BOSTON (CBS) - Small Businesses are defined as having less than 500 employees and according to the SBA:
- There are almost 28 million small businesses in the US
- Over 50% of the working population (120 million individuals) works in a small business
- 5 million are self-employed businesses
- 52% of all small businesses are home-based
- 4 million small businesses are sole proprietorships
These are the individuals we will talk about this week. The really small businesses, the one person firm.
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 SBA, Small Business Administration; they have key information on running your business and where to get financing. And they offer webinars and consulting as well as seed money.
Another good resource would be a good CPA as you struggle to start your new business. Well worth the dollars spent!
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.
One more thing: 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?
You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
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