding factor for this decision. Keeping an accurate set of books on your business is mandatory. It does not need to be overly complex, and there are some very good bookkeeping programs available to make this task simpler. Quick Books is a great program that is very user friendly, and if you are a Mac user, MYOB is probably the best call. This is one area though, that I would suggest you outsource. It can be very time consuming, and it is not a sales generating activity, so unless you are experienced at bookkeeping, and can input and reconcile your own data quickly and with a minimum of fuss, I would definitely be outsourcing it. Your primary focus in your business should always be on the activities that generate leads, and convert sales. ALWAYS. Either way, you will need to keep all tax invoices, tax receipts, and bank and credit card statements together in chronological order, so that it is easy for whoever does your books to work through them quickly and methodically. Otherwise it will cost you a fortune in bookkeeping fees, or wasteful hours of your own time. So, that is a quick guide to some of the issues you will want to be working on and settling straight up, before you get too immersed in your training and marketing. It will give you a clean slate to move forward with, and allow you to get on with the business of making money.