Accounting and Small / Home Business

The Financial Reporting Act 1993 “requires the financial statements of an entity to which the Act applies to comply with GAAP (Generally Accepted Accounting Practice)”. Yet, as per the Act - almost all Small / Home-based businesses are “exempt companies” for which the compliance is not legally required. Although there are some valid reasons for the exemption – not having the reports prepared when needed – can have tragic consequences. Statistically the chance of a Small business to survive and be successful in the first 5 years of operation is less than 20%.

There is a clear link between such a sobering statistic and doing the books just to “furnish taxes”. It is heart breaking that 4 out of 5 ambitious and determined individuals fail in their quest to become successful business owners. One of the ways to reduce such a failure rate is to make Accounting for internal use (like planning, monitoring) – also known as Managerial Accounting – an integral part of every business.

Considering that the very important Home Based Business sector is the most neglected by the Accounting profession - we decided to play our part in changing the odds.

We at BusinessLand believe that there is no reason why any business should fail. That’s why we made it our mission to provide Small business owners with all the tools and support needed to succeed. These tools have been packaged into a product / template called Biz 2 Go.

Before we explain what Biz 2 Go is, let’s take a look at what is holding back most would-be entrepreneurs, who dream of starting their own business:

• They have no idea where to begin
• They fear large personal investments with no guarantee of return
• They fear it will take a long time before they break even and start being profitable
• They fear it may take too long to recover their initial investment or that they may not recover it at all
• They fear the unknown of what will be required (i.e.: skills, resources, market forces etc.).

If starting a business from scratch invokes the above fears, what are the alternatives?

They range from offers of “get rich quick” schemes to Large Franchises for sale. Most of the offers either sell a concept with guarantees of instant millions, or the asking price for Intangible “good will” (the price of a brand, reputation or track record) runs into tens or hundreds of thousands of dollars.

So why would you want to own a business?

The most common reasons that we hear are: Be my own boss, desire to succeed, need to earn extra money after loosing a job, being around loved ones - to name just a few. We identified a few more reasons that you may want to consider:

• Family Values: Time with your family and friends is important to you. Yet, showing your children that there are responsibilities outside of the household will provide them with a valuable lesson.
• Freedom: Working for yourself will give you more flexibility in scheduling your professional life around your domestic activities.
• Semi-Retirement: Retirement isn’t the end of the world. The family is all grown up and left home. You are still very active and want to earn extra cash for that special “something”.
• Supplementary Income: You don’t need to become the next Bill Gates or Robert Jones, to be a success. You may just want to supplement your family’s income - success is what you define it to be.
• Contact with outside world: Many parents love the time with their children but wish there was a reason to dress up and meet people in other places than at the PTA. Running a small business from home may do just that.
• Self-determination: Seeking fulfillment in life may be the greatest driving force for an entrepreneur. If you often think, “I could do this better!” You probably could.
• Self-reliance: Relying on others to provide stability in your life may not be the best way. No job is secure any-longer. Being your own boss may just give you the stability and income level you and your family need.
• Tax advantages: As a business owner you can claim genuine expenses created in the process of producing an income. You can off-set such costs as travel, accommodation, home office expenses including part of the interest on your mortgage or rent, utilities and more.

Considering the above, despite the compelling reasons to start a business the fears and obstacles maybe too great for some would-be enterpreneurs. Yet, there are ways where entering the business world needn't be risky or costly to start. On top of that, the risk of failure could almost be eliminated. To see how, click here.