In 2007, I opened a makeup studio in New York City. By 2009, because of a failed economy I had to close my doors. Since then I've been doing a variety of activities to generate income such as writing, consulting, social media marketing and other newly developed skills. The one thing I forgot to really focus on was my passion for doing makeup. I have been a makeup artist pretty much all of my life. As a child I was always in awe of the women in the magazines with bright red lipstick, and arched brows. In my child's mind, their lives always seemed perfect. As a teenager, I took this awe for makeup to learning the art, and got a job at a local department store. In my 20s and 30s I had a very successful career as a celebrity makeup artist earning two consecutive Emmy nominations for my work. The money was rolling in, so I decided to open my own studio to support my unique position on the benefits of green and sustainable makeup. Almost in my 40s, I saw my bank account and my business completely shut down due to the stock market crash in 2008. I was now faced with jumping back into chasing celebrities, television and movie gigs after a three year hiatus. Most of my clients had moved on, when I moved in a different direction.
In a state of panic, I began to implement a "jack of all trades" mentality. I started doing a little of this, and a little of that just to be able to put food on the table. Yes, I still loved makeup, but my passion for it was dying because of its lack of monetary resources in my life. How was I going to make my passion and financial needs meet again? Here are the steps I followed:
Separate passion from money: I started to volunteer at different organizations that help women in need, just to find the love again. I also started to read, play and watch everything I could that pertained to makeup. Sometimes old dogs need to learn new tricks.
Base your services according to the location of your home based business: The next thing I did was to look at my surroundings. I live in New York City, but not in Manhattan which is the mecca for all things fashion and beauty, which is where I hosted my last studio. I switched my focus, and started promoting my services in my area (which is extremely concentrated with working women). I made the decision to open a makeup studio in the comfort of my own home, offering Manhattan trendy services (like false eyelashes and airbrushing).
Get your loved ones involved: Starting a home based business can be stressful on family life in the beginning. I showed my family that I needed their support by getting them involved. I had my daughter do inventory of all of my supplies, and my husband hand painted a beautiful sign for my space.
Don't forget marketing: I had to find a way promote my business, so I handed out postcards and spoke to women everywhere I went. I offered other businesses kickbacks for referrals, and took out an ad in the local newspaper. I created a website, offered specials on social media, and created a monthly email newsletter.
The next step was to turn my business into a real business not a hand to mouth cash "hustle." I met with Holly Nicholas Signorelli CPA, aka, the Money Therapist who shared her five tips that can be applied to any business for success and paying the least amount of taxes possible.
1) If you are starting a new home based business, either because you lost your job, or are no longer fulfilled in your job and want to create a new income stream, you absolutely must love what you do. You should also be selling something that you use, whether it's a service or a product. After all, if you don't like your own product, then why should anyone else?
2) In order to get the home office deduction, you need to actually have a home office, not just a portion of your house/apartment that you are using for a home office. The exception here is if you have inventory, but even then, take a few pictures to substantiate it for tax purposes.
3) Now that you have established your home office, you can start tracking your miles to anything at all that relates to your business. There are plenty of mileage apps out there that use the GPS phone feature to easily and effortlessly track your miles to and from appointments, going to the bank, to see your CPA or attorney, or any kind of event related to your business. This is a huge tax deduction, as the IRS gives .56 per mile and this can add up to thousands of dollars in savings. Make sure you keep your log! The IRS audits those due to past manipulation of handwritten logs. Also, if you live in the city and use the subway and cabs, all of those are also deductible, but you still need to use the keep a log to show that those trips and expenses were for business.
4) Please keep your receipts. The IRS does not always ask for them, but they can deny any expense you take if you don't have a receipt. There are simple reasonably priced scanners that allow you to scan receipts into a simple folder onto your computer. You don't have to organize them too much. Just have them in case you need them.
5) Remember, this is your first business and you may not realize that in addition to paying federal tax, you also have to pay social security tax of 15.3 percent of your net income. This means that even if you don't make a lot of money, you could pay over 30 percent! Your old employer took taxes out of your W2 and you didn't even think about it. Now, you are the employer, and you must set taxes aside and send them in each quarter. It's no longer acceptable to pay on April 15th, because due to the deficit, they want to be paid each quarter ahead of time. Otherwise, they will penalize you again. Talk to your CPA about this more in detail.
So now every night I go to sleep extremely optimistic of the next day, knowing that passion and money will come.
For more information on Holly Nicholas Signorelli CPA and The Money Therapist you can go to her website or download her free app The Money Therapist in the Apple Store or Google Play.