Where's the bail out for home-based businesses?

CPSC has a new set of sharp teeth
Watch what you sell online or off

Home-based business owners typically don't qualify for unemployment benefits, they can't buy job-loss insurance, they pay more Social Security and Medicare taxes than salaried workers and the demise of "stated-income" mortgages has priced many of them out of the home-buying market.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Isn't it time for a big fat tax credit for home-based businesses?

They've paid their dues.

Home-based business owners typically don't qualify for unemployment benefits, they can't buy job-loss insurance, they pay more Social Security and Medicare taxes than salaried workers and the demise of "stated-income" mortgages has priced many of them out of the home-buying market.

Yet they are old-school planet savers who drive less and reduce both traffic congestion and pollution.

A study commissioned by the Consumer Electronics Association (CEA) "The Energy and Greenhouse Gas Emissions Impact of Telecommuting and e-Commerce"found that the estimated 3.9 million U.S. telecommuters reduced gasoline consumption by about 840 million gallons, while curbing carbon dioxide (CO2) emissions by nearly 14 million tons. That's equal to removing 2 million vehicles from the road every year.

Give home-based businesses a break, a tax break -- if not more.

• The so-called "Cash for Clunkers" gave qualified car buyers $4,000 in tax credits for trading in old cars, for newer fuel-efficient models -- an approach to greening the highways.

• Expiring November 30, the $8,000 first-time home buyers tax credit helped pull the housing industry out of a nose dive in the name of economic stability.

• And the American Recovery and Reinvestment Act comes with a relatively little-used tax credit of up to $1,500 on energy-saving products for the home.

The American Homeowners Grassroots Alliance is lobbying for a $2,000 tax credit for technology expenses used in teleworking (hardware, software, broadband access, cell phones, etc) that would go to whomever purchased the products/services (business owner, telecommuter, employer), among other long overdue benefits for those who work at home.

The effort is a part of AHGA's recent appeal to the Federal Communication Commission for a variety of incentives to promote "teleworking" -- home-based businesses or telecommuting with a heavy reliance upon modern technology.

"With the dramatic growth in two income families, time-starved parents find that teleworking helps them cope with the many responsibilities of child-rearing. As commuting distances and times lengthen due to suburban sprawl, teleworking also provides a way to recapture precious hours lost to traffic jams," said Bruce Hahn, AHGA president.

Virginia Governor Tim Kaine said when 2,286 federal and private sector employees as well as 1,765 state employees participated in Telework Day in Virginia on Aug. 3, they saved the state approximately $113,000 by not driving and reducing pollutants.

That could amount to a savings of $807 million in commuting costs it all eligible employees teleworked one day per week for a year.

A survey of Virginia's teleworkers also showed that 69 percent felt they accomplished more than a typical day at the office and 91 percent said that they would be more likely to telework again as a result of their experience.

To stimulate telework businesses, help the environment, and reduce state and local transportation infrastructure costs AHGA is also lobbying for

• Sales tax exemption on Internet buys because they reduce transportation costs associated with in-store shopping.

• Shortening the depreciation periods for technology products to two years to encourage teleworkers to maintain technological competitiveness.

• Click on the keywords below for more stories on this subject.

© 2008 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Starting a home-based business as an economic refuge? Insure it

Fifty-eight percent of the 24 million home-based businesses have no business insurance. Almost 40 percent of surveyed home-based business owners thought that their homeowner policy would cover their small company, and more than 10 percent of those without business insurance experienced a loss.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Recession refugees who turn to a home-based business to make ends meet threaten their livelihood if they aren't properly insured.

Homeowner policies limit coverage for work-at-home ventures and that can include coverage for buildings where the business is housed; office equipment or business property; and legal liability that may arise out of a lawsuit generated by the home-based job.

The Small Business Administration says nearly half of all U.S. businesses are home-based and more than 20,000 gross more than $1 million annually. Too many have put that income at risk.

A national survey by the Independent Insurance Agents & Brokers of America says 58 percent of the 24 million home-based businesses have no business insurance.

Almost 40 percent of surveyed home-based business owners thought that their homeowner policy would cover their small company, and more than 10 percent of those without business insurance experienced a loss.

"Many home-based business owners think they're too small to need a business insurance policy," said Candysse Miller, executive director of the Insurance Information Network of California (IINC).

"But in the real world, lawsuits don't discriminate. Whether you're big or small, your business suffers," she added.

Most homeowner's policies cover only $1,000 to $2,500 for business equipment and offer no liability protection or loss of income coverage.

Insure your home-based biz

What are the options?

IINC says:

• For as low as $14 a year, business-owners can increase their standard homeowner's policy limits. This can be a good choice for people who don't have exposure to liability, who do not store business inventory and who do not rely solely on their income for survival and have inexpensive business equipment.

• A full home office policy is the next step up. Home office policies cover business liability and replacement of lost income, as well as homeowners coverages such as fire, theft and personal liability.

• You can also buy several individual business insurance policies to provide the various coverages you need, such as business property, general liability and business income insurance.

• You may also need special policies for business use of your car, health insurance, injured workers compensation. An umbrella policy may also be necessary to offer extra liability insurance that pays or a loss when the limits of your underlying policy are reached.

Discuss home-based business insurance with your insurance agent for more details and then shop around for the best deal. A few calls can save you money.

Get proposals for the coverage you need from at least three different agents.
Compare the proposals, prices and your impressions of the agents. Don't forget to ask about discounts available to owners of businesses with fire detectors or security systems.

Update your policy as your business grows.

Read more about Home-Based Businesses.

© 2008 DeadlineNews.Com

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Avoiding Home-Based Business Blunders

Tapping your home's potential as a business venue lets you cash in on the intrinsic value of a roof over your head without treating it like an ATM.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Tapping your home's potential as a business venue lets you cash in on the intrinsic value of a roof over your head without treating it like an ATM.

The benefits are numerous.

• A home-based business comes with a full array of tax benefits.

• What you'll save in the time, cost and mental anguish associated with schlepping to work weekdays is by itself enough to want to work in your jammies.

• And all those savings could allow you to let your equity stay put for a rainy day -- which, as a work-at-homer, you won't have to go out in.

This all assumes you have what it takes to avoid common blunders associated with building your business at home.

Here's what not to do around the home, when you work there.

• Don't choose the wrong business. You may think you have enough space for those widgets in the crawl space above your garage until business booms and you've forgotten to have a load-bearing capacity analysis of the structure. Choose a business you love, to build in motivation, and then check on local licensing, zoning, work-at-home ordinances and other requirements before settling on a business. Make sure you've got the passion for the work and a job that is a good fit for your home and community.

• Don't give up your bedroom. Find a space in your home that is large enough to dedicate to running a real business or consider keeping your day job. You won't sleep in your bedroom if that's also your cubicle. Don't kid yourself. Leave your bedroom as your inner sanctum, a place to retire from life's daily challenges. Choose a location you can dedicate to your work, a spare room, an alcove under the stairs, a corner you can divide off from the rest of the room. Tax laws also require you have such a dedicated space.

• Don't use an easy chair as your desk chair. Don't cut corners, but get well-designed ergonomically correct office furniture or expect to pay the same or more for chiropractic or physical therapy services. The more you work at a computer or do desk work, the more you need the best furniture for the job.

• Minimize personal effects. A few personal items -- family photos, job related awards, a stress button -- are allowed in any work space, but there's usually a limit to maintain a business-like and professional atmosphere to your workspace. This is especially critical if clients come to your home office for a visit, conference or other meeting.

Instead equip the office with a fast computer, faster broadband connection an all-in-one printer, scanner, fax machine and feature laden telephone that can take messages and screen calls.

• Don't be a 24-7 business, unless you've got staff. Set realistic office hours and stick to them just as you would if you had to commute to work. Establishing regular work schedules includes break times, a lunch hour, giving yourself days off during the week, holidays and vacation time. If you have a family, they will still expect some of your time and you don't want work at home life to take over your personal life.

A regular work schedule also plays a part in motivation that can be threatened by kids, television, household chores, pets and the backyard hot tub. A work schedule also means no distractions from family members, family affairs and other matters you typically don't handle when you are at work.

You should have a separate phone line for your business and answer only it during business hours, letting non-business callers know you are busy and will get back to them as soon as you can.

• Don't forget room for growth. If your business is successful it will grow and growth demands more physical space. Don't allow business growth to take over the rest of your home. Consider using a garage, attic, basement or other area to store files you don't use. Rent long term storage for obsolete items. Work with only the equipment you need and store, sell or otherwise get ride of space grabbing items. Hire a professional organizer if you are all thumbs at keeping things neat.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Renters Without Insurance Risk Future Homeownership

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Refugees from home ownership now forced to rent could be setting themselves up for another financial disaster if they avoid renter's insurance to pinch pennies in order to quickly save up and return to home ownership.

All renters should have an insurance policy to cover their possessions because, should a disaster hit home, the cost to replace those items will put home ownership that much further out of reach.

But that's not all.

If you are held responsible for an injury to someone in your home or someone's property in your home, without the liability coverage provision of a renter's policy, your current and future earnings could be at risk. You'll also have to foot the bill for any legal defense you could need.

A renter's policy can also put a temporary roof over your head while damage to your rental home is corrected. Policies come with some limits but typically cover the difference between your additional living expenses and your normal living expenses.

Unfortunately, most renters, 58 percent, don't bother to buy renters insurance, according to an Apartments.com survey.

Most of them, more than 70 percent, know better and believe the insurance is important to piece of mind when renting, but say cost is a big reason they forego the coverage.

Apartments.com said 40 percent of those responding to the survey said cost is the reason they decide not to buy the coverage. However, an additional 24 percent of respondents said they were unaware that renters insurance exists.

The Insurance Information Institute reminds renters that because the property owner's policy covers the structure and common area and renters insurance covers only the value of the renter's belongings, renters insurance premiums are relatively cheap.

Shop around.

Apartment.com also found that an additional 18 percent of renters said the value of their personal belongings wasn't enough to warrant coverage.

That's an oversight because renters insurance doesn't just replace property but provides protection from liability claims, loss of use and in some cases, involuntary unemployment insurance in the event of a job loss.

Apartments.com says some management companies and property owners mandate the coverage because of the value provided those covered. Twenty percent of renters said they are required to have a renters policy to live in their current home.

Also, 36 percent of those responding to the survey said they'd be more inclined to rent an apartment with an insurance requirement.

There's a certain value to a community that can retain residents even after events that trigger insurance benefits.

Renters insurance typically provides coverage for possessions lost to fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). Liability covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and it pays legal defense costs if you are taken to court.

Renters can choose between two basic types of policies:

• Actual Cash Value pays to replace possessions minus a deduction for depreciation up to the limit of your policy.

• Replacement Cost pays the actual cost of replacing your possessions (no deduction for depreciation) up to the limit of your policy.

Floaters are also available to boost limited standard policy coverage, especially for items such as jewelry, silver, furs, collectibles, and some computer equipment and work-at-home related items. Floaters also cover perils not included in your policy such as accidental loss, according to the insurance institute.

• Renters Get A Breather
• Rents Inflated By Owner-Occupied Slowdown

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Work-At-Home Owners Catch Mortgage Malaise

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Home-based business owners and other self-employed workers are the latest victims of mortgage market malaise.

Self-employed workers often use income tax returns, IRS (Internal Revenue Service) Form 1099 and related documents to prove their income and, as such, typically qualify for what's called "stated-income home loans" (SILs).

Unfortunately SILs, similar "no-doc" (for no documentation) home loans and similar mortgages are in short supply.

That's largely due to the high rate of failures that have hit the subprime and non-traditional home loan segment of the mortgage market -- even if most of the failed mortgages don't belong to the self-employed and home-based business owners.

Lenders who had portfolios heavy in any risky loans -- SILs, subprime mortgages, nontraditional home loans and others -- either failed or stopped making the loans or severely curtailed their availability to stay in business.

Today's lenders prefer writing less risky mortgages and that includes those with more conventional income documentation including pay-check stubs or statements and employer-generated IRS Form W-2.

The mortgage market squeeze has put the kibosh on SILs.

SILs remain available but the come in shorter supply with stiffer underwriting rules and higher prices.

"Most lenders now require that you have excess cash after the transaction -- reserves of three to six months," said Eric Nelson, owner/mortgage broker of The Honte Group in Campbell.

"They also pay more attention to the length of time being self-employed and they look for legitimacy of the business, meaning a copy of a business license and a certified public accountant's document that the business actually exists," Nelson added.

Home-based business homeowners and other self-employed workers looking to get the best SIL loan need to relearn the ropes.

Here's how.

• Put all your docs in a row. In addition to two or more years of tax returns, proof-of-licensing, business tax statements and other proof of self-employment, you should also get your professional accountant to sign off on a profit and loss or income statement to reveal home much money your business is making or losing over a specific period of time. The Service Corps of Retired Executives (SCORE) offers an online tutorial on the statement.

"Adjusted gross income (AGI) is not reflective of a self-employed borrower's true earnings and these borrowers/applicants need to work with a lender (more importantly an underwriter) who understands cash flow and reserves, which more accurately reflect what a self-employed borrower is bringing in," said Cameron Street, a mortgage broker and editorial content provider with Santa Clara-based ERate.com.

The documents can take time to gather. Begin well before you actually apply for a home loan, refinanced mortgage, equity loan or other financing that stakes your home as collateral.

• Watch those write offs. Home-based businesses, like any business, get a plethora of tax write offs, from office supplies to health insurance, but the deductions reduce the amount of income against which taxes are calculated. A smaller income makes it tougher to quality for a mortgage.

• Use a savings strategy. The larger your down payment the better your eligibility requirements for the best, least expensive loan terms. If a lender offers a SIL it likely wants to reduce its risk.

• Crank up your credit rating. Good credit has never been more critical. Lenders have upped the credit score and credit report ante. Visit MyFico.com and learn what hurts and helps your credit score and credit standing. Keep tabs on your credit report, but only from AnnualCreditReport.com. Every four months, rotate obtaining one free report from one of the three major credit reporting agencies, to space out self-monitoring of your credit report.

Experts say the tighter underwriting standards alone shouldn't be enough to make home-based business owners and self-employed workers veer from their career path.

"There's nothing wrong with working from home, particularly in the San Francisco Bay Area where real estate and office lease expenses run through the roof. What you don't spend each month in the way of a lease goes straight to your bottom line," said Street.

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Dual Green Gains From Working At Home

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – It used to be working at home was a way to tell the boss to shove it, exit the rat race, work in your jammies and get a few tax benefits in the process.

Now home workers can also boast a green stamp of approval.

That's not just because of the more energy efficient technology today's consumers typically use at home, though that helps, but because staying off the road reduces carbon dioxide (CO2) emissions that contribute to pollution and climate change.

The Consumer Electronics Association says if a worker with a one-way commute of 22 miles, instead telecommutes five days a week, he or she would save about 320 gallons of gasoline and reduce CO2 emissions by 4.5 to 6 tons per year.

Also, one telecommute days saves the equivalent of up to 12 hours of an average household’s electricity use, saves 1.4 gallons of gasoline and reduces CO2 emissions by 17 to 23 kilograms per day.

In a year, the individual's energy savings would amount to approximately 4,000 to 6,000 kilowatt-hours of electricity -- an amount comparable to the electricity consumed by an average household in 4 to 6 months.

And that's just counting telecommuters -- not home-based businesses.

The study "Energy and Greenhouse Gas Emissions Impact of Telecommuting and e-Commerce," focused on workers who spend one or more days working from home each week and considered the energy consumed by telecommuting compared with traditional methods.

CEA commissioned TIAX LLC of Cambridge, MA to determine energy savings and CO2 reductions that result from the nation’s increased use of electronics, such as personal computers and wireless networks.

TIAX found that the estimated 3.9 million U.S. telecommuters reduced gasoline consumption by about 840 million gallons, while curbing carbon dioxide (CO2) emissions by nearly 14 million tons.

That's equal to removing 2 million vehicles from the road every year.

Using electronics to kickback and telecommute instead of gasoline and road rage saves the equivalent of 9 to 14 billion kilowatt-hours of electricity per year — the same amount of energy used by roughly 1 million U.S. households every year.

"This report demonstrates that consumer electronics are part of a climate change solution, as the use of electronics is preventing greenhouse gas emissions and reducing fossil fuel consumption," said Gary Shapiro, president and CEO of CEA.

"Statistics have been available to detail how much energy electronics use, but less was known about the environmental benefits of consumer products developed by our industry when used to communicate and conduct business," Shapiro said in prepared statement.

There's also another "green" benefit associated with telecommuting and working at home -- a $3-a-gallon gasoline savings.

Other studies have shown potential health benefits that come with not being exposed to office workers who refuse to stay home when they are sick.

• DeadlineNews.Com offers more green news that hits home.

• DeadlineNews.Com offers more global warming news that hits home.

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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