Keep More of What You Make – Start A Home-based Business
by: Direct Selling Women’s Association
The best advantages of owning a home-based business are you can turn non-deductible expenses into tax deductions. The deductions you create for your Schedule C have a more significant impact on the total taxes you pay than do deductions on Schedule A. Schedule C deductions not only reduce federal income tax, they also reduce self-employment tax, Medicare tax, and state and local taxes.
Some favorite tax deductions for home-based businesses include the following:
Meals and Entertainment can be 50% deductible when you are with prospective or existing clients, vendors, etc. If you are in a service business or sell products, most everyone is a potential client. It is important to follow the simple documentation guidelines issued by the IRS and to understand there are limitations. An example of a deduction you cannot take is dining out with your spouse. Even if you are business partners, the IRS says no to this. If together, you take a potential client to lunch then the meeting expense is deductible.
Trips must be mostly business-related to be deductible. If a small element of fun is involved, you will most likely have a completely deductible trip. The deductions will not apply to a spouse who tags along, unless it is also a working trip for the spouse. Compliance with IRS regulations can be tricky, so it is best to check with your tax advisor before assuming your trip to Hawaii will be deductible.
Utilities and other expenses for the portion of your home or apartment you use exclusively for business are powerful deductions. Without a home-based business, the most one can deduct is interest and property taxes (on Schedule A). In relation to a home-based business, a portion of utilities, maintenance, cleaning, lawn service, pest control, etc. can be deducted on a Schedule C.
Income Shifting. Let us say you have three kids who are ages 10, 12, and 14. You can pay them to work in your business. (Children must be eight years old to be paid for working in a family-based business.) Each child can earn up to $4,700 in 2002 without paying income tax. You also have the advantage of not paying Social Security or Medicare taxes on your dependent children who work in your business. In this example, you have shifted $14,100 tax-free dollars to your kids. This is clearly better than allowance! There are rules, however. The kids have to actually work and be paid fair (not excessive) wages for their services
These are just a few of the many tax advantages available to owners of home-based businesses. It is strongly recommended you enlist a qualified tax advisor to help you learn how to document your expenses and how to legally take every deduction to which you are entitled.
This article has been provided by Vicky Collins, The Financial Center Director for the Direct Selling Women’s Association. The Association offers a community web site where direct sellers enjoy 24-hour access to industry specific information and resources designed to help them successfully manage their direct selling business. Discover this one-of-a-kind, all-inclusive business-building resource at www.mydswa.org or contact them at info@mydswa.org.
About The Author
This article has been provided by Vicky Collins, The Financial Center Director for the Direct Selling Women’s Association. The Association offers a community web site where direct sellers enjoy 24-hour access to industry specific information and resources designed to help them successfully manage their direct selling business. Discover this one-of-a-kind, all-inclusive business-building resource at www.mydswa.org or contact them at info@mydswa.org.
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Offering a price to prospective clients for servicing their lawns on a regular basis is not easy. Newcomers to the business are always looking for a formula or method to help them to price accurately but are quickly disappointed when they don’t find one. While there are lawn pricing tips and guidelines that you can follow you will have to rely on instinct to some extent. The good news though is that with a little experience you can become proficient at estimating and bidding on lawns within a fairly short time period.
Here are some tips and guidelines to help you come up with lawn care business prices that are fair and profitable at the same time.
Don’t Price to Low
Don’t make the mistake of pricing too low if you are just starting out in business. Many entrepreneurs come into the industry with the idea that they will establish themselves by competing on price. Bidding too low will mean that you will struggle to reach a profitable level of operation with your business. When you do finally realize that you have to increase your prices considerably to make any money you will risk losing most of your clients. Customers that choose a service based on price alone are often not the most loyal and they won’t think twice about moving on to the next low priced operator. Those business owners that do under price, known as ‘low ballers’ in parts of the US may also be doing a great deal of damage to their local lawn care industry and will be resented by their competitors.
The only time that you may want to price low is if you are really having trouble getting started in the business. If you offer your first one or two clients a great deal then you can at least get going and build up some confidence and experience.
When to Price your Lawn Care Services Above Market Rates
Pricing too high is also a mistake. The average prospect typically invites a number of lawn care companies to bid on their lawn and if your price is too high then you risk losing jobs and your marketing efforts will have been in vain.
There are some situations where it does pay to price above market rates. If your business is well established and has a reputation for quality work then prospects will expect to pay a little more. If you are a confident and gifted salesman, or have one working for you then it is also sometimes possible to sign households up for your services at above average rates. Being able to show customers your knowledge of lawn maintenance and proving to them why your services come at a premium price will help you to win accounts.
Other Pricing Tips
Never offer a bid over the phone. If you show up in person it gives you an opportunity to check out the property thoroughly so that you can avoid any nasty surprises. You can also show prospects photos or references from some of your current clients. If things go well you can also try to sign them up for other services that your business offers as well.
Lawn care business prices will vary depending on the going rate in your community. However the rate that you can get away with may be very different from that of your competitors. Only time, experience and the development of your own methods will help you to price in a way that maximizes your profit levels.
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