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.

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© 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.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner

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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.

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© 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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