Business Management tips for people in a home based business/ Direct Sales Industry
BUSINESS MANAGEMENT TIPS FOR THE DIRECT HOME SALES CONSULTANT
Whether you are just starting out in business for yourself, or have had a home-based business for a while, here are some good business practices for you to consider:
Set up a separate checking account with an “attached” savings account at the same bank. Try to qualify for an account for which you need only a small, or no, minimum balance. Keep enough in the checking account to cover charges for unanticipated expenses like bad checks from customers. Do not “spend” deposits until checks have cleared.
If you must combine personal and business checking or credit card accounts, keep careful, written records of business transactions.
If you qualify, and if you have self-discipline enough, open a separate credit card account, which should be used for BUSINESS EXPENSES ONLY and MUST be paid IN FULL when it is due. NO PERSONAL EXPENSES on this card!
When you receive a commission check or other income, put at least ¼ of the amount in your savings account (or otherwise set it aside) to cover possible income taxes and other future expenses. Forget it’s there until it’s needed.
Delay gratification. Do not spend in anticipation of income. Wait for “discretionary” expenditures until the funds are in hand. Pay off credit card balances before spending for something new.
Pay yourself only after all business obligations have been satisfied.
Keep records of ALL income and expenses, especially cash transactions. Save all receipts. Match up credit card receipts to the bills when they come in and keep these in a separate file.
Make a habit of reconciling bank statements when they arrive. Keep copies in a separate file.
Figure what your on-going expenses will be and keep enough in checking/savings to cover them should your income stream be interrupted.
Invest in yourself. That includes purchasing appropriate business attire, if needed, but not extravagant items. Dress for success but modestly. Purchase necessary business supplies and keep them separate from personal and family items. Attend conferences and training to improve your knowledge and skills. You can always learn from others.
Set aside a specific area of your home to store business supplies, records and inventory. Keep records of inventory—costs as well as sales of these items.
Do not keep more items than you anticipate selling in the near future or are necessary for day-to-day business operations. Inventory items cost money that is not working for you if they are just sitting around.
Keep business cash in a separate wallet, purse or box. That would be a good place to keep the business checkbook and credit card.
Keeping a “petty cash box” with a journal to list cash income and expenses is also helpful. Reconcile cash income and expenses on a regular basis. Deposit extra cash in your checking or savings account where it can earn interest for you.
Pay quarterly income taxes if you anticipate having to pay taxes when you file your yearly tax return. (Otherwise you may owe a penalty for underreporting or late reporting.)
Remember that sales “prizes” and other incentives are usually taxable and “save” for taxes accordingly.
Your income will not be credited toward your future Social Security benefits (disability as well as retirement) unless you pay Self-Employment Tax.
Contribute a percentage of your income to an IRA if you are not already doing so.
Keep track of miles driven for business purposes--which include trips to the bank, post office, office supply stores and making deliveries. These are deductible on your tax return.
Whether you are just starting out in business for yourself, or have had a home-based business for a while, here are some good business practices for you to consider:
Set up a separate checking account with an “attached” savings account at the same bank. Try to qualify for an account for which you need only a small, or no, minimum balance. Keep enough in the checking account to cover charges for unanticipated expenses like bad checks from customers. Do not “spend” deposits until checks have cleared.
If you must combine personal and business checking or credit card accounts, keep careful, written records of business transactions.
If you qualify, and if you have self-discipline enough, open a separate credit card account, which should be used for BUSINESS EXPENSES ONLY and MUST be paid IN FULL when it is due. NO PERSONAL EXPENSES on this card!
When you receive a commission check or other income, put at least ¼ of the amount in your savings account (or otherwise set it aside) to cover possible income taxes and other future expenses. Forget it’s there until it’s needed.
Delay gratification. Do not spend in anticipation of income. Wait for “discretionary” expenditures until the funds are in hand. Pay off credit card balances before spending for something new.
Pay yourself only after all business obligations have been satisfied.
Keep records of ALL income and expenses, especially cash transactions. Save all receipts. Match up credit card receipts to the bills when they come in and keep these in a separate file.
Make a habit of reconciling bank statements when they arrive. Keep copies in a separate file.
Figure what your on-going expenses will be and keep enough in checking/savings to cover them should your income stream be interrupted.
Invest in yourself. That includes purchasing appropriate business attire, if needed, but not extravagant items. Dress for success but modestly. Purchase necessary business supplies and keep them separate from personal and family items. Attend conferences and training to improve your knowledge and skills. You can always learn from others.
Set aside a specific area of your home to store business supplies, records and inventory. Keep records of inventory—costs as well as sales of these items.
Do not keep more items than you anticipate selling in the near future or are necessary for day-to-day business operations. Inventory items cost money that is not working for you if they are just sitting around.
Keep business cash in a separate wallet, purse or box. That would be a good place to keep the business checkbook and credit card.
Keeping a “petty cash box” with a journal to list cash income and expenses is also helpful. Reconcile cash income and expenses on a regular basis. Deposit extra cash in your checking or savings account where it can earn interest for you.
Pay quarterly income taxes if you anticipate having to pay taxes when you file your yearly tax return. (Otherwise you may owe a penalty for underreporting or late reporting.)
Remember that sales “prizes” and other incentives are usually taxable and “save” for taxes accordingly.
Your income will not be credited toward your future Social Security benefits (disability as well as retirement) unless you pay Self-Employment Tax.
Contribute a percentage of your income to an IRA if you are not already doing so.
Keep track of miles driven for business purposes--which include trips to the bank, post office, office supply stores and making deliveries. These are deductible on your tax return.
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