In episode 22, I’ll do a deep-dive into the many benefits of baby boomers starting their own home businesses. Heads up Boomers! This could change your life!
To many of us baby boomers, turning 65 doesn’t mean retirement, it means that it’s time for new beginnings, it time to start a business. Many of us boomers are starting home businesses. In fact, according to the Kaufmann Foundation which is a multi-billion dollar foundation dedicated to the advancement of individual achievement and entrepreneurial success, baby boomers are twice as likely to start a new business compared to Millennials, Gen X’ers and Gen Y’ers. We’re an innovative and energetic bunch and a lot of us don’t want to quit working just because we’re in our 50s, 60’s and and soon to be 70’s.
According to a recent Gallup poll us boomers are still a full 1/3 of the entire workforce. That’s Equal to the entire population of generation X and Y combined. We are 76 million strong.
So why are so many of us boomers starting new businesses? Were a group of highly educated, highly qualified, highly experienced and very motivated people and many of us have been working in high-tech and computers for 20 years or more. Many boomers are working past the age of 65 by choice, not by necessity. It also makes financial sense to continue working and putting off drawing social security benefits until 70.
Click Here to hear my podcast How to Avoid the 10 Worst Social Security Mistakes
A lot of us boomers are starting their own businesses because it’s fun, its challenging, profitable and it often has a positive effect for the planet. A lot of us boomers care deeply about making a difference.
Many of us baby boomers, including me, either have or are starting home-based businesses. In fact, home based businesses are quickly becoming the fastest form of business startup. There are some great advantages to starting home-based business which make it particularly attractive to us boomers.
The advantages include:
- No commuting. I can tell you that here in the bay area it can take you hours to do a 30 mile commute during the typical commute time which is just about any time of the day.
- Working from home provides a lot more freedom. Working from home frees you up to set your own hours. You don’t have to plan your workday to the whims of traffic or a manager’s schedule. You can work at night when everybody else is in bed. You can also go on vacations when you want and possibly even make part of your vacation expenses tax deductible. More on that in a bit.
- Another big benefit of having a home-based business is the savings from not having to rent an office space. This can save you thousands of dollars a month.
- Because of the lower potential cost of running a business you can test out business ideas without spending a lot of money.
- Home based business are very scalable. You’re able to adjust the time and space dedicated to working as dictated by the needs of the business and your lifestyle. You can save a lot of money by hiring virtual assistants to help with your business. This can cost you from $10 per hour to around $75 depending on the level of skill and the country that they are working out of. Many VA’s work out of the Philippines.
Click Here to learn How to Hire a Virtual Assistant for Startup Success
- A great perk of having your own home business is that you have access to many excellent tax breaks, many of which include expenses that you are already paying for.
- In 2015, Self-employment tax is 15.30% for sole proprietors. This is your payments into social security and medicare and it’s all deductible.
- You can also deduct 100% of your health insurance premiums as long as you’re not eligible for insurance through your spouse’s insurance and if you have long-term-care insurance, than all or a considerable portion of it is deductible depending on your income.
- You can also deduct the cost of a Home office. You can deduct the cost of any workspace that you use exclusively for work regardless of whether you lease, rent or own it. But, this is a big red flag to the IRS so be very careful and be prepared to defend it at an audit if you claim this.
- Internet & telephone expenses are also deductible. Even if you don’t claim a home office you can still claim telephone and internet deductions but only to the percentage that its used for business. If you use your internet for business but still use it for personal use than be sure to deduct only the percentage that is used for business. But if you’re dealing with a business that requires for you to have an online presence or sell products over the internet than all of your related expenses such as computers, software, online services, website and related expenses are also tax deductible.
- Meals & Entertainment. Yes, you can also write off business related meals and entertainment. Entertainment does need to be business related. Taking the kids to Disneyland would most likely raise some eyebrows at the IRS. You can also only deduct 50% of the meals cost and you’d better keep very good records because these are areas closely watched by the IRS.
- Travel is also deductible. To qualify your destination must be out of your general area. There really does need to be a specific business purpose for your trip. But, you can fly down to visit the grand-kids and attend that trade show while you’re there and make the trip tax deductible. To play it safe you must keep records.
- When you use your car for business than those direct expenses are tax deductible. The standard mileage rate which requires minimal record-keeping of the date and miles, is57.5 cents per mile in 2015. You can also use the actual expense method which requires a bit more record keeping of all of your related expenses like gas, oil changes, registration fee, car insurance. If you use the car for personal reasons than again, only deduct the % that you use the vehicle for business.
- Having your own business also entitles you to some nifty options in how you can save your money. There are solo 401Ks or simplified employee pensions (SEP) which are tax deductible. To us boomers who are already 60, these are like tax deferred savings accounts because you can typically draw money at no penalty and still keep putting pre-tax money in.
Click Here to learn more about self-employment retirement plans from Forbes
The best advice I can give you here is to engage the services of a reputable CPA who can guide you through the IRS minefield. A good CPA will save you money and make it so you can sleep at night. Plus, they’re fees area deductible too!
It is also very important to establish yourself as a business for profit as opposed to a hobby with the IRS. Otherwise, you won’t be allowed to take deductions on your expenses. There are very important rules and filings that you need to do to be a business in the eyes of the IRS. Talk to your CPA about these rules and requirements.
Click here for the 23 questions to ask when hiring a CPA
Okay Jim, This is all well and good but I have no idea what kind of business to start. How do I figure that out? Good question. This does take some research and soul searching. Lucky for you there is a plethora of information out there for free to help you and to spur your imagination.
Click here for 65 home business ideas from goodfinancialcents.com
Click here for 25 of the top home business ideas from allbusiness.com
Click here for 107 ideas for finding your perfect home business
Here are Some things to consider when creating your own business.
Leverage your expertise. You’ve spent a lifetime accumulating skills and experience. Draw upon that. Don’t sell yourself short. There is only one you on this planet. There is only one person who has been through all of your experiences, gained the education and walked your path. Your knowledge and wisdom is golden. Look within for something that you will truly be passionate about. It’s that passion which will propel you forward during those times when you feel like all is lost…and there will be those times. Write down a list of all of your skills. Ask your family and friends. A lot of times we are blind to our most valuable skills. What are you passionate about? What do you love to do?
Most of us have had a lifetime to identify our weakness. We all have them. Identify yours and get expert help in areas where you are not as strong. Again, ask your close family and friends to identify your strengths and weaknesses. Seek out brutal honesty.
Surround yourself with positive, supportive people. It is said that we are the sum total of the 5 people that we hang out with the most so make sure that you nurture positive, supportive friendships. The best way to have a friend is to be a friend so be sure to offer your support, knowledge and wisdom freely and openly.
Consider your finances when deciding on a business. If you don’t have a lot of money to invest than it’s probably not a great idea to create a home business where you have to invest a lot of your own money to create or buy a product to resell. Remember, creating information is way cheaper than creating hula hoops.
Maintain a balance with your life. This is very important. It’s very easy to get caught up in all of the processes of starting and maintaining a business, even a “part-time” business so I think it’s very important to schedule time to do the things you love with the people you love. Being boomers, we realize that time is precious. Remember that…and that granddaughter of yours is only going to be young for a very short time.
Invest in yourself. There is no better investment than in your own education, especially when trying to get a business off of the ground. Hiring a business coach can save you years of painfully slow growth and help to prevent the big mistakes that often happens to people trying to wing it. Creating your own master mind group can propel you and your members to achieving your goals much quicker than on your own.
Click Here to learn more about how to create your own master mind group
Click Here to learn more about hiring a business coach from Success.com
Thanks to the latest trends of providing free ultra-valuable information to attract followers, There are vast amounts of extremely valuable online sources providing specific information on how to create businesses out there. Just google the specific information that you are looking for and you will find podcasts, blogs, videos and webinars providing step-by-step guidance that will provide the answers and education that you need to put your business together. It’s amazing really. Information that would have cost you 10’s of 1,000s of dollars is now available for merely the price of your email address. These are often-times created by the top leaders in the exact market that you are with your new business.
Click here for a home business startup guide from homebusiness.com
Okay, so after going through the process of figuring out what the heck kind of business you want to do whats next?
figure out what your competition is doing. The research spent here is priceless. Figure out what they are doing well, and what you can improve upon, or select more of a niche market. Its often way better to create a product or service that will solve the problems of a very specific niche. As they say, go an inch wide and a mile deep. If you are too general in targeting your potential customer than you will find it very difficult to get your message out there with everybody else yelling the same thing at the same time. But if you target a more specific niche than it is easier to get you message to that select group.
Next you will need to Set up a structure for your business. Most home businesses start off as sole proprietorships. That’s what you are by default. If you have a spouse or partner, than it’s a simple partnership. This is pretty easy to work with tax wise but you should know that you are personally liable for your business so if you get sued, than that great house and all of your assets are fair game. A lot of people set up LLCs or limited liability corporations. This limits your liability to the amount of money that you put into your business. These are easy to set up and relatively inexpensive, though here in California you get dinged with an $800 tax bill right out of the gate. It’s important to talk to an attorney to decide on which is best for you and your business.
Click here for more information on setting up your home business structure
Speaking of liability, you might be exposing yourself, your home and your family to a variety of risks. You may want to consider small business insurance. Also, you may need some liability insurance in case somebody hurts themselves as a result of your product, service or advice. This is a very litigious society. It is way better to be too safe than really sorry.
Click here for more information on home business insurance from entrepreuner.com
Depending on the type of business you’re running out of your home, you’ll need to determine if there are any zoning or restrictions that you’ll need to consider, such as having customers come to your house. Check with your city and county.
Are you going to be selling products online or locally? You will definitely need to get yourself educated and toe the line with your states tax entity for collecting sales tax. They have the power to shut you down in a millisecond so don’t treat them lightly. Keep good records and know they laws that are applicable to you. If you sell products nationally or internationally you will most likely have to account for the sales tax wherever your products are available. This is a big-time heads up.
Click Here for information on sales tax for home businesses
You will most likely need to come up with a name for your business. If you’re doing business locally than you will need to register your fictitious business name with the county of which you live.
Click Here for more information on creating a fictitious name for your business
Do you need to create a trademark, copyright or patent to protect your brand, service or product. You don’t want to create a successful business just to have somebody else hijack it from you. Check with your attorney to determine if this is a course of action that you should take.
No matter what kind of business you are planning you will need to set up an on-line presence to support your business. It is easier than ever to create great looking websites but if you don’t LOVE tech and know a lot about graphic design and websites, it’s worth it to pay somebody else to put the site together. It will save you hours, no days of pulling your hair out. A good website can drive business to you while a bad one can seriously affect your credibility and how people perceive your professionalism. Remember, on the internet, it’s a level playing field.
Click Here for more information on building your website vs hiring somebody to build it for you.
Next let’s talk about creating a brand for your company. Why do I need a brand you may ask. I’m just a local guy providing services to my home town. First, lets talk about what a brand really is. It is more than just a logo or the name of your company. It is the entire experience that a customer gets from first exposure through the entire sales process. It’s how you communicate with your customers and potential customers. It’s the way that they perceive you and it is very important. A good brand creates trust and credibility. A good brand can establish you as an expert in your field. A good brand will generate new customers. All successful companies both small and large have one thing in common, they have established themselves as a leader in their industry by building a strong brand. I will provide some links in the show notes to some excellent resources to help you with building your brand.
Click here for more information on building your own brand for your business
Next, What is your budget for startup costs and for running your business? Do you need to buy equipment such as furniture and computers? How about software, insurance, creating an LLC, licenses and building a website? Take your time with this step. It’s hard to know where you are going If you don’t know where you are at and what your resources are. What is your breakeven point, that golden number that turns your income into profit? What happens if you need more money? Where will you get it from? Uncle Frank? A small business loan? A line of credit? Do you need to work part-time to support your business until it becomes profitable? That’s what I’m doing for my home business…and be sure to set up a good system for keeping your books. There is software out there that can do the job but in my experience they are fraught with bugs so my big advice with them is avoid updating the software as long as possible because it can be a nightmare when your books from the last 5 years suddenly disappear. You can hire a bookkeeper locally or hire one as a digital assistant. Each has its pros and cons so do your due diligence. This is an important aspect of your business. I would also, as mentioned earlier, get yourself a great CPA,, they are worth their weight in gold.
And my last piece of advice is to just do it. You don’t have to wait for everything to be perfect. Yes, be sure to have your ducks lined up in a row, do your due diligence, plan and do your best in putting the proper processes into place but at some point you need to just take that leap and start. Whatever it is. Launch the damn thing. It’s okay that it’s not perfect. It won’t be. You will make a lot of mistakes along the way but you will most likely look back in a couple of years at your starting product with complete embarrassment but that will be from a place of immense growth and improvement. This is especially true if trying to create an online business dependent upon social media for growth. Just get out there and do it. Find the people who are successful in what you are doing, connect with them and try to use their mentoring as much as possible. Be true to yourself and provide solid content to your audience and customers. All of the information you need is out there and most of it is for free. So Be resourceful. Stay positive and dream big. That’s what us boomers do.
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