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Creating Wealth With A Small Or Home-Based Business

Millions of Americans are discovering how to attain wealth with a small business. Many individuals are being outsourced due to companies downsizing. This trend is expected to continue due to increasing foreign competition and factors in the US economy. A small business is defined as a business with 10 employees or less. A home-based business falls under the category of a small business for our discussion therefore we are also speaking of home-based businesses. A small business is one of the last significant tax shelters other than a home for middle-income Americans. Individuals can receive tremendous tax incentives with a small business along with income-generating opportunities. Items such as training, books, business meals, entertainment, business travel, payment to family members for employment services, auto maintenance, utilities, a percentage of the mortgage or rent, and others. Tax advice is beyond the scope of this document and the discussion here is not intended to provide advice, strategies, or education on tax subjects. To get the necessary information on small business tax considerations, visit

The small business should be started with every attempt to make a profit. The IRS allows the business owner time to generate a profit. Most business owners will incur a loss for at least the first year of operation. Some incur a loss the second year as well. If the business does not show a profit by the third year, it is in risk of being labeled a hobby by the IRS. Hobbies are not given the same tax consideration as small businesses therefore the deductions would not apply.

A business owner can employ several strategies to generate wealth. Using the tax deductions allowed by the IRS, a business owner may elect to pay his or her children to help out with the business. The children could put all or a portion of their wages into a tax-deferred college savings fund. The wages would be a tax deduction for the parent and depending on the children’s tax bracket, the wages could be tax exempt income for them as well.

Take, for example Bob, who is an employee of a company. Bob receives $40,000 a year from his employer in wages. Now let’s say that Bob decides to start a small business. The first year, his business has $12,000 in revenue. The expenses were $15,000 for the first year which included business meals, business travel, educational training (books, seminars, etc), wages to family members, advertising, office expenses (printer, computer, paper, etc), utilities for his office, mileage for his auto for business travel, costs related to manufacturing the product or providing the service, a percentage of his rent or mortgage if his business met the IRS criteria of a home-based business, and other business expenses.

Because Bob’s business had a net loss of $3,000 ($12,000 – $15,000), he could report a lower taxable income to the IRS. In other words, he would report his taxable income to be $37,000 to the IRS rather than $40,000. Depending on other things going on in Bob’s life, this could reduce his tax liability. The IRS allows for business deductions but does not allow for tax avoidance. Be sure you understand the difference. There are certain items that can be deducted in a small business that could effectively lower an individual’s taxable income as long as it is not a ploy to avoid paying taxes. The business owner must make every attempt to make a profit. Otherwise, after the third year, the IRS views the operation as a hobby as stated previously. Again, tax advice is beyond the scope of this document and the discussion here is not intended to provide advice, strategies, or education on tax subjects. To get the necessary information on small business tax considerations.

A business can be established in several methods such as a franchise, multi-level marketing, affiliate, and start from scratch method. A franchise is a method of doing business wherein the franchisor approves a franchisee to use certain processes of doing for an upfront fee and a percentage of monthly sales or monthly profits. It is a cookie-cutter approach to owning a business. Franchises can cost as little as $20,000 and up to several millions of dollars.

Many forward-thinking company executives have adopted the multi-level marketing or MLM technique to selling their products and/or services. With a MLM business, an individual can receive training support, and possibly marketing support from the parent company. A MLM business owner earns a commission on their personal sales as well as a commission on the sales generated by the people they have recruited into the organization once certain qualifications have been met. This type of business can be started with as little as a $49 investment or with as much as several thousands of dollars.

An affiliate business is one in which an individual agrees to market a company’s product or service in exchange for a commission. An affiliate usually receives a Website and earns a commission on revenue or leads generated through the Website. Some affiliate programs have a tier structure allowing the business owner to also earn revenue from affiliate members who signed up from their Website.

Starting a business from scratch can be the most risky of all choices. There are many areas that must be explored and mastered in order for this method of business to be successful. Historically, startup businesses using this method have a much higher failure rate than the other startup methods. However you have more control over the service/product pricing, marketing, distribution, and other aspects of the operation. It can be very satisfying when your product or service is delivered in the manner you envisioned.

With the additional income from the business coupled with the tax savings, you could have the opportunity to save more money on a monthly basis toward your retirement funds, college funds, and/or dream funds. If you are able to save this additional money in high earning yields (methods paying high interest rates), you can build substantial amounts of wealth over time. Consider the following:

Saving $500 a month at a rate of 10% for 20 years would result in approximately $102,433 in your savings fund.

Saving $1000 a month at a rate of 10% for 20 years would result in approximately $204, 867. Twice as much as if you were saving $500 a month.

Now consider these:

Saving $500 a month at a rate of 15% for 20 years would result in approximately $137,636 in your savings fund. Over $35,000 more in your fund than if your money was growing at 10%.

Saving $1000 a month at a rate of 15% for 20 years would result in approximately $275, 272. Over $70,000 more in your fund than if your money was growing at 10% annually.

Saving $500 a month at a rate of 20% for 20 years would result in approximately $188,107 in your savings fund. Over $50,000 more in your fund than if your money was growing at 10%.

Saving $1000 a month at a rate of 20% for 20 years would result in approximately $376, 215. Over $100,000 more in your fund than if your money was growing at 10% annually.

This is the magic of compound interest and is how you can generate a great deal of wealth. The key is to maximize, maximize, maximize. Use a small business to maximize your monthly savings contribution. Maximize the amount of interest your money will earn annually. And maximize the number of years the money will grow.

Cooking Up A Web Hosting Business?

Before you venture into the web hosting business a lot of factors need to be taken into consideration. One major and often overlooked part of the business is the ability to forecast growth. A web host must be ready for a positive growth swing before he even buys his first server. Once the hosting business gains popularity it will almost always generate additional business and preparing for the sudden influx of additional clients would be a key advantage. These will help the business to continue and not compromise its present clientele due to the sudden traffic which could bog down the whole system. In the event that additional traffic is foreseen, the web host should already be able to implement the additional hardware into the payload without affecting present operations.

A website must always have back up systems and should have a safe location away from physical hazards. Their equipment must be stored in state of the art facilities that prevent their system from breaking down due to environmental or mechanical failure. Maintenance and upkeep needs to be seriously considered to avoid sudden system failures. This is most important since a lot of the clients are using the web host service for e-commerce or for storing both personal and public information. Whatever happens, the show must continue. So goes the saying.

Needless to say extremely powerful systems must be invested upon including back up systems to keep the operation going round the clock. There should be outsourced areas where the customers can shift to sort of like temporary mirror sites that would be able to allow customers to retrieve important information while the main system is fixed and corrected. Some web hosts, in order to ensure that this will not happen, have facilities in multiple states all linked together each supporting each other so that if one breaks down the remaining can still handle the load.

The web hosts online presence should also be accounted for. Never mind that it’s not flashy as long as it is functional and has a lot of outstanding features. Post links that show certified write-ups or forums about the present customer satisfaction level of your web hosting service, this will entice hesitant customer to join the bandwagon. A barrage of positive testimony from existing clients can reinforce your reputation as a stable and reliable web hosting company.

You should then provide more of the necessary come-ons that web hosting companies are supposed to provide their customers. Features like lots of free space to store almost an unlimited supply of information on a case to case basis. Or some steep discounts when you bring in a friend as a client.

The number of customers and experience will always mark the trail for a web host. Try to keep your customers happy. Provide extra services or bonus incentives such as more domains or even unlimited domains, unlimited emails, free Yahoo credits or marketing credits. Offer to create a link to search engines and provide the needed exposure of your clients.

Finding The Best Home Based Business Online

Wouldn’t it be great to have a home based business online? You could earn all you need from the comfort of your own home, be home with the family all of the time, never have to spend another cent on transportation, be your own boss and get out of bed whenever you want!

A lot of people think this way but the truth is, these are negative goals, and negative goals are never enough. Negative goals are where you are aiming to avoid something (in this case, having to go out to work) instead of aiming at what you really want. To make a success of your home based business you will need to find out what you really want to do – not only what you don’t want to do.

There are a lot of ways to make money online and some of these can surely replace your current income or give you an income boost if you want to do this part time. But you need to find the right type on online home based business and preferably, find it right away before you start.

The worst thing that you can do is to keep trying one type of business and then another. All businesses take some time and money to get started. You almost always need some training in connection with your business, which will take some time and possibly some money. Many businesses require stock that you have to buy, or equipment that you need. You cannot expect to recover your initial investment if you give up and switch to another type of business every few weeks.

Even though online businesses are less likely to require stock, you are still likely to have to buy some extra things. For example when you switch from using your computer only for entertainment, to using it for your business, it becomes more important to have a backup of all your data that is on the computer. You would be surprised to know how often hard drives fail. So you will probably want to buy an external hard drive that you can connect to your computer to store your backup once a day or once a week.

The best way to begin with an online business is to decide what you want to do and then pursue that goal until it is making a reasonable profit for you, before you expand or switch to anything else. This means some thought and research before you first start up.

If you have space for storage and some money that you can use for stock, you may want to set up an online business that sells physical goods. If you do this, be sure to research your market thoroughly to know that you can make a good profit per item after considering all of your costs – not just the cost of the stock, but costs of running your website, shipping, insurance, telephone costs, packaging materials and any help you need for packing and shipping the items.

If you want to sell digital goods online, such as ebooks and software, you do not have the same shipping and purchase costs but you still need to know that there is a market for your products so that you are not wasting your time. Time is a very precious commodity in a home based business online so make the most of the time that you have!