Many people believe that starting an online
business from home is difficult. In fact it is quite easy. If you are
already familiar with what product you will sell you will need to create
or hire someone to produce an online website for you. This website
should list the product or products you have available. If you will be
selling your own products, make sure that your online business has a
name that reflects you and what you offer.
After this has been completed, you should inquire in your local
state to learn the guidelines necessary for you to run a business from
your home. Many states require that even an online business register
with them and receive a business license. You will have to get the
necessary forms to request this license.
After you have obtained you license, you should also find out how
running an online business from home will affect you tax situation. You
would still need to report any income you make from your business, even
if you are working at home.
After all this paperwork is completed for you business, it is
important to set up your home office for you new job. It is suggested
that you have a separate space to conduct
your business affairs. A separate phone line that customers can call
is also very necessary and I strongly suggest you get a fax machine.
You will lose customers if you are not able to be reached by telephone,
fax and e-mail. Having a separate phone line from the rest of the house
is essential!
Other than a second phone line, it is also a good idea to buy the
necessary hardware and software for you home office. You will save lots
of money if you have your own fax machine, scanner, and printer. Also it
is probably wise to have the latest software additions for word
processing and accounting. The accounting software is especially useful
for you to keep track of all expenses and revenue for your online
business.
When you have established the business and things are going well, it
is a good idea to consider outsourcing. This would mean hiring someone
to take care of the little jobs that
you would have to do such as email or letter correspondence or
creating marketing brochures. By doing this, you will be able to focus
on the more important areas of making money and marketing your business,
which will be key to your success.
Tuesday, November 24, 2020
Starting An Online Business From Home
Is Your Business Profitable?
What’s your job profitability? Do you know?
Many
business owners are unsure of their profitability at a company or job
level. They “think” they are making money because they have a few
dollars in their checking account. Having money in your checking account
doesn’t mean you are profitable. It might simply mean you haven’t paid
all the bills yet, so you have a little cash. Cash and profit are two
different concepts. If you don’t know your exact income and expenses for
each job and your overall business, then how can you know whether you
are making a profit? And, if you aren’t profitable, your business won’t
last long.
Analyze Each Job
Regardless of the size of your
business or your industry, profitability is something you should be
monitoring on a monthly basis. To determine your profit, you must know
how much you make and spend on each job. Expenditures should be tracked
for direct labor and material costs on each job. In addition, you should
also be tracking overhead costs and allocating them to your various
jobs as applicable. There is always going to be some general overhead,
but too often dollars are thrown into general overhead, when those
dollars could easily be attached to specific jobs.
Intuit’s
QuickBooks software program has easy-to-use features that allow you to
do job-costing for time and materials, so you don’t have to worry about
having to track it all manually. Rely on tools to help you run your
business more efficiently and effectively.
Are you curious how
you are doing with job costing measurements? Here are some quick and
easy questions to gauge your job costing performance:
1. Do I track each customer’s revenue information through a detailed invoice?
2. Do I have a way of breaking down my direct job materials cost by customer?
3. Do I associate all time spent to each job accurately with actual dollar amounts?
4. Do I have access to reports to monitor profitability on each job in a timely manner?
5. Do I have a way to trend the fluctuations in job profitability from job to job, month to month, etc?
If
you answered “no” to any of these, then it’s time for you to take an
objective look at your financial goals. It’s time for you to implement a
job costing mechanism to help you answer “yes” to all these questions.
How can you track your profitability and long-term growth plans if you
don’t have detail at a job level?
QuickBooks Can Help
Here are some easy ways to utilize QuickBooks effectively to help you with your job-costing process:
1.
Set up the QuickBooks Item list so that you’ll have both an expense and
an income aspect to each of the items. This will allow you to track
your costs and your income, and will provide you profit by item.
2. Record your sales through the invoicing or sales receipt process. This will record the income aspects of the items.
3.
As you purchase the product or service items, make sure that you
utilize the Items tab so that it will record the cost to the appropriate
item. In addition, make sure to assign your customer/job information to
each line item so that you’ll have the costs associated to the
appropriate customer/job for job-costing.
4. Utilize the
time-tracking mechanism in QuickBooks so that you and your employees can
track time by item and customer/job. No dollar value is associated with
this time until you actually pay the employees within QuickBooks.
5.
QuickBooks has preformatted reports that you can access to have
job-costing information right at your fingertips. These are found under
the Reporting menu and the Jobs/Time/Mileage option.
6. QuickBooks
has the ability to provide reports for any time period you select. This
will allow you to have a variety of detail over the growth of your
business and to produce trending reports. You can modify the report as
needed to meet your needs.
A good accounting professional can
help you understand what these reports are telling you, in terms that
you can use. Reports alone don’t provide value if you don’t understand
them. So it is key that you understand the reporting information and how
you can use that information to assist you in decision-making as you
grow your business profitably.
Job-costing is easier when you
set-up your accounting/bookkeeping software package and know how to use
it. So, challenge yourself today to become more adept at running a
financially savvy business through job-costing. Then, you’ll know,
without a doubt, whether your company is profitable.