Business Articles
Home-Based Business Tips
If you intend to deduct the costs of using your home for business purposes, keep careful records that show the area of your home used for business, and how that space met the requirements for regular and exclusive use. Record any depreciation claimed, and file cancelled checks, receipts, and invoices to verify your expenses.
You also may benefit from a wide range of other deductions for expenses, fees, and services:
- Start-up expenses: renovating facilities.
- Operations expenses: paying for office supplies, equipment repairs, postage, utilities, subscriptions, and similar expenses.
- Equipment costs: purchasing computers, furniture in qualifying office, and specialized items.
- Legal and professional fees: paying fees to attorneys, accountants, and consultants.
- Purchased services: hiring family members or service firms to help complete special projects. Payments to family members are deductible as long as you document services rendered and cost.
- Automobile costs: keeping a mileage log and claiming the standard IRS deduction, set at 37.5 cents a mile in 2004. Or, you can deduct the business share of actual expenses. If you purchase a vehicle for business use, you may be able to deduct the full cost or depreciate it over several years, depending on type of vehicle purchased and cost. Small businesses may deduct the full cost of any vehicle that weighs over 6,000 pounds, up to $100,000 annually
How to Get a Business Loan
A lender looks to your business plan for information needed to evaluate the loan request. A business plan is a written document that combines your personal enthusiasm for the business with real life facts, figures, and details. It also serves as a guide for your company's progress and should change and expand with your business.
A business plan should explain how you will manage, operate, and finance your company. Call Member Business Services Manager Donna Russell at 597-2816 for more information on what lenders look for in a plan.
A business seeking a loan should answer these 10 questions in its business plan:
- How much money do you need and what is the owner's capital commitment? A rule of thumb is that 20% to 30% investment in the company needs to come from the owner, from either personal cash and savings or equity in the business.
- What will you use the money for? Give a clear description of how you'll use the money and how you intend to pay it back.
- How will the loan affect your financial position?
- What will you pledge as collateral? You'll have to pledge some tangible asset--such as stocks, certificates of deposit, or property--to obtain a loan. If the loan is for the purchase of equipment or real estate, that can become collateral.
- How will you repay the loan?
- When will you repay the loan?
- If you don't realize projections, can you still repay the loan? For example, do you have a spouse with outside employment?
- How much can your business afford to lose and still remain viable?
- How will the business manage risk?
- For an existing business, how has it performed to date? Is the financial position of the business improving or declining?
Links of interest
Ohio University Innovation Center
Ohio University Voinovich Center Small Business Development Center
State of Ohio
