Average mortgage rates fell moderately yesterday for the fourth consecutive day. So, it’s been a good week for those rates, and they’re now appreciably lower than they were seven days ago.
Whether that happy experience extends into next week will likely depend almost entirely on Tuesday’s inflation report, the consumer price index (CPI) for February. So, yet again, I’m forced to say mortgage rates next week could go either way. Ask me again late on Tuesday morning.
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Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.02%
7.04%
-0.08
Conventional 15-year fixed
6.51%
6.54%
+0.05
Conventional 20-year fixed
7.03%
7.05%
Unchanged
Conventional 10-year fixed
6.57%
6.59%
+0.08
30-year fixed FHA
6.15%
6.82%
+0.05
30-year fixed VA
6.43%
6.54%
Unchanged
5/1 ARM Conventional
6.28%
7.35%
-0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
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Should you lock a mortgage rate today?
I think it unlikely that the last couple of rate-friendly weeks are the start of the sustained downward trend in mortgage rates that I’ve been predicting for months. However, if next Tuesday’s CPI report turns out to be exceptionally good for those rates, I just might be proved wrong.
But I doubt it. So, my personal rate lock recommendations are now:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
What’s moving current mortgage rates
This week
The economic data published earlier this week suggested that economic growth is slowing at just the right rate. Mortgage rate watchers would like to see it cooling but not enough to trigger a recession.
Typically mortgage rates tend to be lower when the economy is struggling or at least not running too hot.
Some indicators this week pointed to continuing resilience, including the headline figure in yesterday’s jobs report. However, that was balanced out by a very large downward revision to the previous month’s number, and by the report’s other major components being friendly to mortgage rates
Next week’s CPI
So much depends on next Tuesday’s CPI. Only the jobs report rivals its ability to move mortgage rates so far and for so long.
As usual, we want lower numbers on the day than markets are expecting. Wall Street will already have priced into mortgage rates the consensus forecasts. So, it’s the gap between expectations and reality that changes those rates.
There are four main items in the CPI report:
All-items CPI — The amount by which the prices of all surveyed items moved in February. Called just CPI
Core CPI — The all-items CPI after volatile food and energy prices have been stripped out, revealing underlying inflation in February
YOY CPI — The year-over-year CPI will reveal how all surveyed items moved between Mar. 1, 2023 and Feb. 29, 2024
YOY core CPI — The year-over-year core CPI will reveal how all surveyed prices for items excluding food and energy moved between Mar. 1, 2023 and Feb. 29, 2024
Here’s what’s currently expected, according to MarketWatch, for the upcoming February report:
February CPI — Markets are expecting prices for all items to have risen by 0.4%. (0.3% in January report)
February core CPI — Markets are expecting prices for all items excluding those for food and energy to have risen by 0.3%. (0.4% in January report)
YOY CPI — Markets are expecting prices for all items to have risen by 3.1% between Mar. 1, 2023 and Feb. 29, 2024. (3.1% in January report)
YOY core CPI — Markets are expecting prices for all items excluding those for food and energy to have risen by 3.7% between Mar. 1, 2023 and Feb. 29, 2024. (3.9% in January report)
Remember, mortgage rates are more likely to fall if actual figures are lower than the expected ones.
Other important reports next week
The other economic reports are much less likely to move mortgage rates far or for long. But those most likely to do so, in rough order of importance, are:
February retail sales on Thursday — Expected to rise by +0.7% compared to January’s -0.8%
February producer price index (PPI) on Thursday — Expected to hold steady at 0.3%. This measures wholesale and factory-gate prices so changes may turn up in later CPIs
February industrial production on Friday — Expected to rise to 0.0% from a negative in January. Also, capacity utilization, which is expected to inch lower compared to January
February import price index (IPI) on Wednesday — Expected to fall to 0.3% from January’s 0.8%. This measures price changes in foreign-sourced goods and services
Of those, retail sales and the PPI are most likely to affect mortgage rates. But even they rarely move them far or for long.
The Fed
Wall Street currently views most economic reports through the prism of how they’ll affect the Federal Reserve’s decisions on when it will start cutting general interest rates and how often it will do so after that.
That’s why The Wall Street Journal (paywall) yesterday greeted the jobs report with the headline, “Hiring Boom Continues, but Signs of a Cooling Labor Market Boost Rate-Cut Hopes.” In the article beneath it said:
“The Goldilocks report lends credence to the Federal Reserve’s outlook that somewhat lower interest rates could be warranted later this year, potentially providing a boost to markets that have been on a tear to start 2024.
“Bill Adams, chief economist at Comerica Bank, summed up Friday’s report with one word: cool. ‘That’s what the Fed wants to see right now,’ he said.
The Fed will next decide on rate policy on Mar. 20. Very few expect it to cut general interest rates that day. But Wall Street hopes it will strongly hint at cuts at the May or June meetings of its rate-setting committee.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
Monday — Nothing
Tuesday — February consumer price index. Also small business optimism index for the same month
Wednesday — Nothing
Thursday — February retail sales. Plus February producer price index. And initial jobless claims for the week ending Mar. 9
Friday — February industrial production and capacity utilization. Also, the February import price index
With the consumer price index, Tuesday is make-or-break day.
Time to make a move? Let us find the right mortgage for you
Mortgage rates forecast for next week
I hate not giving rate forecasts for the following week. But this is the third consecutive Saturday on which I really can’t.
Nobody knows what Tuesday’s CPI will say. And that’s very likely to determine how mortgage rates will move over the next seven days.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.
Your part
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Shopping around for your best mortgage rate — They vary widely from lender to lender
Boosting your credit score — Even a small bump can make a big difference to your rate and payments
Saving the biggest down payment you can — Lenders like you to have real skin in this game
Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on something called you “PITI.” That stands for:
Principal — Pays down the amount you borrowed
Interest — The price of borrowing
Taxes — Specifically property taxes
Insurance — Specifically homeowners insurance
Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2023
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
Millions of employees work from home at least part time. They’ve carved out dedicated office space and plopped laptops on kitchen counters and in closets. They almost never can declare the home office tax deduction.
Millions of self-employed people have also created workspaces at home. If they use that part of their home exclusively and regularly for conducting business, and the home is the principal place of business, they may be able to deduct office-related business expenses.
Why the difference? The Tax Cuts and Jobs Act nearly doubled the standard deduction and eliminated many itemized deductions, including unreimbursed employee expenses, from 2018 to 2025.
Read on to learn whether or not you may qualify for the home office tax deduction.
What Is a Home Office Tax Deduction?
The home office tax deduction is available to self-employed people — independent contractors, sole proprietors, members of a business partnership, freelancers, and gig workers who require an office — who use part of their home, owned or rented, as a place of work regularly and exclusively.
“Home” can be a house, condo, apartment, mobile home, boat, or similar property, and includes structures on the property like an unattached garage, studio, barn, or greenhouse.
Eligible taxpayers can take a simplified deduction of up to $1,500 or go the detailed route and deduct office furniture, homeowners or renters insurance, internet, utilities needed for the business, repairs, and maintenance that affect the office, home depreciation, rent, mortgage interest, and many other things from taxable income.
After all, reducing taxable income is particularly important for the highly taxed self-employed (viewed by the IRS as both employee and employer.)
An employee who also has a side gig — like driving for Uber or dog walking — can deduct certain expenses from their self-employment income if they run the business out of their home. 💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.
Am I Eligible for a Home Office Deduction?
People who receive a W-2 form from their employer almost never qualify.
In general, a self-employed person who receives one or more IRS 1099-NEC tax forms may take the home office tax deduction.
Both of these must apply:
• You use the business part of your home exclusively and regularly for business purposes.
• The business part of your home is your main place of business; the place where you deal with patients or customers in the normal course of your business; or a structure not attached to the home that you use in connection with your business.
Regular and Exclusive Use
You must use a portion of the home for business needs on a regular basis. The real trick is to meet the IRS standard for the exclusive use of a home office. An at-home worker may spend nine hours a day, five days a week in a home office, yet is not supposed to take the home office deduction if the space is shared with a spouse or doubles as a gym or a child’s homework spot.
There are two exceptions to the IRS exclusive-use rules for home businesses.
• Daycare providers. Individuals offering daycare from home likely qualify for the home office tax deduction. Part of the home is used as a daycare facility for children, people with physical or mental disabilities, or people who are 65 and older. (If you run a daycare, your business-use percentage must be reduced because the space is available for personal use part of the time.)
• Storage of business products. If a home-based businessperson uses a portion of the home to store inventory or product samples, it’s OK to use that area for personal use as well. The home must be the only fixed location of the business or trade.
Principal Place of Business
Part of your home may qualify as your principal place of business “if you use it for the administrative or management activities of your trade or business and have no other fixed location where you conduct substantial administrative or management activities for that trade or business,” the IRS says.
Can You Qualify for a Home Office Deduction as an Employee?
Employees may only take the deduction if they maintain a home office for the “convenience of their employer,” meaning the home office is a condition of employment, necessary for the employer’s business to function, or needed to allow the employee to perform their duties.
Because your home must be your principal place of business in order to take the home office deduction, most employees who work part-time at home won’t qualify.
Can I Run More Than One Business in the Same Space?
If you have more than one Schedule C business, you can claim the same home office space, but you’ll have to split the expenses between the businesses. You cannot deduct the home office expenses multiple times.
How to Calculate the Home Office Tax Deduction
The deduction is most commonly based on square footage or the percentage of a home used as the home office.
The Simplified Method
If your office is 300 square feet or under, Uncle Sam allows you to deduct $5 per square foot, up to 300 square feet, for a maximum $1,500 tax deduction.
The Real Expense Method
The regular method looks at the percentage of the home used for business purposes. If your home office is 480 square feet and the home has 2,400 square feet, the percentage used for the home office tax deduction is 20%.
You may deduct 20% of indirect business expenses like utilities, cellphone, cable, homeowners or renters insurance, property tax, HOA fees, and cleaning service.
Direct expenses for the home office, such as painting, furniture, office supplies, and repairs, are 100% deductible. 💡 Quick Tip: A major home purchase may mean a jumbo loan, but it doesn’t have to mean a jumbo down payment. Apply for a jumbo mortgage with SoFi, and you could put as little as 10% down.
Things to Look Out for Before Applying for the Home Office Tax Deduction
If you’re an employee with side gigs or just self-employed, it might be a good idea to consult a tax pro when filing.
To avoid raising red flags, you may want to make sure your business expenses are reasonable, accurate, and well-documented. The IRS uses both automated and manual methods of examining self-employed workers’ tax returns. And in 2020, the agency created a Fraud Enforcement Office, part of its Small Business/Self-Employed Division. Among the filers in its sights are self-employed people.
The IRS conducts audits by mail or in-person to review records. The interview may be at an IRS office or at the tax filer’s home.
A final note: Taking all the deductions you’re entitled to and being informed about the different types of taxes is smart.
If you’re self-employed, you generally must pay a Social Security and Medicare tax of 15.3% of net earnings. Wage-earners pay 7.65% of gross income into Social Security and Medicare via payroll-tax withholding, matched by the employer.
So self-employed people often feel the burn at tax time. It’s smart to look for deductions and write off those home business expenses if you’re able to.
To shelter income and invest for retirement, you might want to set up a SEP IRA if you’re a self-employed professional with no employees.
Recommended: First-Time Homebuyers Guide
The Takeaway
If you’re an employee working remotely, the home office tax deduction is not for you, right now, anyway.
If you’re self-employed, the home office deduction could be helpful at tax time. To qualify for the home office deduction, you must use a portion of your house, apartment, or condominium (or any other type of home) for your business on a regular basis, and it generally must be the principal location of your business. This is something to keep in mind if you’re in the market for a new home, since writing off a portion of your home expenses could help offset some of the costs of homeownership.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much can I get written off for my home office?
Using the simplified method of calculating the home office deduction, you can write off up to $1,500. Using the regular method, you’ll need to determine the percentage of your home being used for business purposes. You may then be able to deduct that percentage of certain indirect expenses (like utilities, cellphone, cable, homeowners or renters insurance, property tax, HOA fees, and cleaning services). Direct expenses for the home office, such as painting, furniture, office supplies, and repairs, are generally 100% deductible.
Can I make a claim for a home office tax deduction without receipts?
The simplified method does not require detailed records of expenses. If using the regular method, you should be prepared to defend your deduction in the event of an IRS audit.
The IRS says the law requires you to keep all records you used to prepare your tax return for at least three years from the date the return was filed.
What qualifies as a home office deduction?
Things like insurance, utilities, repairs, maintenance, equipment, and rent may qualify as tax deductions.
Photo credit: iStock/Marija Zlatkovic
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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The NCAA’s name, image and likeness policy, or NIL, is an interim rule that allows college athletes to earn money by lending their celebrity to endorse or promote products, services or brands. Since it took effect in 2021, NIL deals have exploded, increasing by 146% from 2022 to 2023 according to SponsorUnited, an online platform that tracks sponsorship data.
In addition to the impact on college athletics, the policy increases access for smaller businesses that couldn’t previously afford big university sponsorships, allowing them to align themselves with the school brands through smaller NIL deals.
“There are a lot of athletes who want to be part of this economy, at most schools, and not all of them are looking for million-dollar deals,” says Robert Boland, a sports law professor at Seton Hall University and attorney at Shumaker law firm with a specialization in collegiate and professional sports, including NIL sponsorship.
Here’s what small-business owners need to know before investing in this type of partnership.
NIL is similar to other types of marketing
The majority of NIL deals involve social media posts, according to Opendorse, an online athlete marketplace and NIL technology company. These types of deals work similarly to other types of influencer marketing, where popular social media personalities collaborate with businesses to promote their products.
NIL activities can also include print or TV ads, clinics or in-person meet-and-greets or autograph signings. While compensation can be cash, small-business owners can also offer free or discounted products or services to athletes in exchange for promotion, Boland says.
The NIL landscape is broader than it looks
Though big-name companies and star athletes get all the media attention, data from Opendorse indicate that the average NIL deal since the policy was implemented ranges from $228 to just over $10,000, depending on the athlete and collegiate division. Keep in mind, though, that those averages are inflated by high-dollar deals that only a handful of star athletes receive. Many NIL sponsorships are, as Boland describes, “small-dollar deals.”
Though NCAA football is by far the leading sport for NIL endorsements, sports like volleyball, track and field, baseball and softball make up nearly a quarter of NIL activity, and athletes who compete in less visible sports can also be great partners, according to Boland.
The leading industries for NIL deals are apparel and footwear, followed by local restaurants and technology companies — but those aren’t the only businesses that can see a return from NIL deals.
Brian Quigley, founder of Beacon Lending, a Colorado-based mortgage company, has collaborated with three college athletes in Boulder and Fort Collins to promote his business. He’s found that these sponsorships have grown brand recognition and trust, particularly among a younger demographic, and have also deepened his ties with the respective communities, which he sees as especially important for someone in his industry.
Collectives can help facilitate NIL deals
Small-business owners who aren’t comfortable reaching out to athletes directly can go through NIL collectives, which are school-specific, independent organizations that act as marketplaces for athletes to connect with interested companies and vice versa. Collectives function similarly to marketing or talent agencies and are intended to protect athletes and businesses by facilitating NIL transactions and handling the financials of the deals.
Currently, there are over 250 collectives in existence or on the way, and the majority of schools in the Power 5 conferences — The Atlantic Coast Conference (ACC), Big Ten Conference, Big 12 Conference, Pacific-12 Conference (Pac-12) and the Southeastern Conference (SEC) — have at least one collective.
NIL activity isn’t uniformly regulated
The NCAA’s policy doesn’t allow an athlete to be compensated for athletic performance and strictly prohibits deals that are contingent on enrollment at a particular university. For now, such deals are regulated at the state and university level, which means that schools and students bear the responsibility of monitoring and reporting activity and potential violations.
This has led to concerns that NIL deals lend themselves too closely to a “pay-for-play” model and encourage illegal recruiting activities. Currently, several pieces of bipartisan legislation have been introduced in Congress that could make regulations universal nationwide.
This means that the model for NIL sponsorships is still very “dynamic,” cautions Steven Baker, a mentor at the Coachella Valley, California, chapter of SCORE, a nonprofit that offers free resources for small-business owners. Small-business owners need to be intentional about each aspect of their approach, including their marketing strategy and plans for return on investment, according to Baker. Above all, avoid investing just because you’re a fan.
Small-business owners will need to do their research on whom they’re working with. Quigley’s recommendation is to prioritize authenticity. “Choose athletes who resonate with your brand values,” he said in an email. “It’s not just a transaction but a partnership.”
Looking for jobs where you can bring your child with you? Yes, some jobs and companies let you bring your child to work. More and more companies are supporting parents by providing on-site childcare facilities. Plus, along with the rise of remote jobs, there are many jobs out there that let you bring your child…
Looking for jobs where you can bring your child with you? Yes, some jobs and companies let you bring your child to work.
More and more companies are supporting parents by providing on-site childcare facilities. Plus, along with the rise of remote jobs, there are many jobs out there that let you bring your child to work, eliminating the costs of paying for childcare.
In this post, we’ll explore different jobs that let you take your child to work, along with a list of remote jobs that give you the flexibility to work at home and take care of your children at the same time.
Whether you want to make extra income or if you are looking for a full-time career, many options may interest you.
Recommended reading: 25 Best Work From Home Jobs To Make $1,000+ Monthly
Best Ways To Bring Your Child To Work
Here’s a list of jobs where you can bring your child to work.
1. Nanny or babysitter
Working as a nanny or babysitter gives you the option of possibly bringing your child to work.
Before bringing your child to work, it’s important to come up with an agreement with the family you work for. Have clear communication and set expectations of what it will be like if you bring your child to work with you.
There are many ways to find nannying and babysitting jobs online, especially with websites like Care.com. I’ve found several nannying and babysitting positions with my free profile on Care.com.
You can also share your services on local Facebook groups, Indeed, and SitterCity. References from past childcare jobs are important, along with offering a background check.
2. Daycare (where you work for someone else)
You may also be able to bring your child to the daycare or preschool that you work for.
You need to consult with your employer about this first and check the daycare’s policies and employee handbook. Many daycares have it in writing whether or not you can bring your children to work with you. Some daycares allow it, while others are strictly against it.
To find a daycare job, search on websites like Indeed or call local daycares near you and see if they are hiring. Childcare work is in high demand and there are always jobs available in this field.
Your child may be in your classroom if they are in your age group, or they may be in another group of children. Typically, the cost is not free, but you may get a discounted rate to bring your kid to the same daycare that you work at if you are a childcare worker.
3. Own in-home daycare (where you run your own daycare)
If you can run your own daycare, this is going to allow more flexibility in bringing your child to work. Many daycare centers are run by parents looking for a more suitable job where they can bring their own kids with them to work.
However, there are still some things to keep in mind. You need to make sure that you are complying with local licensing regulations and requirements for running a daycare, along with maintaining professionalism at work while having your own child at the daycare.
Starting your own daycare from home requires careful planning. You need to think about things like local zoning laws to make sure you can run a daycare in your home and make sure your home is safe for children. You may need certifications and training like CPR and first aid certifications, along with early childhood education courses. Getting the proper insurance to protect your business in case of accidents on your property is important too.
You also need to think about how you’ll attract clients and what kind of marketing you’ll do. Word of mouth is huge, so make sure to always provide the best business and care (plus, these are children we are talking about – so high-quality care is always important!).
4. Drive a school bus
If your child’s school is hiring school bus drivers, this can be a great gig to not only take your child to and from school but also earn extra cash.
Bus drivers need to be 21 or older, have a valid driver’s license, and clean driving record. You may even need to obtain a CDL (Commercial Driver’s License).
The school will also require a background check, and provide school bus driver training, which is provided by the school district or a third-party organization.
The salary for a school bus driver depends on things like location, experience, and the district. The average salary for school bus drivers ranges from $30,000-$40,000, along with getting benefits like health insurance, retirement plans, and PTO.
5. Food delivery services
Working as a delivery driver may give you the option to bring your child to work with you.
Some food delivery platforms prohibit from having anyone else in the care of you on food delivery runs, so this is important to find out before bringing your child with you to work.
Getting a job as a food delivery driver is relatively easy as long as you meet the minimum age requirements and have a valid driver’s license. Each platform is going to have different benefits including pay, flexible work schedule, payout time, and sign-up process.
6. Photographer
One way to do photography and be able to bring your child with you is to take stock photos.
Stock image websites are among the most popular platforms for photographers to sell their pictures. These websites allow customers to buy royalty-free photos for personal or business use. Various entities, including websites, TV shows, books, and social media accounts, frequently use stock photos.
A significant advantage of stock photo sites is the potential for passive income. You can take pictures, upload them, and potentially earn money from an old photo for months or even years to come.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
7. House cleaner
Working as a house cleaner possibly allows you to bring your child to work depending on the policies of your employer, the nature of the job, and safety considerations. Some employers allow it, while others have strict rules against bringing a child to work.
As a house cleaner, you may be working with cleaning chemicals and heavy equipment, so you need to consider whether it’s suitable to have a child present in this kind of situation. It’s important to have a backup plan in place for times when you cannot bring your child to work.
8. Blogger
I started my blog back in college over 10 years ago and it’s still my full-time job. I’m my own boss, create my own schedule, and get to take vacations whenever I want.
As a blogger, you get to work from home and create your own schedule. This allows you to “bring your child to work” but also maintain a relatively flexible lifestyle when raising a child. This can be great for balancing work and family life.
Building a successful blog takes time and consistency, but when done right, can make income.
Bloggers make money through advertising, sponsorships, affiliate marketing, and product sales. You can even make money by offering coaching services on your blog or writing for other popular websites in your niche.
You can learn how to start a blog with the free How To Start a Blog Course (sign up by clicking here).
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In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.
9. Proofreader
Another great remote job that lets you stay at home with your child while earning money is proofreading.
A proofreader is someone who is in charge of reviewing written content to identify and correct errors in spelling, grammar, punctuation, and formatting.
Proofreaders work for all kinds of companies, including advertising agencies, media outlets, government agencies, and even bloggers and other small business owners.
Proofreaders can earn between $15-$50 an hour depending on their experience, type of project, and industry demand.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year)
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
10. Freelance writer
I’ve been a freelance writer for almost a decade and it’s one of my favorite ways to make money. This is because freelance writing can be done on my own schedule. An agency (or whoever is paying me to write the article) will send me what they want the article to be about, how many words to write, and other important information that needs to be included.
Since this job is remote, this means you can work from home and “take your child to work” with you.
So, this can be a great job to look into for a stay-at-home mom or dad of young children.
How much you earn as a freelance writer depends on your skills and experience. If you’re just starting, you may earn between $50-$75 per 500-word article. As you gain experience and get better, you can charge a lot more. The larger and more impressive your portfolio becomes, the easier it gets to land jobs and get paid higher rates.
Recommended reading: 14 Places To Find Freelance Writing Jobs
11. Transcriptionist
A transcriptionist is someone who converts spoken audio files into written text (this is what transcription is). Your tasks include listening to audio recordings and accurately transcribing them into a written format. Transcriptionists work in fields like legal, medical, academic, and business-related industries.
Starting pay for a transcriptionist is in the $15 an hour range, with that number increasing once you’ve honed in your skills and experience, and have a wider database of clients who have worked with you in the past and want to hire you again.
Many transcriptionists are stay-at-home parents, and that is because you can get started relatively easily (it is easy to meet the qualifications to become a transcriptionist) and you can work on your own time and create a flexible schedule that works for you and your children’s schedules.
Recommended reading: How To Become A Transcriptionist From Home
12. Virtual assistant
I’ve been working as a virtual assistant for years and it’s one of my favorite jobs. I get to work from home and set my own schedule. Virtual assistants usually work for a person, company, or small business owner doing administrative tasks to help the business run smoothly.
As a virtual assistant, you’re working from home which means your child can stay at home with you while you’re working.
Tasks for virtual assistants include tasks like responding to emails, social media management, customer support, and more.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
13. Customer service representative (at home)
Customer service representative jobs are often remote, therefore you may be able to leave your child at home with you while you’re working.
Customer service representative tasks include assisting and supporting customers with problem resolutions, inquiries on products, order processing, and even offering technical support in some cases.
Finding a job as a customer service representative is easy. Check out job boards like Indeed and type in “Customer Service Representative” and hundreds of jobs will come up. Make sure to look for jobs that are 100% remote, as some of these jobs may be in person.
Typically, to get started, you will just need a computer, phone, and internet access.
14. Mystery shopper
As a mystery shopper, you are grading restaurants, stores, and other businesses on how well they are doing.
My sister was a mystery shopper and often brought me with her on mystery shopping outings. She made around $150 to $200 a month in extra money doing this and she also earned free items as well, like food at restaurants, makeup, and more.
Bestmark is a popular mystery shopping company that connects mystery shoppers with jobs. Mystery shoppers get reimbursed for their time via check or cash and typically get paid out 2-4 weeks after the job is completed.
Recommended reading: How To Become A Mystery Shopper
15. Newspaper deliverer
As a newspaper deliverer, you may be able to bring your child to work with you when you’re delivering newspapers. Delivery times typically range from 4 AM-6 AM, and in some cases, there are late evening deliveries and weekend deliveries.
Before bringing your child to work, make sure the newspaper company permits you to bring your child with you as some companies may not be okay with this.
16. Gym worker (many jobs have on-site daycares)
Gyms all across the country are now offering free on-site daycares for customers. This is to entice people to come to their gym and also allows parents to workout without having to pay and arrange childcare to get to the gym.
Depending on the location, gyms that offer childcare include EOS Fitness, Life Time, LA Fitness, YMCA, and even local and county gyms.
I have a friend who works part-time hours at a local county gym. She works in the daycare room and gets to bring her toddler and baby with her. This can be a good option to look into if you don’t have school-aged kids, and need to bring your young children to work with you.
17. Find a company that has onsite daycare for their employees
There are many companies out there that provide on-site daycare for their employees.
My husband’s company provides 100% employer-sponsored on-site childcare at work, so anyone who works at the company can bring their children to work and save money on childcare costs. This is a growing benefit that more and more companies are offering to employees.
When searching for new jobs, read the benefits offered at the company and see if on-site childcare is listed.
Frequently Asked Questions
Below are answers to common questions about bringing your child to work jobs.
What are the best jobs where you can bring your child to work?
The best jobs that let you bring your child to work include jobs like nannying and daycares, and remote jobs like blogging, proofreading, or working as a customer service representative. All of these jobs typically let you bring your child to work or you get the benefit of working at home, saving money on childcare costs.
Can you bring your baby to work with you?
Whether or not you can bring your baby to work with you depends on many factors, including:
Company’s policies
Nature of your job
Local regulations
Many jobs have family-friendly policies in place that allow you to bring your kids to work for a certain period, especially during the infant stage. Some employers even have designated areas to support parents who bring their children to work, including on-site childcare facilities, flexible work hours, or remote work options.
Is it acceptable to bring your child to work? Can I take my child with me to work?
Whether or not it’s acceptable to bring your child to work depends on each company and the type of job. Some jobs fully support parents to bring their children to work and even have a 100% company-sponsored childcare facility. Other companies may not allow bringing children to work if such childcare facilities do not exist at the company. It may also be dangerous to bring kids to certain jobs if you work in a field like construction.
Can you work a remote job with a baby?
One of the best ways to work and save money on childcare costs is working remotely. This method of work is becoming increasingly common thanks to technology and shifting attitudes toward flexible work arrangements.
If you do land a remote job, here are some tips for successfully working with a baby:
Establish a schedule that accommodates your work responsibilities and baby’s needs.
Set up a dedicated workspace that is quiet and comfortable where you can focus on work.
Aim to get a job that has flexible work hours, so you can take care of your child when they need it, and perhaps work during naps.
That being said, it doesn’t mean that online or remote jobs are easy, or that working from home and watching a kid at the same time will be easy. It can be hard to manage both at the same time.
Do companies still have bring your kid to work day?
Some companies do still have bring your kid to work day. Keep in mind, this is usually only one day out of the whole year.
If you work at a daycare can you bring your child for free?
If you work at a daycare, you can usually get a discounted rate if you bring your child.
How to find jobs that would welcome children and don’t require a nanny or sitter?
Some workplaces are much more welcoming than others. Finding jobs that already cater to kids (such as daycares) or working from home are two options to start with.
Bring Your Child To Work Jobs – Summary
Being able to bring your children to work is becoming more accepting and even supportive, with companies providing on-site childcare facilities.
There are many child-focused businesses, such as private preschools or daycares, where you may be able to bring your child to work with you.
Along with the rise of remote jobs, you may be able to work at home and take care of your children at the same time. If you work from home, such as by being a proofreader or virtual assistant, you may be able to work a flexible schedule and work in your spare time, such as when your child is napping or sleeping. Working around your children’s schedules is one way to work from home for stay-at-home parents.
Running her own business and deciding on her own hours is how my sister works from home with a child. She is a full-time blogger (she owns the very site that you are reading – Making Sense of Cents).
What do you think are the best kid-friendly jobs for moms and dads?
Looking for the best business ideas for kids? Finding business ideas for kids is a great way for them to learn about starting their own business, being responsible, and understanding money from a young age. They get to understand how to set goals, handle money, and feel the joy of earning their own extra income….
Looking for the best business ideas for kids?
Finding business ideas for kids is a great way for them to learn about starting their own business, being responsible, and understanding money from a young age. They get to understand how to set goals, handle money, and feel the joy of earning their own extra income.
Whether it’s in the summer, after school, or on weekends, having a small business can be a fun and educational thing to start.
I did many different things as a kid to make extra money, and they all taught me so much. There are many different ways for kids to make money, as you will learn below.
Best Small Business Ideas for Kids
Here are the best business ideas for kids to start.
1. Sell arts and crafts
If your kid enjoys being creative and making things with their hands, selling arts and crafts can be a great business idea for them. It’s not only fun but can also help them earn some money.
Here are some crafts kids can make and sell:
Bead jewelry – They can make necklaces and bracelets with colorful beads.
Homemade candles – Candles are simple to make and can be sold to people who like to add a cozy feel to their homes.
Paintings – If they like to paint or draw, they can create artwork to sell.
Slime – Slime is really popular and fun to play with. Kids can make and sell their own slime in different colors and maybe even add things like glitter to make it unique.
Pet toys – If they love animals, they could make toys for pets. Choose materials that are safe for animals and design toys that pets would enjoy.
Soap – Homemade soap is always nice to have, and people love to buy it. This can be a fun item to make on their own.
Stickers – Everyone loves stickers and this can be a fun way to make extra money on Etsy or in person.
Recommended reading: 16 Best Things To Sell On Etsy To Make Money
2. Tutoring
If your child is really good at a subject like math or science, they can start a tutoring business. They can help other kids who might find those subjects tough.
Tutoring is something they can do after school when they’re finished with their own homework. It’s a great way to use what they know to help others and even make some money.
Learn more at The Best Online Tutoring Jobs.
3. Babysitter
If your child loves being around kids, babysitting can be a great way to start their journey into the world of small businesses for kids. It’s not just about watching kids; it’s about creating a fun and safe environment while parents are away.
Your child’s reputation is important, and they can start with their neighbors or family friends who already know and trust them.
To decide what they should charge, you can look at what other babysitters charge in your area, but consider how much experience your kid has.
I recommend having your child learn about basic first aid and child care, and you can find classes through community centers or the Red Cross.
Babysitting is what I did the most of as a kid. It was my first full-time job, actually. Starting at the age of 14, I was working around 40 hours per week in the summer taking care of a baby in my neighborhood (I found the babysitting ad on a local bulletin board!). I earned $10 per hour. The mother was a nurse, so I was working about 13 hours per day for a few days each week.
4. Pet sitting and dog walking
If your kid loves animals, starting a pet care service or dog walking business could be perfect for them. It’s more than just a job; it’s a way to care for pets when their owners can’t.
In this job, you might look after pets either at your own home (called pet boarding) or take care of them at their home.
Depending on their age, your child may walk the dog for 15 to 30 minutes a day, or more.
I was recently looking at a local bulletin board, and a parent put up an ad for their 10-year-old to walk dogs. The parent would be there as well (to ensure the safety of both the child and pet, of course), but it was a small business idea that the kid wanted to start. If your child is a little older, they may be able to do this on their own as well.
5. Lemonade stand
Starting a lemonade stand is more than just a fun activity; it can be their first step for starting a business as a kid!
Your child will probably want to start with a simple recipe, as lemonade does not have to be hard. They can try different flavors, like strawberry, to make your stand unique.
They will need pitchers, cups, ice, and a table.
Work out how much each glass of lemonade costs to make, and then decide on a price that makes a little profit but is still affordable for customers.
6. Mow lawns
Mowing lawns is a great way to start a small business as a kid. It’s simple to get going, and kids can make money during spring and summer.
They’ll need a lawn mower, fuel, and basic gardening tools.
Next, it’s time to set rates. Figure out how much to charge for each yard. A good plan is to look at what others charge and then set a competitive price.
Your kid can talk to neighbors, family, and friends to find new lawn mowing jobs.
I know many, many families who have kids who mow lawns to make money. I also know several people who have older kids who have turned this into a full-time business that has grown with them as an adult.
7. Rake leaves
Raking leaves is a great business idea, especially during the fall. Trees drop their leaves and many homeowners need help gathering and disposing of them.
To get started, your kid will need to have a sturdy rake, bags for leaf collection, and a pair of gloves to keep their hands clean and protect them from blisters.
8. Shovel snow
If you live in a place where snow falls, a kid can make money by shoveling snow. This job is great if they enjoy being outdoors and don’t mind the cold. Start by asking family and neighbors if they need help clearing their driveways and walkways.
They will need a few things to start:
A shovel: This is the main tool, of course!
Warm clothes and gloves: Stay warm while they work.
Your kid can hand out flyers or tell friends to spread the word. Social media can be a big help too. A simple post can let everyone in your neighborhood know that your kid is ready to help clear the snow.
9. Birthday party assistant
If your kid likes being around kids and celebrations, becoming a birthday party assistant could be a fun way for them to earn money.
They will help set up decorations (balloons, banners, and table settings), organize games (such as being ready to lead a game of musical chairs or a treasure hunt), and make sure the party runs smoothly (they might help serve cake and snacks to the little guests.).
10. Start a YouTube channel
Starting a YouTube channel can be exciting. If your child is under 13, remember, they can’t have their own account. But with a parent’s help, they can still share videos.
Your child can pick something they love, whether it’s science experiments, video game walkthroughs, or crafting tutorials.
They will want to post videos regularly – maybe post once a week to start.
Remember, it’s all about doing something fun and sharing what they love. Starting a YouTube channel takes work, but if they stick with it, they could make something really cool.
11. Lifeguard
If your child is looking for a responsible way to earn some extra cash, becoming a lifeguard could be a way to make money.
Not only does this gig teach important life-saving skills but it also teaches them responsibility and discipline. Many local pools or community centers offer lifeguard certification courses, giving them an excellent opportunity for young entrepreneurs to get valuable training.
Running a small lifeguard business can be a win-win situation for kids and the community. They can sell their services to local events, pool parties, or even provide private swimming lessons.
Note: In most states, you need to be at least 15-years-old to become a lifeguard.
12. Start a greeting cards business
Starting a greeting card business is something your kid can have fun with and get their creative juices flowing! They can make cards for birthdays, holidays, thank you, congratulations, or just to say hello.
They will need:
Art supplies, like colored pencils and markers
Cardstock or heavy paper
A printer (if they’re printing designs)
Digital design software like Canva (this is optional)
They could start by selling to family and friends or at school events. As they grow, they could try selling them at local markets or even online.
13. Neighborhood helper
As a neighborhood helper, they can sell their services to people around your community. This is a great way to help others and earn some money.
Your child can sell services such as:
Car washing: Wash cars for people in the neighborhood for a shiny finish.
Grocery running: Offer to pick up groceries for those who can’t go themselves.
Gardening: Help maintain gardens by planting flowers or weeding.
Lawn care: Keep neighbors’ lawns neat by mowing them regularly.
Pet walking: Walk neighbors’ dogs when they’re busy or away.
To get started, your kid should make a list of what they’re good at and what they might enjoy doing. Then, let neighbors know about their services with flyers or tell them directly.
If you have many kids, they could even involve multiple family members so that each kid has their own specialty or niche as a neighborhood helper.
14. Reseller
Starting a small business as a reseller means buying products at a lower price and selling them for a profit. They don’t need to make their own things; instead, they can find good deals on items, then sell them to others for more than they paid.
They can get items from yard sales, thrift stores, or their own home.
They can sell online on places like Etsy or eBay, or at school events and local fairs.
Recommended reading: 16 Best Selling Apps For Selling Stuff Online And Locally
15. Voice artist
Becoming a voice artist can be an exciting way for kids to explore and share their talent. If they enjoy speaking and have a unique voice, this could be a fun business idea for them.
They can sell services for character voices for cartoons and animations, narration for audiobooks or educational videos, commercial voice-overs for ads and marketing materials, and more.
They will need to start with a good microphone and recording software on a computer. They can practice by reading out loud and recording their voice.
To find work, they can join online platforms like Fiverr, where people look for young voice talent.
Recommended reading: How To Become A Voice Over Actor
16. Actor
If your child is interested in acting, the first step is to take acting classes, which can help them learn the skills they need to act in plays, movies, or TV. These can be found online or at a business near you.
Once they have some skills, they can try out for local theater productions and school plays, and join their school’s drama club. Being part of a production gives them practical experience and shows them what it’s like to work with a director and other actors.
17. Sell candy
Starting a candy business can be both fun and rewarding. With a love for sweets and a little creativity, your child can turn their passion into profit.
Candy is something that I see children selling all the time, and it completely makes sense – everyone loves candy! So, it is an easy item to sell.
They can sell homemade treats like chocolate-covered pretzels or gummy bears. Or, if you prefer, you can buy popular brands in bulk and sell them individually.
Next, consider where they will sell the candy. They may be able to sell at school, neighborhood, or local community events, and you should always ask for permission when selling in public areas or on someone else’s property.
Pricing the candy is important. You’ll want to make sure your kid covers the cost of what was spent and adds a little extra for their profit. Selling candy for $2 or $3 can make it easy for customers to buy without thinking twice.
18. Start a blog
If your kid is interested in working online, then they may want to try starting a blog. It doesn’t take a lot of money to get started, and it can teach a kid a lot about how to run a website.
I have met many teens over the years who have started a blog, and I think it’s a great small business idea!
Whether they want to share their hobbies, interests, or personal experiences, a blog gives them a platform to be creative and communicate.
Other business ideas for kids related to this include starting accounts on social media platforms like Instagram and Twitter, and starting a podcast.
Recommended reading: How To Start A Blog Free Course
19. Deliver newspapers
Newspaper delivery is a classic way for children to earn some money. It’s a job that can fit well into their schedule before or after school. Plus, they can get good exercise at the same time!
It’s usually pretty simple: they take newspapers and deliver them to people’s homes.
When I was younger, I had a friend who had a delivery route. Once, I went along with her and helped her deliver some newspapers. It was hard work but she ran it smoothly!
If your kid is interested in this job, start by checking with local newspapers. Call them and ask if they’re looking for delivery helpers. Some things they might need:
A bicycle or a reliable way to get around the delivery area quickly
A bag or basket to hold the newspapers as they deliver them
An early morning start if the paper is a morning edition
To dress for the weather, since they will be outside
They will learn responsibility by making sure the newspapers are delivered on time.
Sometimes there may be age limits, so if your child is younger, they might need to get a work permit. But often, kids as young as 11 or 12 can start with a bit of paperwork.
20. Sell used toys
Recently, I was on Facebook, and a parent was helping their child host a garage sale. They were letting their child take control of most of the sale, but the parent was posting about it in the group to get more traffic to their yard sale.
They were selling the kid’s used toys to help them declutter and make some extra money. I thought this was a great idea!
Kids can learn the basics of entrepreneurship by organizing and pricing their toys for sale. This activity not only teaches them about value assessment but also introduces the concept of supply and demand as they observe which toys are more popular among buyers.
People pay good money for used toys all the time, so this can be a great side hustle to get into.
21. Face painting
Face painting can be a fun and profitable small business venture for kids who love art and painting. They can start by setting up a face painting booth at local events or birthday parties.
Running a face painting business encourages kids to develop their entrepreneurial skills, from marketing their services to managing customer interactions.
22. Recycling collector
Kids who care about the environment can turn it into a business by collecting recyclables. With a passion for keeping things green, they can offer to gather recyclables from neighbors, schools, or local businesses.
This not only helps the environment but also teaches kids about reducing waste and recycling.
23. Vending machines
I have been seeing more and more parents starting vending machine businesses for their children.
Getting kids into the entrepreneurial world by running vending machines can be an interesting and educational small business idea. Whether they decide to place machines in school common areas or local community spaces, managing a vending business can help teach children valuable lessons in supply and demand, handling inventory, and understanding customer preferences.
Running vending machines also gives kids a chance to learn about financial responsibility as they handle income, expenses, and profit calculations.
Recommended reading: How To Start A Vending Machine Business
Frequently Asked Questions
In this section, you’ll find answers to common questions about starting a business as a kid.
What is a good business to start as a kid?
Starting a business that fits into their hobbies and interests makes a good choice. For instance, if they like technology, they might try starting a blog or YouTube channel. If they love the outdoors, then a lawn mowing or gardening business might be a better fit.
How can a kid make $100 dollars fast?
A kid can make $100 fast by selling their old toys or clothing items that they already have. You, the parent, can help them organize a yard sale or gather their items to sell in a Facebook buy/sell group.
What can kids sell to make money?
Kids can sell a lot of different things to make money, such as jewelry, paintings, greeting cards, homemade cookies, lemonade, used toys, and more.
What kind of businesses can young students start at school?
They can start businesses at school like a pencil and eraser store, a book swap service, or a snack bar (if the school allows it). Just remember to check in with the school’s rules to make sure their business idea is allowed on the school campus.
What steps can a child take to start their own business?
Here are steps a child can take to start their own small business:
Identify interests and skills – This will help them find a business idea that they actually like.
Research business ideas – Research different small business ideas suitable for kids and think about factors like their age, skills, and the resources available.
Create a business plan – Develop a simple business plan outlining the business idea, target audience, products or services offered, and basic strategies for marketing and sales.
Learn basic business – Introduce the child to basic business concepts such as budgeting, pricing, and customer service, and this can be done through discussions, educational resources, and more.
Decide on pricing – Teach your child about pricing by thinking about the cost of materials, time, and possibly profit. This helps them understand the value of their products or services.
Market the business – Your child could create posters, use social media with parental supervision, or spread the word within the local community such as by placing an ad on a local bulletin board.
Provide good customer service – I highly recommend making sure that you teach your child the importance of treating customers with respect and giving great service as this can lead to repeat business and word-of-mouth referrals.
Track finances – Teach the child basic financial management, including tracking income and expenses.
Celebrate achievements – Celebrate small victories and milestones to keep the child motivated and proud of their entrepreneurial journey.
Throughout this process, parental involvement is so important. Parents can guide, supervise, and provide a supportive environment for the child’s business, making sure it is a positive and educational experience (and safe!).
Can a 9 year old make a small business?
At around 9 years old, they can start businesses that use creativity and simple skills. For example, making greeting cards or friendship bracelets.
What business can a 10 year old make?
There are many things that a 10-year-old can do to make extra money. A 10-year-old can start a lemonade stand, sell crafts, do yard work, and more.
How can an 11 year old make cash?
There are many things that an 11-year-old can do to make extra money. An 11-year-old can rake leaves, walk dogs, sell baked goods like cupcakes, and more.
What are some simple business ideas for children under 12?
Younger kids can think about businesses like lemonade stands, which are simple to set up and manage. They also might create and sell craft items or start a pet sitting service for neighbors if they enjoy spending time with animals.
How can a teenager make money online?
A teen can make money online by blogging, offering online tutoring services, selling printables on Etsy, reselling items online, and more. I recommend reading 17 Online Jobs For Teens To Make Money to learn more.
How can children stay safe when starting a business?
When starting a small business as a kid, it’s important to think about safety and the rules they need to follow. For safety, always make sure they have an adult they trust to help watch over their business. If they’re selling something like food or crafts, make sure everything they use is safe and won’t hurt anyone.
For legal aspects, different places have different rules for businesses. They might need to ask for permission from someone (like you, the parent) or maybe need a permit.
They also need to make sure they have supervision, which means having an adult around to help them out and make sure everything’s going right. Monitoring what they are doing online, if they are dealing with customers, can be very smart because you never know who they are selling to or talking with.
Small Business Ideas for Kids – Summary
I hope you enjoyed this blog post about small business ideas for kids.
From traditional ways to make extra money like running a lemonade stand or mowing lawns to more modern business ideas like making and selling crafts or starting a YouTube channel, the possibilities for kid-run businesses are plentiful.
Starting a business as a kid can teach children valuable problem-solving and life skills. With the proper guidance and help, there are many different good business ideas that a kid can start.
I have been earning my own money from a young age, and it has taught me so much. I highly recommend helping your kids do the same!
If you had $20,000, how would you spend it? One of the smartest things you could do if you suddenly came into an extra $20,000 – or managed to save that much money over time – would be to invest it. But where? And how?
The right answer differs for everyone and depends on your financial objectives, comfort level with risk, and time horizon. This guide illuminates 10 ideal ways to invest $20,000 and maximize your returns.
Set Your Investment Goals and Assess Your Risk Tolerance
Establishing clear financial objectives and measuring your tolerance for risk should serve as the cornerstone of your investment decisions. For instance, if you’re eyeing retirement, long-term investments like stocks or real estate might be right up your alley. Conversely, if your goal is to accumulate funds for a house down payment in five years, safer options like a high yield savings account may be more appealing.
Risk tolerance plays an equally critical role. If the thought of market volatility unsettles you, safer options with lower returns might suit you better. But if you can handle a higher level of risk for the prospect of higher returns, you might explore riskier ventures like individual stocks or even cryptocurrencies. A consultation with an in-person financial advisor can help you decipher your financial goals and risk tolerance.
10 Best Ways to Invest $20K
As you prepare to grow your $20k investment, an array of options awaits. Your financial goals, risk tolerance, and timeline will guide you to the ideal choice. Here are 10 ways to strategically invest your $20k:
1: High-Yield Savings Accounts
High-yield savings accounts are a low-risk, steady-growth choice for those looking to invest $20k. They offer more competitive interest rates than traditional savings accounts, meaning your money works harder for you. The Federal Deposit Insurance Corporation (FDIC) protects these accounts, offering an additional layer of security and peace of mind.
This investment route is particularly beneficial if you prefer having your emergency fund accessible, or if you’re saving for near-term goals. Despite the returns being lower than riskier investment options, the safety and stability they provide make high-yield savings accounts an attractive option for many investors.
2: Bitcoin
Bitcoin has emerged as a prominent player in the investment world, offering a high-risk, high-reward dynamic that appeals to some investors. The value of Bitcoin is notoriously volatile, yet its remarkable growth cannot be ignored.
Over the past decade, Bitcoin has experienced gains exceeding 5,700%, significantly outpacing traditional markets like the NASDAQ, which had a gain of 336% over the same period. Even within a five-year timeframe, Bitcoin still came out ahead with a 96% increase compared to the NASDAQ’s 69%.
Given its digital nature and decentralized structure, investing in Bitcoin can be complex and fraught with unique risks. Unlike traditional currencies, Bitcoin operates independently of a central bank. Furthermore, its value is susceptible to sharp fluctuations influenced by a variety of factors, including market demand, investor sentiments, regulatory news, and macroeconomic trends.
Ready to dive into Bitcoin investing? Consider Swan Bitcoin, where you can easily set up recurring buys or make instant purchases right from your bank account.
3: Stock Market Investing
Stock market investing is a viable path for those seeking to grow their $20k investment, especially for long-term financial goals. Today’s investing apps make it easy to start investing with as little as $1 and to diversify your investments with fractional shares if you desire.
When considering individual stocks, potential returns can be substantial, but they often come with a higher level of risk. By holding a variety of stocks across different sectors and regions, a diversified portfolio can help mitigate these risks, providing a buffer against market volatility.
As an investor, it’s important to remember that past performance doesn’t guarantee future results. The stock market has demonstrated remarkable growth over time, but it’s not immune to periods of downturn. Staying resilient and maintaining a long-term perspective can help you deal with these fluctuations.
4: Mutual Funds and Exchange-Traded Funds (ETFs)
Mutual funds and ETFs offer investors an easy way to diversify their portfolios. These funds allow investors to buy a stake in a wide range of stocks and bonds, spreading the risk and potentially improving the returns over time.
Financial institutions manage mutual funds and ETFs, charging management fees for the expertise they provide in managing and selecting the assets within the funds. While mutual funds often require a significant initial investment, ETFs are more accessible for investors, as most brokerage firms offer a wide variety of ETFs with no minimum investment requirements.
Index funds, a subtype of mutual funds or ETFs, aim to replicate the performance of a specific market index, such as the S&P 500. These types of funds are a popular choice among passive investors due to their typically lower management fees compared to actively managed funds. The strategy of mimicking the market rather than attempting to outperform it allows investors to enjoy broad market returns while keeping costs low.
5: Bonds and Treasury Securities
For more conservative investors, bonds and Treasury securities offer a safer, lower-yield alternative. When you purchase a bond, you’re essentially loaning money to a corporation or government entity. In return, you receive interest payments over a specified period and the return of the principal amount at the bond’s maturity.
Treasury securities are a type of bond issued by the U.S. government, widely regarded as one of the safest investment vehicles. For broader exposure, bond ETFs and bond mutual funds allow you to diversify across different types of bonds, reducing the impact of any single bond defaulting.
6: Robo-Advisors
For those who prefer a hands-off approach to investing, robo-advisors can be an excellent option. These digital platforms create and manage your investment portfolio using sophisticated algorithms, taking into account factors such as your risk tolerance, investment goals, and time horizon.
Robo-advisors typically charge lower fees than traditional financial advisors, making them a cost-effective choice, especially for beginners or those with simpler financial situations. They offer a straightforward path to diversification and automatic portfolio rebalancing, reducing the need for constant monitoring and manual adjustments. It’s an appealing solution for those looking to invest $20k while minimizing time and effort spent on investment management.
Most robo-advisor platforms offer exposure to stocks, bonds, ETFs, and mutual funds.
7: Real Estate Investing
Real estate has proven to be a lucrative asset class for many investors. Income-producing real estate, like rental properties, can generate a steady flow of rental income, with potential property appreciation over time. However, property management can be time-intensive and comes with additional costs such as maintenance and property taxes.
If the idea of becoming a landlord doesn’t appeal to you, you might want to consider investing in real estate investment trusts (REITs). These publicly-traded companies own, operate, or finance income-producing real estate, allowing you to dip your toes into real estate without the hassle of managing properties.
8: Peer-to-Peer Lending
Peer-to-peer lending, an alternative form of investing, involves lending money to individuals or small businesses through online platforms that match lenders with borrowers. As an investor, you can potentially enjoy higher returns than those offered by traditional savings or money market accounts. However, this approach comes with its own set of risks, including the risk of borrower default.
To safeguard against potential losses from defaults, it’s wise to diversify your lending across different borrowers. This practice, similar to diversification in a stock portfolio, can help spread the risk, increasing your chances of overall success.
9: Investing in a Small Business or Start-up
Investing in a small business or a start-up offers an opportunity to potentially reap significant returns. However, it is a high-risk venture and typically requires becoming an accredited investor. As an accredited investor, you’ll need to meet specific income and net worth criteria, emphasizing the fact that this investment option is not for everyone.
Due to the inherent risk, this investment path should only be considered if you’re financially secure enough to withstand potential losses. Remember, while investing in a burgeoning business can be lucrative, it could also result in losing your entire investment.
10: Education and Skill-Building
Often overlooked in investment discussions, investing in yourself through education and skill-building can offer meaningful long-term returns. Whether it’s advancing your current job skills, earning a new certification, or exploring a new field, enhancing your knowledge base and skills can lead to increased earning potential and greater job satisfaction.
While the returns may not be immediate or easily quantifiable like other investments, investing in your personal and professional growth can open doors to new opportunities and provide long-lasting benefits. This is a valuable investment that you can make, regardless of market conditions.
What to Consider Before Investing
Before you venture into investing, it’s crucial to have an emergency fund, ideally three to six months’ worth of living expenses, set aside. Additionally, paying off high-interest debt, like credit card debt, should be a priority. The average credit card account interest rates often outpace the returns you’d earn from investments.
Consider the tax implications of your investments. Some investments, like taxable brokerage accounts, are subject to capital gains tax, while others, like Roth IRAs, offer tax-free income in retirement.
Finally, diversification is a key strategy to manage risk. By spreading your money across different types of investments (stocks, bonds, real estate), you can better weather market fluctuations.
Conclusion
Wisely investing 20k requires careful consideration of your financial goals, comfort level with risk, and investment timeline. Whether you choose high-yield savings accounts, the stock market, real estate, or another option, the goal is to grow your wealth over time and move closer to achieving financial freedom.
Regardless of your chosen path, remember that investing involves risks, including potential loss of principal. So, it’s crucial to review any investment strategy periodically to ensure it still aligns with your financial objectives. Consider seeking advice from a financial planner or other professionals to help guide your investment journey.
In this exceptional episode of The Kings Table Podcast, we have the privilege of hosting 2024 presidential candidate Vivek Ramaswamy. Vivek opens with insights into his remarkable background, paving the way for a dynamic conversation spanning politics, business, and the future of the United States.
Vivek takes us on a journey through his personal and professional history, discussing his presidential aspirations and campaign strategies. We explore the role of business leaders in shaping the nation’s future and how Vivek aims to support small business owners and aspiring entrepreneurs. The episode delves into the Federal Reserve’s impact on the real estate sector and the president’s role in this context, providing clarity on what a president can and cannot do. The episode wraps up with a discussion on enhancing financial literacy and life skills within the educational system. Tune in for this engaging conversation with a visionary leader.
Meet the hosts:
1. Mike (The Sage) Ayala is an accomplished investor, speaker, and podcast host, who stands at the helm of Investing for Freedom, guiding busy professionals and entrepreneurs toward the path of genuine liberation and optimal living. 2. Ashish (Hostess with the Most-est) Nathu is a founder and CEO, entrepreneur, real estate investor, triathlete, and host of the Rich Equation Podcast. 3. Matt (Hero of Hospitality) Aitchison is a distinguished real estate investor, captivating speaker, and committed philanthropist. 4. Aaron (The Trend Spotter) Amuchastegui is a seasoned real estate virtuoso with a remarkable track record of over 1,000 house transactions, predominantly acquired through astute foreclosure purchases at courthouse auctions.
Highlights:
00:00 – Ashish introduces the episode with our special guest, 2024 presidential candidate, Vivek Ramaswamy
00:53 – Vivek introduces himself and talks about his personal and professional background, and why he wants to run for president
03:42 – Ashish asks Vivek about how business leaders can get more involved in politics and shaping the country’s future
07:11 – Vivek talks about his campaign strategy, and how he feels what’s working for him based on his expectations and the results
12:56 – Mike asks Vivek about his ideas to help the small business owners and aspiring entrepreneurs compete in the business sector along with the large companies
16:41 – Aaron asks Vivek how he views the Federal Reserve’s rapid interest rate hikes over the past years, particularly their impact on the real estate industry, and what role do you believe the president should play in this context
21:04 – Vivek sets the record straight on what a president can and cannot do
24:01 – Vivek talks about how listeners can help and support his campaign
25:54 – How can the current educational system promote financial literacy, entrepreneurship and other relevant life skills
30:02 – Round table discussion of the host’s opinions and thoughts regarding the interview
Welcome to Episode 11 of The Kings Table Podcast, a captivating new show hosted by Ashish, Mike, Aaron, and Matt. Join us for an unfiltered, authentic experience as we gather weekly to delve into the raw discussions that drive our lives, businesses, economics, and the world.
Connect with us!
We eagerly await your feedback about the show! Kindly share your thoughts via text message at this number: (844) 447-1555.
Mike Ayala: Instagram: https://www.instagram.com/themikeayala/ YouTube: https://www.youtube.com/channel/UCoa4pNSAYxBM6nSn2jCrPYA Website: https://investingforfreedom.co/
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
There are many ways to manage your money, but there is always one key piece that you need no matter how much or little you earn. The best way to get ahead in life and work when it comes down to personal finances:
Planning.
Yes, a little bit of planning will make sure your bills are paid.
If you are looking to save money and make more, then this article is for you.
We have broken down five effective bill calendar strategies that can help boost your finances. With each strategy comes an eye-opening fact about how to make paying bills easier.
Use these tactics in order to get ahead of the game and be one step closer to financial freedom.x
The term “bill calendar” may seem like a jargon-y thing stuck in the past, but it’s actually an effective way to keep track of your finances and budget.
That being said, not all bill calendars are created equal. Make sure you choose one that meets your needs or is most suitable for what you’re looking for so you can get the maximum benefit from this tool!
What is a Bill Pay Calendar?
A bill pay calendar is a financial tool that enables an individual to manage, track, and forecast bills.
It is useful for those who have multiple bills each month or need to plan ahead for upcoming expenses.
This is one of the files you can find in our budget binder.
A bill pay calendar is typically used in conjunction with a budget planner to help manage financial goals and stay on track towards financial success.
This simple tool helps you manage your finances better. The useful trick is to see where all of our bills fall in relation to when we make money, so it’s easy enough for us to plan out what we need and don’t need.
The strategies are effective because they allow you a visual way to see your bills and expenses. Thus, making bill-paying much easier than ever before.
Why a Monthly Bill Calendar Works
A monthly bill calendar is a great way to keep track of upcoming bills and make sure you’re not missing any.
Also, it is helpful if you want to plan ahead for certain events like birthdays, holidays, or special occasions. Just to make sure you set aside enough money.
If you’re struggling to keep up with your bills, a monthly bill calendar can help.
It will remind you when it’s time to pay them and give you the proper schedule for future payments so that they don’t get delayed.
A monthly bill calendar is an effective way of organizing finances because it provides reminders about what needs to be paid on which day. This helps to ensure debts do not accumulate over time without being noticed until they become unmanageable.
Other benefits of a bill paying calendar:
Keeps you focused.
Motivation to improve your finances.
Visually track your progress.
Simple Bill Calendar Strategies
The financial benefits of a proper bill calendar include increased productivity, improved cash flow management, and long-term savings opportunities all brought about by thoughtful organization with an emphasis on efficiency in priority setting.
Just like with any time management idea, you must actually implement the system for it to work.
All of these strategies will give you a chance to get on top of your finances and start working towards getting out from under that large, unmanageable debt.
Five effective bill calendar strategies that will boost your finances include:
1. Use Budget Binder
Personally, I have found that those who have a printable budget binder stick to their budgets long term vs those who try to manage their finances digitally. That doesn’t mean you can use your favorite budgeting app (I love Quicken). It just means you are writing out key financial information for your reference or if someone needs to pay your bills.
If you’re looking for a way to organize your bills and keep track of when they are due, the bill calendar is an effective tool. By putting all of your bills on one page, it makes it easier to coordinate payments with your employer or other creditors.
The template allows you to add in expected paydays so that you can easily plan ahead.
2. Plan Reoccuring Time to Review
Not many people jump at the excitement of paying bills. Normally, it is a task that we put off until we just cannot wait any longer.
For me, I review our bills every two weeks. That is what I have found to work best for us.
To make the time more plausible, many couples will celebrate bill paying with a special treat or date night.
Do what you need to do.
Just make sure you review your bill payment calendar on a regular basis.
3. Avoid Paying Bills Late
Paying your bills late will incur additional fees; those penalities in extra fees and interest are just not worth it. In addition, your credit score will take a hit with each late payment.
By consistently paying your bills late, you will have access to less cash. On the flip side, you could be saving money by paying your bills on time.
To avoid paying bills late, many people have set up automatic payments. This can be done by setting up a direct debit or Automatic Clearing House (ACH) payment.
When looking at your bill payments calendar, decide what bills are going to be paid by what paycheck. Make a plan for your money.
That will help you avoid paying bills late.
4. Keep Track of Bill Due Dates
One of the most important tasks that households have is paying their bills on time. However, it can be difficult for those without a lot of organizational skills to keep track of bill due dates and upcoming bills.
One way to keep track of bill due dates is by using a calendar that has notes on each day, as well as other information such as what’s coming up in the near future.
You may want to color-code your bills by paycheck. Another option is to track your payments with colors, such as red for debt, green for paydays, etc.
Either way, you want to notate when you paid a bill and the manner you paid it.
5. Digital or Paper
Now, for the endless debate… do you use a digital or paper system? Or do you need to use both for double reminders?
Regardless of what you decide, you should use a monthly calendar printable template to track what needs to be done.
Here are some options on how to organize your bill calendar.
Keep your monthly bill calendar in your budget binder.
Print out the month’s schedule and hang it up on your refrigerator or wall for easy reference. This is an important habit because you’ll never miss due dates if you don’t have to worry about finding paper calendars or trying to remember which bills are due when.
Create a post-it note with the day’s due date on it and stick it to your monitor so you don’t forget.
Use Google Calendar or iCalendar, which are both free online calendars that can be accessed from any computer or mobile device. This allows you easy access when away from home but still keeps things relatively simple as well since these options only.
Many budget apps have cost-effective solutions with tons of cool features and helpful tools that will make your life easier.
The end goal is to keep things simple, allowing you more time for other tasks.
Bill Calendar Sample
Here is a bill calendar example.
You would personalize this for your needs and your expenses.
Remember, many times it is helpful for people to visualize how bills will be paid and when.
This helps with cash flow planning.
Bill Calendar Template
It is important to keep track of your bills and how much you have to pay each month. The best way to do this is with a bill calendar template that has columns for your monthly expenses, which include rent, utilities, phone service, groceries, etc.
Some effective strategies for keeping tabs on what’s due when are:
– Create a list of all the upcoming payments in order from high priority (such as a mortgage) to low priority (such as grocery store), and then put them in your calendar as they come due.
– Create a list of all the upcoming bills, rent from highest to lowest priority, and then put them in your calendar as they come due.
To make the most of your budget, you need to know where every dollar is going.
A bill calendar template will help you plan and prioritize which bills are due when so that money can be properly allocated for important expenses without letting any slip through the cracks or being overspent on things like entertainment.
FREE Printable Bill Calendar
A bill calendar is a type of monthly planner used to keep track of bills that are due. This free bill calendar printable can be downloaded and used personally.
Having a visual reminder of what’s coming up helps me stay focused and watch my spending because it gives me an idea at a glance of how much money comes out each month.
It also helps remind me when certain events occur such as income tax or mortgage payments.
Download your printable monthly bill calendar.(This is a perk for our readers who subscribe to our email list.)
A bill payment calendar is a helpful tool for keeping track of when your bills are due.
Bill Calendar App
A bill payment app is a form of software that helps people pay their bills online. It offers a way to manage the process and avoid any potential late fees.
Bill payment apps are useful for many individuals.
They can help you keep track of your monthly bills without having to use a paper calendar, which is typically cluttered with social events and day-to-day tasks.
Furthermore, bill month calendars organize recurring payments that occur on the same date each month so that they don’t get charged twice or renew prematurely before you know it!
Here are some great options:
How Will a Bill Paying Calendar Help You?
All in all, a bill calendar is another tool in the personal finance toolkit.
This bill organizer calendar is an important part of your managing money.
You can choose a checklist style or a monthly layout.
Bill calendars are a simple and effective way to keep track of your bills and expenses.
They can help you save money and come up with strategies to boost your finances. They come in many different types and are often used for budgeting purposes.
Many people use a bill calendar in conjunction with a budget binder with envelopes as well.
How do you see a bill calendar improving your finances?
From all of the free and paid budgeting apps, here are our top budgeting apps to check out!
This section may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. Please read the full disclosure below.
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
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Great way to use cash flow budgeting. Plus uses “envelopes” to budget.
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Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Embark on a profitable journey with our guide on starting a bookkeeping business. Find the steps on how to become a bookkeeper and find success.
Starting a bookkeeping business from scratch can be an exciting yet nerve-wracking venture.
For many budding entrepreneurs, the formidable task of setting up a business adds a mix of anxiety and anticipation. The initial trepidation often stems from dealing with the unknowns of a new venture and the pressure of ensuring meticulous financial management of someone else’s finances.
However, with thorough planning and an understanding of the essential steps, such as crafting a solid business plan and obtaining the necessary certifications, these nerves can be managed.
By embracing your entrepreneurial spirit and equipping yourself with the right knowledge, you can lay a strong foundation for a successful bookkeeping business.
Plus it is easier to get started than you thought…
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is a bookkeeping business?
At its core, a bookkeeping business manages the financial records of other businesses. They ensure accuracy, track receipts and expenses, and prepare financial statements – the financial bedrock upon which enterprises stand.
With an emphasis on accuracy and organization, they are responsible for keeping the financial data up to date and available for strategic decisions.
For many, this is a popular way to make money online.
Earn Extra Income with Bookkeeping
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
Show Me How
First Steps to Starting a Bookkeeping Business
Craft a Comprehensive Business Plan for Success
Your roadmap to success begins with a business plan. This document is crucial—it outlines your vision, goals, unique value proposition, target market, competitive landscape, marketing strategies, and detailed financial forecasts. Think of it as your strategic compass guiding you from startup to growth.
This takes your side hustle to an actual living thriving business.
Remember, your business plan is a living document. You must regularly review and update your business plan will help you stay on track toward your business objectives and adjust course as necessary to meet new challenges or opportunities.
Acquire Essential Certifications and Training
By obtaining the right certifications and training, you not only perfect your craft but also send a message of reliability and professionalism to prospective clients. While this may require an investment of time and resources, the credibility and expertise you gain are invaluable assets for your bookkeeping business.
Select bookkeeping courses that cover crucial topics such as accounting principles, financial statements, tax preparation, and accounting software. This education will deepen your understanding and sharpen your skills.
Stay updated with continuing professional education (CPE) credits to keep your certifications active and your knowledge fresh.
Familiarize yourself with popular bookkeeping software that you’ll use day-to-day. Being proficient in these tools will increase your efficiency and accuracy—qualities clients highly value.
Once certified, don’t forget to prominently display your credentials on your website and marketing materials. This can significantly bolster potential clients’ trust in your abilities and help establish your reputation as a qualified bookkeeping professional.
Bookkeepers.com Online Courses
Learn what you need to start your very own virtual bookkeeping business.
An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.
Learn More
Legal Considerations and Compliance
Setting the legal foundation for your bookkeeping business is not just a formality—it’s about protecting your operations and establishing credibility.
Register Your Business and Secure the Necessary Permits
Let’s look at the essential steps to ensure your business is registered correctly and fully compliant with regulatory requirements.
Choose a Business Structure: Decide whether an LLC, sole proprietorship, partnership, or corporation best suits your needs.
Register Your Business Name: This is a crucial branding element. Check for name availability and register it with the appropriate state agency, ensuring it’s unique and resonates with your target market.
Obtain an EIN: If you’re in the U.S., you’ll need an Employer Identification Number (EIN) for tax purposes, especially if you plan to hire employees. This number is also often required to open a business bank account and apply for business licenses.
Apply for Licenses and Permits: Depending on your location and the structure of your business, you may need various licenses and permits. Check local and state regulations to ensure you meet all legal requirements.
Register for State Taxes: If applicable, register for your state’s tax structure. This may include sales tax, unemployment insurance tax, and other business-related taxes.
Comply with Local Regulations: Ensure you’re familiar with local zoning laws if operating from home, and obtain a Certificate of Occupancy if required. If you’re part of a homeowners’ association, review any stipulations they might have on home-based businesses.
Understand Ongoing Compliance: Be aware of annual filings, renewals for licenses and permits, and other regulatory commitments to maintain compliance.
By being diligent with these legal prerequisites, you’re not just following the rules—you’re also sending a clear message about your professionalism and attention to detail.
Protect Your Endeavors with the Right Insurance
Insurance is the safety net that can save your bookkeeping business from unexpected financial challenges. It’s not about expecting the worst; it’s about being prepared for any situation that could undermine the stability and reputation of your business.
General Liability Insurance: This covers a broad range of issues, including bodily injury or property damage claims made by others.
Cyber Liability Insurance: As a bookkeeper dealing with sensitive data, you’ll want protection against cyber threats and data breaches.
Property Insurance: If you have a physical office or own valuable equipment, property insurance can cover losses from events like fire or theft.
By integrating the right insurance policies into your business strategy, you set up a protective fortress around the hard work and dedication you put into your bookkeeping business. Insurance should not be perceived as an unnecessary expense but rather as a prudent investment in your business’s longevity and reputation.
Setting Up Shop
Establishing a Home Office vs. Renting Space
Choosing the right environment for your bookkeeping business is a balancing act between professionalism, cost-effectiveness, and personal working style. Whether you decide on a home office or opt for a rented space, the decision will significantly impact your operations.
Home Office Advantages
Renting Space Advantages
Cost Savings: Eliminate commuting costs and monthly rent, channeling those savings back into your business.
Professionalism: A commercial office can provide a more professional setting for client meetings and create a clear boundary between work and home life.
Convenience: Enjoy the flexibility of setting your own hours and working in a stress-free environment.
Networking Opportunities: Proximity to other businesses in shared office spaces can foster relationships and potential client referrals.
Tax Deductions: You may be eligible for home office tax deductions, saving you money during tax season.
Amenities: Rented spaces often come with value-added services like receptionists or conference rooms.
Home Office Disadvantages
Renting Space Disadvantages
Distractions: Domestic life can disrupt your work, impacting productivity.
Overhead Costs: Monthly rent and utility bills will add to your business expenses.
Professional Image: Having a dedicated business address and separate workspace can often project a more professional image to clients.
Long-term Commitments: Leases typically require a long-term commitment that may be risky if your business circumstances change.
Ultimately, the decision depends on the nature of your clientele, your personal work preferences, and your budget. Also, this is great for a stay at home mom to make money.
Many bookkeepers find success starting with a home office and transitioning to rented space as the business expands. Others may find that a small rented office fits their needs right from the onset, or that a virtual office setup provides the perfect middle ground.
Selecting State-of-the-Art Bookkeeping Software
With the right bookkeeping software, you can streamline your operations, foster transparency with clients, and confidently tackle complex financial scenarios.
Adopting top-notch software will serve as both a foundation and a catalyst for your bookkeeping business, ensuring you remain competitive and responsive in a rapidly evolving industry.
Look into popular bookkeeping software such as QuickBooks Online, Xero, FreshBooks, and MYOB. Compare them based on features, ease of use, scalability, and customer support.
By taking the time to carefully weigh these factors, you will be better positioned to select bookkeeping software that not only meets your current needs but also supports your business as it expands.
Financial Foundations for Your Firm
Unravel Funding Options and Small Business Loans
Before seeking funding, calculate your startup costs including equipment, software subscriptions, legal fees, marketing, and initial operating expenses. This will help you understand how much capital you need to secure.
Typically, you should be able to start your bookkeeping business with little investment and add additional expenses as you grow.
If needed, there are a variety of funding sources available for new businesses. Research options like traditional bank loans, credit unions, Small Business Administration (SBA) loans, online lenders, and crowdfunding. When applying for loans or pitching to investors, a comprehensive business plan is essential. It should outline your business concept, financial projections, and growth strategy to demonstrate the viability and potential profitability of your bookkeeping business.
Smart Money Management from the Start
Establishing smart money management practices from the very inception is the same as being financially sound with your personal finances.
Open a Dedicated Business Bank Account: Keep your personal and business finances separate. This is fundamental for accurate bookkeeping and simplifies your tax situation come year-end.
Start With a Budget: Even before your first client, create a realistic budget for your business. Know the costs of all aspects, including marketing, equipment, insurance, and any other operational expenses. This will help prevent overspending and ensure your resources are allocated effectively.
Use the Profit First Formula: This simple formula will help you to pay yourself as well as have enough money for operational expenses and to pay your self-employment taxes.
By establishing and maintaining these smart money management practices from the outset, you’re not just safeguarding your bookkeeping business against common financial pitfalls—you’re also building a foundation for a prosperous financial future.
Marketing Your Bookkeeper Business
Digital Presence: Creating a Website That Converts
In today’s digital-first world, your website often makes the first impression for your bookkeeping business. It’s not just an online brochure; it’s a crucial tool engineered to turn visitors into leads and leads into loyal clients.
User-Friendly Design: Your website should be easy to navigate with a clean layout that directs visitors naturally from one section to the next. Prioritize quick load times and mobile responsiveness with Kadence to cater to all potential clients.
Clear Value Proposition: Immediately communicate what you offer and why a potential client should choose your bookkeeping services. Highlight your unique selling points front and center on the homepage.
Strong Call-to-Actions (CTAs): Use compelling CTAs to guide visitors towards taking action, whether that’s contacting you, scheduling a consultation, or signing up for your newsletter. Make it easy for them to engage with you.
Client Testimonials and Case Studies: Social proof can be incredibly persuasive. Showcase positive reviews, client testimonials, and case studies to build trust and credibility with prospective clients.
With a well-crafted website, your bookkeeping business demonstrates its expertise and readiness to cater to client needs, no matter where they are in their financial journey.
Networking and Navigating Social Media Strategies
Building a robust network and mastering social media can turbocharge your bookkeeping business’s growth. It positions you not just as a service provider, but as a thought leader in your field.
Identify the Right Platforms: Choose one or two social media platforms where your target audience is most active. LinkedIn, for instance, is a goldmine for professional networking, while Instagram can showcase your brand’s personality.
Create Valuable Content: Share content that resonates with your audience — tips to manage business finances, tax updates, or insights into bookkeeping trends. This positions you as an expert and invites engagement.
Engage Actively: Don’t just post and disappear; interact with your followers. Answer questions, join discussions, and show appreciation for their engagement. Building relationships is key to networking success.
Leverage Professional Groups and Forums: Beyond your own social channels, be active in online groups or forums related to bookkeeping and your clients’ industries to expand your visibility and establish credibility.
Your network and social media are not just channels for promoting your services; they’re platforms for sharing your expertise, engaging with peers and potential clients, and building a community around your bookkeeping brand.
Bookkeeping Startup Pricing, Clients, and Growth
Determining Competitive Rates for Your Services
Setting competitive, yet fair pricing for your bookkeeping services is a balancing act that ensures value for your clients and viability for your business.
Let’s explore how to establish a rate structure that meets the market demands and supports your financial goals.
Market Research: Begin by understanding what other bookkeepers in your area or within your niche are charging. This insight will help you benchmark your rates competitively. Keep in mind factors like experience, specialization, and location.
Value Your Expertise: Assess your qualifications, experience, and the quality of services you offer. Clients are willing to pay for the value you bring to their business, so price your services accordingly.
Consider Your Costs: Ensure your rates cover your expenses, including software subscriptions, continuing education, insurance, and taxes, while also leaving room for profit.
Pricing Models: Decide whether you’ll charge hourly, offer flat-fee packages, or adopt a value-based pricing model. Each model has its advantages and can be chosen based on the type of service or client preferences.
Communicate Your Pricing Clearly: Be transparent with clients about your rates. Clear communication prevents misunderstandings and builds trust from the outset. [Placeholder for sample pricing page]
Within your pricing strategy, consider the lifetime value of client relationships and the potential for added services down the line.
How will you find clients for your bookkeeping business?
Finding clients is the engine that powers your bookkeeping business and your income. With a strategic combination of diligent networking, tactical marketing, and leveraging existing relationships, you can start building your client base.
Utilize Online Platforms: Websites like Upwork, Fiverr, and LinkedIn can connect you with businesses looking for bookkeeping services.
Local Business Outreach: Approach local businesses directly. Offer to discuss how your bookkeeping services can alleviate their financial stress and add value to their operations.
Referral Program: Encourage word-of-mouth by setting up a referral program. Incentivize your current clients or network to refer others to you.
Social Media and Content Marketing: Create and share engaging content on your social media profiles to build brand awareness.
Community Involvement: Join local business associations, attend chamber of commerce events, or contribute to community projects. These can lead to connections and opportunities.
Offer Free Workshops or Webinars: By providing value upfront through informative sessions on bookkeeping and financial management, you can attract potential clients who are interested in improving their business finances. Also, you can partner with other professionals.
Professional Partnerships: Build relationships with accountants, lawyers, and business consultants who might not offer bookkeeping services but can refer their clients to you.
With a consistent and strategic approach, you can attract and retain the clients that are the best fit for your business, ultimately building a robust client portfolio. Remember, it’s not just about finding any clients—it’s about finding the right clients who treasure you.
Discovering and Retaining Your Ideal Clientele
Attracting clients is one feat, but discovering and retaining those who are the perfect fit for your bookkeeping business is where the real growth happens.
Offer Customized Solutions: Set yourself apart by tailoring your services to meet the specific needs of your clients. Show that you understand their industry and are invested in their success.
Provide Exceptional Service: Consistently deliver high-quality work, be responsive, and proactively address your clients’ needs. Clients will stay with a bookkeeper who goes above and beyond.
Host Client Appreciation Events: Small gestures of appreciation or exclusive events can strengthen business relationships and foster client loyalty.
Stay on Top of Industry Trends: Being knowledgeable about your clients’ industries can make you indispensable. Offer insights that can help them stay ahead of the curve.
Stay Ahead in the Bookkeeping Scene
Continuous Learning and Leveraging Industry Trends
The bookkeeping industry doesn’t stand still, and neither should you. Continuous learning keeps you at the forefront of evolving practices, ensuring your services remain relevant and your advice sound.
Keep Abreast of Regulatory Changes: Tax laws, financial regulations, and compliance standards can affect your clients; stay updated through webinars, online courses, and industry news.
Embrace Technological Innovations: New software and tools can streamline bookkeeping tasks. Be open to adopting tech that can improve your efficiency and the services you provide.
Participate in Professional Development: Attend workshops, seminars, and conferences geared toward bookkeeping professionals. Networking with peers can also uncover new trends and techniques.
By maintaining a commitment to continuous learning, you not only improve your own skillset but also enhance the overall value of your bookkeeping services.
Join Professional Associations for Peer Support
Being part of a professional association offers more than just credentials; it’s a direct line to a community of peers who can share insights, resources, and support as you build and grow your bookkeeping business.
By joining professional associations such as the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB), you demonstrate a commitment to professionalism and continuous improvement. These affiliations provide a wealth of resources to support you in delivering high-quality services and growing a thriving bookkeeping business.
Plus you can take advantage of seminars, webinars, and certification courses offered by associations to further your education and maintain any required continuing education credits.
Bookkeepers.com Online Courses
Learn what you need to start your very own virtual bookkeeping business.
An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.
Frequently Asked Questions (FAQs)
Yes, a bookkeeping business can certainly be profitable. It offers a low overhead cost model, recurring revenue opportunities through ongoing client relationships, and the potential to scale services.
With diligent financial management and strategic growth, profitability can be substantial.
While a degree is beneficial for deep knowledge, it’s not mandatory. Certification and practical experience can often suffice in starting a successful bookkeeping business.
In fact, this is one of the best low stress jobs without a degree.
Begin by gaining an understanding of bookkeeping principles, getting certified, investing in software, and slowly building up your clientele with strategic marketing and networking.
Ready to Open Bookkeeping Business?
Starting your own bookkeeping business can be a fruitful endeavor with the right preparation and education.
This guide outlines the key steps and provides direction on how to start a bookkeeping business, ensuring you cover all essential elements for a successful launch. With focus and attention to these structured steps, you’ll be well on your way to establishing a thriving bookkeeping business.
Still on the fence? Check out this free bookkeeping webinar to learn more.
With the right preparation, tools, and mindset, you can launch a thriving venture that supports businesses in their financial journey while growing your own entrepreneurial dreams.
Embrace the adventure—your future in finance awaits!
Just remember if you are looking for ways to make money fast, this one comes with patience and perseverance to make things happen.
Earn Extra Income with Bookkeeping
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
Know someone else that needs this, too? Then, please share!!
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Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Master self-employment taxes and avoid common tax mistakes with expert strategies for managing your finances year-round.
How do self-employed taxes work? What are some common tax mistakes self-employed people make? And can you really write off payments on a luxury vehicle if you use it for work purposes? Hosts Sean Pyles and Elizabeth Ayoola discuss the intricacies of self-employment taxes and strategies for financial success and IRS compliance to help you understand how to navigate tax season as an independent worker.
CPA and financial strategist Krystal Todd joins them to delve further into the details of self-employment taxes, with tips and tricks on budgeting for personal and professional life, the importance of making quarterly tax payments, and whether to DIY taxes or hire a professional. They also discuss strategies like depreciating assets, the benefits of hiring family members, and navigating the complexities of tax deductions.
Plus: financial strategies for handling unexpected income and managing self-employment taxes, the importance of setting aside funds for unexpected expenses, and the advantages of timing revenue recognition and prepaying expenses for tax benefits.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
As Ben Franklin himself said, in this world, nothing is certain except death and taxes. Taxes, as we all know, can be wildly confusing, and that goes double when an employer isn’t there to help.
Krystal Todd:
We need quarterly payments just of you estimating how much you think you’ll be paying in taxes, and then at the end of the year when you actually file your taxes, they’ll make adjustments based on whatever credits and deductions you’re eligible for, what you’ve already paid, and then you’ll see what you net.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Elizabeth Ayoola:
And I’m Elizabeth Ayoola.
Sean Pyles:
Today we bring you episode two of our nerdy deep dive into self-employment. In our last episode, we talked about the importance of budgeting when you’re working for yourself. Obviously here at Smart Money we think it’s a good idea for everyone to budget, but especially if you’re self-employed, you’re going to need to budget for both your personal life and your professional life.
So in this episode, we’re going to answer the most important tax questions self-employed people have, like how do self-employed taxes even work? Is it better to DIY your taxes or hire a pro? And can you really write off payments on a luxury vehicle if you use it for work purposes? Welcome to tax season.
Elizabeth Ayoola:
Womp womp. My favorite part of tax season is when it’s over. Thankfully, I’m getting better at taxes every year and I’m also learning to outsource. Shout out to my tax person. Anyways, yes, it’s February and it’s tax time for all of us. And if you’re a gig worker, freelancer, contractor, or other solo entrepreneur, you need to make sure that you’re doing all the heavy lifting an employer would usually do for you. And you have to do that to avoid mistakes and IRS penalties. Hopefully those who aren’t new to self-employment have withheld enough quarterly taxes throughout the year so they’re not hit with an IRS penalty. New listeners who are about to dip their toes into self-employment are about to learn about how self-employed taxes work.
Sean Pyles:
Yeah, that is no bueno. I know people who, when they started freelancing, had no idea that they were supposed to be paying taxes all year long quarterly instead of saving up for a big payment at the end of the year. The IRS does not look kindly on that, even if it ends up that you overpaid. And by people here, I am absolutely referring to myself because I once found myself in a world of tax hurt back when I was a contractor, and that is a lesson I shall not soon forget.
Elizabeth Ayoola:
It’s good to know I’m not alone, Sean, because I’ve been there too and it wasn’t fine.
Sean Pyles:
Elizabeth Ayoola:
It hurts. It’s a heartbreak.
Sean Pyles:
All right, well, we want to hear what you think too, listeners. To share your ideas and questions around self-employment with us, leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected].
So Elizabeth, who are we hearing from today?
Elizabeth Ayoola:
Today we’re going to be chatting with Krystal Todd. She happens to be a certified public accountant, a financial strategist, a money mentor and an entrepreneur. Her resume puts her in a good position to give us the juicy details we need on self-employed taxes.
Sean Pyles:
That’s coming up in a moment. Stay with us.
Elizabeth Ayoola:
Hi Krystal. Thank you for coming onto the podcast.
Krystal Todd:
Yes, thank you so much for having me. Really excited to talk taxes. This is my bread and butter. I love talking about anything money, really.
Elizabeth Ayoola:
No, I’m with you. I’m not going to lie, I do not love taxes, but I do love to understand taxes because I don’t want to pay the IRS more than I have to pay them.
Krystal Todd:
Oh, no. That’s why I’m here.
Elizabeth Ayoola:
Another tax year is upon us, and I think this information is going to be super helpful. So with that said, I’m going to jump straight into the first question I have for you, which is how do self-employed taxes work? And I know this is a big question, but I know I learned the hard way about self-employed taxes and I learned that they’re higher than what you pay when you’re working a traditional job with an employer.
So I want you to tell us why self-employed taxes are higher, especially when the government seems to provide so many incentives for small business owners.
Krystal Todd:
So it’s a double whammy because not only is it higher because we’re paying both sides of the employer tax, but we also have to pay it ourselves. So if you’re coming from a W-2 world into self-employment world, normally in W-2 world, it’s all handled for you. The biggest difference is that you’re having to have full control over paying your taxes, paying quarterly, whereas a W-2, you’re paying every paycheck. It doesn’t feel like that, but that’s what’s going on. And then the self-employment tax. So typically with your W-2 employee, you’ll pay half that piece and then your employer pays half of it, but because you’re self-employed, you are the employee and the employer, so you’re paying 15% in taxes.
Elizabeth Ayoola:
That 15%, I remember the first time I saw it and whipped out my calculator and I was like, “Wait, what? This was a chunk of money.” So I was a little unpleasantly shocked by that number.
Krystal Todd:
Yeah, there is a way to get around it.
Elizabeth Ayoola:
Tell me, tell me.
Krystal Todd:
If you’re just starting out, maybe it wouldn’t be most beneficial. It does depend, and of course you have to always throw a disclaimer out there. Everyone’s situation is different. I’m a CPA, but not your personal CPA, so take everything I’m saying as little seeds of wisdom to go research.
When you’re first starting out, maybe you don’t have your EIN, which is just basically your social security for your business, employee identification number. So it’s like your social security number but for your business, because businesses are their own entity. But when you’re first starting out, maybe you’re not doing all of that. So if you’re in the sole proprietor category, which means you’re just working for yourself, you hired yourself, maybe the next level up is LLC, limited liability company. So you’ve gone ahead and filed for that LLC so you have some protection, but you’re still going to be paying a lot of taxes.
It’s not until you get into the S Corp. And of course there’s a couple of qualifications there, but once you get into S Corp, you can actually pay yourself as a W-2 employee in your business. And then that’s how you circumvent that self-employed tax because even though it’s your business, you’re an employee of the business so it looks like a W-2. And the benefit of that too is especially if you’re self-employed, and I know some people have felt me on this, if you’re trying to get a loan for a car, once they see you’re self-employed, guns are blazing, right? They’re ready to ask you all types of questions. You have to provide so much information. As an S Corp, if you’re paying yourself, you’re going to receive a W-2 from your business so they don’t have to know it’s your business. They just see W-2 and no questions asked. There are some benefits to having an S Corp for sure.
Elizabeth Ayoola:
By the way, for everyone listening, we’re going to go a lot deeper into the different business structures in a subsequent episode, so don’t worry. We’re going to touch on that some more.
So now back to taxes. I know estimated taxes are something that I now do. Didn’t do before, but I remember when I was first researching self-employment taxes, that came up a lot. But I thought, “Hey, I can just pay it in one lump sum,” and I didn’t really dig deeper to read all of the fine details. Can you explain to us what estimated taxes are and how exactly it worked?
Krystal Todd:
Of course. So as I mentioned previously, as a W-2 employee, you’re paying taxes every single pay period. So you don’t necessarily have to worry about that, but as a self-employed individual, you’re not paying any taxes. So what the government has said is, “You’re not off the hook.” You’re not going to pay just one time at the end of the year. We need quarterly payments just of you estimating how much you think you’ll be paying in taxes, and then at the end of the year when you actually file your taxes, they’ll make adjustments based on whatever credits and deductions you’re eligible for, what you’ve already paid, and then you’ll see what you net.
So it’s crucial to pay quarterly taxes, and you can use things out there that help you track your expenses and your income and can even help you calculate that too, so you don’t have to necessarily do it all on your own.
Elizabeth Ayoola:
Absolutely. So tell us, when are the self-employed taxes due and what happens if you don’t pay them?
Krystal Todd:
Yes, they’re quarterly. If you don’t pay them quarterly or they realize that you haven’t paid enough, you will get fined. You don’t have to end up in jail if it was a legitimate accident, so you’ll be fine, but you will get penalized and it can be a little costly. So definitely make sure that you are just getting that done ahead of time. It’s a fresh new year, so new opportunities to make sure we’re staying on target.
Elizabeth Ayoola:
Yes. And for those who maybe are listening and unfortunately missed out on paying quarterly taxes and maybe in April are going to end up being hit with a bill, are there any options in terms of how they can pay it if they don’t have that lump sum cash?
Krystal Todd:
It depends on your situation. Sometimes the IRS will say, “No, you need to make this payment,” and sometimes they’ll work with you depending on the amount. So it does depend on your circumstances.
Elizabeth Ayoola:
What was this I heard about that you can sometimes do a payment plan with the IRS. So is this true?
Krystal Todd:
Yeah, no, it’s true. It’s true. I think it just depends on, like I said, your circumstances. Maybe there’s situations where if you had issues before, they’re a little bit more strict on you, but you can make payments.
Elizabeth Ayoola:
So now we want to get into the mistakes so other people can learn from those mistakes. So what are some common mistakes that you see clients make when it comes to paying their self-employed taxes? So for me, for example, I just wasn’t good at bookkeeping initially. I had my money in too many different accounts, so it was overwhelming when tax season came around to see what my deductions were and just basically my income. So as a CPA, tell us maybe two or three common mistakes you see people make.
Krystal Todd:
The common mistake by far is not making sure that they’re taking all the deductions and credits that they’re actually eligible for. So ultimately, a lot of people will think about taxes as a January through April situation, but it’s a year-round thing. Tax planning is almost more important than actually tax preparation. You want to think about the whole year and ways you can save money, different things you could probably invest in to bring your taxes down. So missing out on tax planning and then trying to just rush everything towards the end of the year is by far the biggest mistake. I’ll see people scrambling for receipts, looking back, and a lot of times if you’re just starting out, typically maybe they won’t have a separate business account as well.
Depreciation is the biggest one that I think people miss out on, not only for things like Airbnb in your home, but also your car. If you’re doing Uber or Lyft, you can get credit for the wear and tear on your car. If you have a computer or any devices that you have, those things are also depreciable or you can actually fully deduct them in certain cases. I definitely think that you should be empowered and doing it yourself, but if your taxes are getting complicated, you’d want to make sure that you’re leaning on a tax professional who will catch those expenses because a lot of people are paying too much.
Elizabeth Ayoola:
Thanks for sharing all of those incredible ways that people can reduce their taxes. Can you tell me about some other deductions or ways that people can reduce their self-employed taxes?
Krystal Todd:
Yeah, so a really neat one is making sure you hire your family in any capacity that you can. Now, of course, there’s some caveats here. You have to make sure you’re paying them a reasonable wage. So if they’re just an administrator, you can’t pay them multiple six figures. It has to be reasonable, but to the extent that it’s reasonable, you can actually hire them on. And I especially love this with kids.
So as an example of my own life, I hire my daughter and she’ll help me with my videos, she’ll help me with setup. She helps me with product development, and she’s been featured in a few of my videos online. So I will pay her. She’s a 1099 worker, so it’s not a W-2, so it’s simple. I just have to give her a check, and what I love about that is that I get to reduce my taxes, and this is more like W-2, but either way, we all get a standard deduction.
If I pay my child up to the standard deduction amount, which was just a little over $13,000 for 2023. If I pay her $13,000, I get to reduce my taxable income by that same $13,000. She pays no taxes on it because of the standard deduction, which basically is the IRS giving you some credits for having a kid or just whatever else is happening in life. They say, “Here’s just one flat rate. You just take that.” So she doesn’t pay taxes on that, and then I can put it into a custodial IRA for her and it’ll grow tax-free because it’s Roth. You’re saving money, they’re not paying any taxes, I mean, that’s a really good tax loophole there.
Elizabeth Ayoola:
For sure, for sure. And speaking of which, since we’re on the topic of deductions, I know sometimes people go a little over the top with these deductions, forgetting that the IRS does audit people. I know recently I’ve seen something floating around on social media about being able to buy a Mercedes Benz, also known as G-Wagon, and write it off using your taxes. And the rules for this are really complicated, so make sure to work with the CPA if you’re thinking about doing it. So is this true? And if it is, what is the catch?
Krystal Todd:
There are some caveats. It must be used in business. You can’t just buy a G-Wagon, you never drive in it. If you’re a realtor, for example, that might make sense. You have an image. If you’re a realtor, you’re selling million-dollar homes, you want to look the part. That might make sense. But if you’re a content creator working at home, you never go in the car to do anything, you cannot do that. In the eyes of the IRS that is illegal, so you have to make sure that it’s being used for business use. It doesn’t have to be exclusively, but if it is half business, half personal, you’ll have to adjust your taxes to account for that.
Elizabeth Ayoola:
So sorry to get into the nitty-gritty, but when you say business use, someone might say, “Oh, I have a meeting, I don’t know, once a month, and I’m driving it to my meeting.” A content creator. Does the IRS get into the details of how frequently you’re using the car?
Krystal Todd:
Yes, and the location. So if you’re driving from your home to a meeting, that doesn’t count. It’s only if you’re going from, let’s say, your primary job to your second job. Then that could actually be considered a deductible expense. So yeah, they’re very particular about what you’re using it for, where you’re driving from, and if you get audited, you better be prepared.
Elizabeth Ayoola:
So can you tell us, on that note, some major red flags or even myths that you hear of when it comes to tax deductions?
Krystal Todd:
Yes. I think that people think they could just deduct anything because it’s eligible. The government makes you go through hoops, especially after the Tax Cuts and Jobs Act where the standard deduction was doubled. They’re really trying hard to make you just take the standard deduction and just take that and go.
If you’re saying, “No, I’ve had more than $13,000 worth of expenses,” you might have. That doesn’t mean they’re all going to be eligible. So for example, for health costs that you’ve spent, maybe you spent $10,000 in health expenses for this year, but the government does not give you dollar for dollar, and if you take that, it has to be itemized. So you might do all this work trying to itemize your deductions and you were better off taking the standard deduction because they make you go through a lot of different hoops. There’s percentages, there’s phase-outs if you’re making a certain amount of money. So it’s super, super nuanced, and just circling back to what we talked about earlier as far as DIY goes, if you’re in that situation, unless you’re going to really put the effort into research, you probably are better off just getting someone who already has done this before and they’re comfortable with it because of all those different nuanced requirements that they have.
Elizabeth Ayoola:
So in the spirit of… Well, I don’t want to say in the spirit of getting audited because I don’t think anyone wants to get audited, but just in case, give us some bookkeeping tips. I’m still refining my bookkeeping because it’s just not my strong area, but what are some bookkeeping tips so that if the IRS comes knocking, people are ready?
Krystal Todd:
I strongly suggest getting software. If you have a software, you’re able to attach receipts directly to it. They’ll organize it for you. If you’re not someone who’s too familiar with income statements and cash flows and all of that, they prepare those documents for you. That by far has dramatically changed my business. And also having separate accounts. You can’t even imagine how many people will dig through their personal account looking for business expenses. Even if you’re just starting out, from the decision you’ve made to take this business seriously, please get your EIN so you can open up your business bank account, and that way everything is just flowing through one account. Lean on these different tools that will organize it for you and just be sure to keep receipts.
I would say you should be at least monthly. All these billion-dollar corporations, I mean, they’re doing things very frequently, but every single month we are balancing the books, we are going over our expenses and then we’re tax planning. So many people wait until the end of the year and then it just becomes a hassle. So to the extent that you can, get it done monthly. That is the best advice I have so you’re not stressing yourself out during these times.
Elizabeth Ayoola:
We’re in a very tech-savvy age, so how are digital receipts? So every time maybe you make a purchase or whatever, just keeping a digital file of your stuff.
Krystal Todd:
Yes, absolutely. And let’s say maybe you’re not ready for the software. That’s what I was doing when I first started out and I wasn’t too sure. Just a simple folder in your computer would work. Document everything in the moment as it happens, that way nothing is slipping through the cracks and you should be in good shape.
Elizabeth Ayoola:
So the last question I have, because in this series we’re trying to cover people who also have how they can manage your finances when they have inconsistent income. So for someone who has inconsistent income throughout the year, maybe they don’t make as much during the beginning of the year, but let’s say halfway through the year they land a huge contract.
How do they budget then for self-employed taxes or estimated taxes, rather? Because I know that’s based on how much you think you’re going to make, but you don’t always know. So maybe you’ve been underpaying for the first half of the year and then the end of the year comes. How do you manage that?
Krystal Todd:
I always say be as conservative as possible. It’s kind of like a dual opinion I have here because on one end, you don’t want to give the government an interest-free loan. That’s essentially what you’re doing when you get a tax refund. But on the other end, you also don’t want to deal with owing money, maybe being penalized and then having to pay that next year. So to the extent that you can, I would say be as conservative as possible when it comes to paying your taxes. Again, there’s different software that’ll help you establish what you should be paying. When you get that windfall, you weren’t really expecting it, right? So I like to live off of my most conservative amount of money.
So let’s say maybe it’s $10,000 a month. If I made $20,000 a month, I will ignore that $10,000 and put it to the side just because you’ll have that extra cushion to keep you protected in the event that you have a windfall you don’t expect. That happened to me last year, actually. I had quite the windfall and I wasn’t expecting it, but I had practiced what I preach and I had some money to the side, so it was okay. So whenever you get those large sums of money, pretend like you didn’t. Just live conservatively and then once a year is done, once you calculate your taxes and you pay it, then you can enjoy the rest. So it’s delayed gratification.
Elizabeth Ayoola:
Oh, I like that as a way of looking at it. And one day when I was complaining about my taxes, I remember someone saying, “The brighter side of that is that you made more money.” So we welcome a windfall, we just have to prepare for those windfalls.
Krystal Todd:
This is a little bit more technical, but something that I love because this again happened to me last year. Let’s say seasonality is something that your company is affected by. Maybe you get a big windfall of purchases or something at the end of the year. In certain circumstances, it might be best to ask them to pay you next year, right?
If you are a cash-basis type of accounting, you won’t get taxed unless you actually receive the money. So maybe you did make that revenue, but if you can have it pushed off to the next year because you didn’t expect that windfall and you don’t want to necessarily deal with the influx of the money you have to pay for those taxes, maybe you can have your customers pay you January 1st or January 2nd. That way you’re not going to be affected by that surprise, and that’s 100% legal. You can delay that or you can bring forward some expenses too.
This only works if, again, you are a cash basis, but if you want to pay something off for the whole year, you’ll be able to deduct that even if the whole year hasn’t actually happened yet. So there’s different ways towards the end of the year to try to get some last minute things in just to further insulate yourself.
Elizabeth Ayoola:
Love that. Those are some really, really good tips and a reminder of why it’s good to talk to CPAs. Do you have any final words of wisdom or anything that people might not be thinking about relating to self-employed taxes that you want to share?
Krystal Todd:
Yes. You are the driver. A lot of times people will shy away from it because it is intimidating, but in the age of information that we’re in right now, there is an influx of free information online. This is an example of one of them. Don’t be paralyzed by fear. Really lean into it because the difference between small business, and I really don’t use that word lightly because no matter if you’re small or big, you have to do the same exact stuff. So why even identify with your revenue or the size of your company? But a business is a business, and these larger companies become larger because they are hands-on and they’re very proactive with how they’re managing their money.
So I suggest that you do so too and do not be afraid of delegation. I, in other areas of life, have not delegated, and that is what comes back to haunt you. So you don’t have to do it all on your own. There are free resources, there are paid resources. Definitely make sure you’re just taking advantage of what you can take advantage of and you’re planning so that you can not be surprised with tax bills at the end of the year.
Elizabeth Ayoola:
Yes, absolutely. Echoing what Krystal said, you do not have to do it alone, and that is something that has made taxes a lot less daunting for me. Thank you, thank you, thank you, Krystal. This was so informative. I have learned so many new things that I’m going to apply when it comes time to do my self-employed taxes, so thank you. Thank you for coming.
Krystal Todd:
You’re so welcome. Thank you for having me, and good luck everybody in this tax season.
Sean Pyles:
Elizabeth, I never thought I’d say this, but that was actually a super interesting conversation about taxes. I am someone who was a planner in all aspects of my life, and like Krystal said, planning ahead with your taxes is so key whether you’re finding deductions, hiring your family, or making quarterly tax payments, but also there is a big difference between planning and scheming. I’m so glad that you guys talked about that viral G-Wagon tax hack because I have seen that so many times on TikTok. I have been really worried about people getting themselves into a world of trouble with their taxes.
Elizabeth Ayoola:
I’m telling you, on the journey of self-employment, I have realized that there are some things that are not too good to be true, but other things are too good to be true, and I think that’s one of them.
So while taxes can be a snooze fest, I think learning about ways to save and avoid penalties will always grab my attention. I love all the tax saving strategies that Krystal shared, and also the deduction red flags to look out for. I mean, for me, this episode was also a reminder about how important it is to talk to a tax professional who has extensive knowledge, and that’s even if you’re a DIY type person.
I feel more confident about filing my self-employed taxes now because of all the information we just got. But Sean, before we go, I do want to mention one development that we didn’t address with Krystal.
Sean Pyles:
What is that?
Elizabeth Ayoola:
Well, starting this year, there’s a new law called the Corporate Transparency Act. And what that says is that anyone with an official business designation, especially a one or two-person LLC, is going to want to be aware of.
This is an effort to stem money laundering and tax evasion in the small business category, and basically you have to file some extra paperwork with the Treasury Department called a Beneficial Ownership Information Report. If you don’t do that, you could be fined $500 and possibly get up to two years jail time, and don’t nobody want two years jail time.
Sean Pyles:
Elizabeth Ayoola:
Nobody. So definitely talk to your tax accountant and or your business attorney about that.
Sean Pyles:
Yourself included, Elizabeth. I do not want you to go to jail, so please get this done.
Well, thanks for that information. Elizabeth, please tell us what’s coming up in episode three of this series.
Elizabeth Ayoola:
Sean, we are all about getting to retirement here on Smart Money, but saving for it can often be an extra challenge when you are self-employed. We’re going to walk listeners through their options and how to make sure you’re planning for the future, even while you’re going into business for yourself.
Ayesha Selden:
If I can get to 10%, a double-digit percentage of my pay, of my gross pay, my pre-tax pay, I’m in the right ballpark. If you are self-employed, then the onus is on you, of course, to put in everything into your own personal retirement plan.
Elizabeth Ayoola:
For now, that’s all we have for this episode. Do you have a money question of your own? If you do, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. You can also visit nerdwallet.com/podcast for more information on this particular episode. And remember to follow, rate, and review us wherever you’re getting this podcast.
Sean Pyles:
This episode was produced by Tess Vigeland. I helped with editing, Courtney Neidel helped with fact checking, Sara Brink mixed our audio, and a big thank you to NerdWallet’s editors for all their help.
Elizabeth Ayoola:
And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and it may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.