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Maria asks…

Do I need a local permit to do programming consulting work at home?

Do I need a local permit to do programming consulting work at home? I don’t expect any visitors. I just want to use the home office to do programming work and want to deduct some tax. Thanks.

AustinBusinessConsulting answers:

You can check in the phone book’s gov’t page under licensing to determine if your locale will require a license. As for the home office deduction – this is one of the IRS’s biggest flags on returns. In order to use a home office, the ‘office’ must be used exclusively for business. You cannot place a home office on your tax return if you business is run out of your den, your living room or from your dining room table. It must be used exclusively for the conduct of your business, and strangely as it may seem, if you choose to do your personal banking or web surfing from that room, you immediately disprove the allowance. IE: you have a spare bedroom that you can convert into an office. Wonderful, then remove the bed, cause once you have a guest, it is just a space in a spare room. However, you can use that space as your home office on your tax returns. The secret is this: You need to measure the size of the ‘space’ or room you have dedicated to your home office and prorate that to the rest of the house. If the space or room is 5×5 and the rest of the houe is 10×10 then you need to figure the percentage of the house that is taken up by the space/room. Which in this case is (i think) to be about 25% (5×5 being 25, and 10×10 being 100). If I figured correctly, then you may ONLY deduct 25% of your homes utilities, (light, heat, water, sewer or septic, etc) rent or mortgage, insurance and what other expenses you may have for your house.

I would visit the IRS’s website and find out more by searching ‘home office deduction’ or ‘business use of the home’. Publication 587 is the one you want.
Hope this helps – good luck with your business.

Lizzie asks…

How can I start a home based business in cake decorating.?

I AM WANTING TO START A HOME BASED BUSINESS IN CAKE DECORATING. I AM A STAY AT HOME MOM WITH 3 KIDS AND LOVE BAKING CAKES,PIES AND PASTERY AND REALLY LOVE TO DECORATE THEM. I’ VE TOOK CLASSES AS WELL ON CAKE DECORATING AND NOW WANT TO GET MORE INTO IT A LOT MORE. I’VE BEEN DOING CAKES FOR FRIENDS AND FAMILY FOR ABOUT 7 YEARS OR SO. ALSO WHERE AND WHAT OTHER CLASSES CAN I TAKE TO HELP OUT AS WELL. ANY SUGGESTIONS AND COMMENTS ARE GREATLY APPRECIATED.

AustinBusinessConsulting answers:

The easiest way is word of mouth advertising, cause it’s free. Tell everyone you know to spread the word. Tell your childrens friends parents so they can call on you when their kids have birthdays.

A cheap way to get started is actually right here with Yahoo. They can start you a website for under 10 bucks a month, they do all the hosting and the website creator program they have for you is very easy to use, it does not require any experiance in website building to use. Then use a free program to submit your website to search engines.

Go to Kinkos or somewhere and make some cards. They can start you out with 500 or so, then drop them off everwhere you can. Also have them make you a magnetic sign (usually a page size graphic advertizement with just your name and business name on it with a big phone #) and stick this on your car.

As far as the legality goes, your just one person so you won’t need to worry about all the pesky tax and labor issues for yourself, but go to IRS.gov and get a TIN # they are free, and will help you later come next year tax time. I’d consult an accountant once you start making some money from this, to help keep you tax-complient, but don’t worry about that right away.

The key is to get new business, (people you have not helped with cake before) then ask them what they think about your finished product, if they are complementing you slide them a couple of business cards and tell them to pass them out if they know anyone with a wedding coming up or something.

Starting in March, you may want to buy advertising either online or somewhere, getting the word out that you make wedding cakes. Make sure to start early. Another good way is to create refrigarator magnets (although not really as cheap a business cards, they do work well) either with a home printer and magnet printer paper, or again at your neiborhood printers. Normally runs about 25-50 cents per magnet. Pass them out in March, so when those looking for cake decorators see them at a friends house or as that person if they know anyone, they will remember the magnet they have been staring at for a while on the frig.

Hope that helps

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