Reporting Dee Lee
BOSTON (CBS) – Small Business Week sponsored by the Small Business Administration is a national recognized event to honor the top entrepreneurs each year.
According to the SBA small firms:
• Employ about half of all private sector employees.
• Pay 43 percent of total U.S. private payroll.
• Have generated 65 percent of net new jobs over the past 17 years.
• Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
• Make up 98 percent of all identified exporters.
• Produce (16.5 times) more patents per employee than large patenting firms.
According to CNBC, 600,000 new companies are started every year. A small business by definition has less than 500 employees. However, there were over 21 million firms without any employees. Those are the individuals we will deal with this week.
We have a huge underground economy in this country. It’s a cash only economy. Individuals think that they will have more money in their pocket if they don’t share it with Uncle Sam.
That may be true, but if you don’t pay taxes whether they are income taxes, social security or Medicare taxes you will not be eligible for future benefits.
I am not recommending anyone pay more taxes than they should, but you do need to report all of your income and then look for the deductions you are eligible for as a self-employed individual.
The IRS has a section for small businesses on their website and they do offer some good advice.
They even have links to a tutorial on writing a business plan. Request publication 583, Starting a Business and Keeping Records and publication 334, Tax Guide for Small Business to get you off on a good start. Both can be downloaded from the IRS’ website.
Another helpful government resource for the small business owner is the Small Business Administration; they have key information on running your business and where to get financing.
One more thing: Check out the many books available for starting your own business whether it is a day care or a landscaping firm. Both the Complete Idiot Guides and the Dummy series have some good offerings.
A mistake the self-employed often make, especially those that are new to being self-employed, is that they are overly optimistic in estimating their annual income. If you have a good first quarter, it’s easy to fall into the trap thinking that the next three quarters will also be good! Don’t count on it! Plan for the worse and if it never happens aren’t you lucky?
Another problem for the self-employed individual is the lack of a steady income. Consultants, real estate agents, writers, musicians, landscapers, Dairy Queen owners and carpenters all suffer from fluctuating income.
It’s often feast or famine. And it’s not unusual to find yourself stuck in the famine mode where you need to hone your money survival skills. A long winter dampens the spirits of many self-employed individuals as well as depleting their savings.