Start Your Own Home Business After 50 (Quill Driver Books, 2013) is the perfect book to help you take care of your retirement income. Robert W. Bly offers advice and proven plans for starting a home business and achieving the income you’ve always wanted. Excerpted from “Launching Your New Business,” this selection shows the importance of setting financial goals that will lead you to a satisfying and sustainable income.
You’ve got a good idea of what you want to do, or maybe several ideas. Now, how do you plan to handle your finances? Do you have a business bank account set up to take in the money you receive as a freelancer? Your account should be one that takes in all payments made by checks and any possible bank-to-bank transfers.
To save yourself a lot of time and aggravation, you should call ahead to the banks you are considering using and ask to speak to the person who handles business accounts. Interview several banks to determine the one that offers the best services for the lowest fees. Start with the bank where your personal accounts are held, especially if you are looking for a business loan, since they already know you.
Often, the bank’s nominal monthly maintenance fees will be waived if you satisfy certain conditions, like maintaining a certain balance in the account or paying a certain minimum number of monthly expenses from the account. Even if you don’t satisfy those requirements, ask for the waiver of the fee.
Tell the business manager what type of entity you have formed, and he will tell you what documentation you need to bring with you to set up the account. Typically, you will need your driver’s license or other official photo identification, the tax identification number for the business, a copy of your articles of incorporation or operating agreement, Department of State filing receipt, and the stock or member’s certificate issued to you, indicating your ownership interest in the business. Open a business checking account and get a business debit or credit card. You can also set up a merchant account for credit card purchases, if that is applicable to your business. Now, you’re in business!
You can also create a PayPal business account online, which is an easy way to get paid efficiently and quickly through e-mail invoicing. PayPal allows your clients to pay with credit cards, even if you haven’t set up a merchant account. There is a small percentage charge for the PayPal service, but that fee may be deductible as a business expense at the end of the year. Just keep careful records of everything you do financially. Get every dollar back in tax deductions that you can.
It is also vitally important for you to establish your financial goals. For instance, let’s say you decide you want to take in $200,000 in revenue the first year, a good goal to begin with. Now, you need to drill down and figure out what you plan to make per month to reach that goal. Drill down further and look at your weekly goals, too. You will have to figure out what you need to charge for products or services in order to reach that year-end goal of $200,000. Sit down with your calculator and start dividing by hours and weeks to work out your income goals.
So, there are 52 weeks in the year, but you want to take out eight weeks for vacation time during the summer. That leaves you with 44 weeks to make $200,000. That amount divided by 44 equals $4,545.45 per week. Dividing that by five days will equal $909.10 per day. If you work eight hours per day, that will equal $113.64 an hour.
The next part of your financial outline is determining what it will cost per year to run a business. This is your balance sheet for the business; what is left over is what you or your company has made for the year as profit. The expenses include office supplies, business supplies, utilities and rent, payments to vendors and contract workers, and finally payments to yourself. Always be sure to pay yourself.
Of particular importance for those of us over 50 is making sure we are putting money away quarterly or yearly, preferably into retirement funds that earn the best interest we can find. Your CPA or money manager will be able to advise you on how to protect your money and make it work for you.
When I started freelancing in 1982, every client paid by check. Now, they pay by check, wire transfer, credit card, and PayPal. The advantage of taking credit cards and PayPal is that it allows you to get your retainer immediately in order to lock in a job before something happens to change the client’s mind.
Reprinted with permission from Start Your Own Home Business After 50: How to Survive, Thrive, and Earn the Income You Deserve! by Robert W. Bly and published by Quill Driver Books, 2013.
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