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Affordable Home Based Business Opportunities With Prospects

Take a look on the Internet and you will find plenty of affordable home based business opportunities. Many of us dream of working from home. After all those who run an online business can be their own boss and work when they choose to.

So running a business from the comfort of your own home sounds pretty idyllic. But anyone who works from home in order to earn their living will tell you that home based business owners probably work twice as hard as anyone else. If you are trying to locate a legitimate way of making money online then begin by starting a small home based business.

Small Opportunities

Mighty Oaks from little acorns grow. There is no point in investing huge amounts of money in an online business if the return is minimal. When we talk about starting up an affordable online business we should consider ideas that require little or no investment.

Take an overall look at the area that you live in and consider supply and demand. Do residents in your locality need cleaners or gardeners? If you are an accomplished gardener or a cleaner then you could set up a website and advertise your services. You may not be physically working from home but your operating costs will be low so you should be able to maximise your profits.

Businesses that Allow You to work within Your Own Home

Every entrepreneur had to start somewhere and all of us have hidden talents that we never bring to the forefront. Maybe you make wonderful gift cards, handmade jewellery or cute hand-crafted goods.

If that is the case then use your skills to make an income. Accomplished cooks could try their hand at baking and selling celebration cakes, hence you make money from working at home doing a job you enjoy.

The Home Party Business Industry is Booming

If you are a great host and you have the gift of the gab then you should try earning a living from home party plan systems. This is one of the many affordable home based business opportunities that can be profitable.

A high percentage of firms that claim to have the ideal way of earning an income from home ask for a substantial start-up fee. Run a home party business and you may well have to purchase a party plan starter kit but that is usually relatively affordable.

Are There Any Internet Business opportunities?

Anyone who has access to the Internet and a few hours to spare has the potential to earn cash from home. Look online and you will see that many companies are advertising for customer service handlers, article writers and data entry workers.

Listed above are a few ways of earning money from home and all of these ideas are affordable. The majority of people seek online work to boost their income and it is up to you to find a business opportunity that matches your skills and interests. There are many affordable home based business opportunities in this world and some of them will bring great personal and financial rewards.

Points to Ponder When Planning a Business

One of the worst mistakes of someone planning a business is saying that you already know everything. The more they try to tell themselves that, the less work is accomplished. Try focusing on a few points.

- Business Plan
Start-up businesses are not always spur-of-the moment type of establishments even if some grilling joints claim that it’s borne out of cooking bar chow for drinking buddies. If start-ups with a plan still fail, what more for those who didn’t plan? Taking time to sit together with potential partners and going through the necessary steps in planning a business puts order and direction into the setting up stage as well as the implementation stage whether it is an LLC or any other type of business entity.

- Budget
Of course, just as in any other state, the economy is not rosy. But that doesn’t mean that enterprising businessmen should stop looking for funding for their business. You can get a loan using the business plan or feasibility study to show the bank how the money being borrowed will be spent. The budget should be realistic enough to include details about all operating expenses such as those that would be spent for office supplies, equipment, rental expenses, and other miscellaneous items. If ever an audit arises, at least you have a paper trail to keep track of the expenses.

- Customers
When planning a business, it is important to identify who your customers will be. This information should be taken further to pinpoint where these customers will be found and how the company will be able to reach out to them. This is important especially for LLCs and smaller businesses without much capital to spend on advertising and promotions. Identifying opportunities and zeroing in on high customer density areas is a wise move.

- Products and Services
Planning a business, of course, involves having solid products and services to offer. Even if you have a huge market to speak of, having products and services that are not good enough or are simply passable in quality would not cut it. In today’s market, consumers find it a lot easier to express what they don’t like in a product or service rather than what they liked about it. You have to listen to your customers and learn to distinguish between constructive criticism from plain bashing.

- Spending Time
Whether you have an LLC or any other type of business, you have to make sure that you devote enough time in running the businesses. The problem with some business owners is that they do not pay much attention to their operations and leave everything to their managers. When planning a business, you should likewise plan how you would allocate your time in running your business. This is especially true for some business owners who have other important concerns to take care of such as in the case of someone who is still employed with another company while running his own business.

PRESERVE YOUR INHERITANCE – Using Business Property Relief

BPR: The basics

Undoubtedly, the relief from IHT for business property is the most powerful relief in the whole of the UK’s IHT code. An interest in a business or shares in a company qualify for relief at 100%, that is their whole value is completely left out of account in charging the tax on death or lifetime gifts. Any kind of business will qualify for the relief, so long as it isn’t trading in shares or land etc., or a business of making or holding investments.

Fifty per cent relief is available for certain assets, like properties, that aren’t actually held within the business but are used for the purposes of a business, which you are carrying on either personally or through a company you control.

Furnished holiday lets

The question of whether a business is investment or trading in nature is a very topical one at the moment, in the context of furnished holiday lets. The case of Pawson recently heard at the Tribunal represented a runaway victory, or so it seemed, for the taxpayer. Reading between the lines of the case, it looks as though the old lady whose IHT was in question actually did very little but receive the rents from holidaymakers who visited her cottage in East Anglia. This therefore put her squarely within the Revenue’s new practice (it changed its approach a few years back without telling anyone), and even though furnished holiday accommodation is treated as a trade for other taxes, it isn’t automatically treated as a trade for IHT. The Tribunal thought otherwise, but unfortunately this case has been overturned more recently on appeal.

So, at the moment, owners of furnished holiday accommodation have no idea whether their asset will qualify or not. In a way, the judgment of the appeal judges is just as attackable in the opposite direction as the original judgment in favour of the taxpayer was. They both almost said the equivalent of ‘it stands to reason that furnished holiday letting is a trading/investment (delete whichever is applicable) business’. Our own view is that some businesses will qualify and others won’t, depending on how active the owner’s involvement actually is. The more active, the better.

But so much for the basics. What were those interesting tax-planning ideas we were talking about?

1. Turn 50% (or 0%) relief into 100% relief

It’s surprising how often people get this one wrong. We’ve just mentioned the rule that says that if you hold a property outside the business you get 50% relief if the business itself qualifies. But this relief is only 50%. Indeed, it’s worse than that if the business is carried on by a company and you, as an individual, don’t actually control that company (for example if you own the shares 50/50 with a business partner). In this instance, holding the property outside the company is a tax disaster, because you get no BPR at all, even if the property is fully utilised in a trading business.

Even worse is the situation where the business property is held in a separate company, which you own in parallel with your trading company. If you do it like that, you haven’t just fouled up your IHT planning position: you’ve also made a pig’s ear of your capital gains tax as well!

People often set up things like this to ring-fence what may be the most valuable business asset (the property) from any financial disaster that might strike the trade itself, for example a disastrous legal claim or losses made for other reasons.

But there is a way you can get the tax benefits without endangering the property asset in this way. One version of this is to put the property in a holding company which then owns the shares in the trading subsidiary company. Because, overall, you are looking at a 100% trading position, your shares in that holding company will qualify for 100% relief. There is an equivalent, which is arguably even better from the point of view of other taxes, in the context of LLP-based structures.

2. The ’50% rule’

Clever use of the ’50% rule’ will enable you to get relief for assets that are not actually trading in nature at all, but merely investments.

How can this be, when we’ve just said that BPR isn’t available for investment businesses, under the heading of ‘The basics’ above?

Simple: BPR is only denied if the ‘business’ in question comprises ‘wholly or mainly’ the making or holding of investments. The Revenue, no doubt correctly, interprets wholly or mainly as meaning more than 50%. Ergo, if your business is no more than 50% investment in nature it will still qualify for the relief in full.

So if, for example, you are in partnership and that partnership has assets (perhaps property or goodwill) worth £1 million, there’s no reason why you shouldn’t smuggle in a buy-to-let property, which would normally be treated as a fully IHTable investment, into the business. Its value will then form part of the overall value of a business which comprises at least 50% trading assets, and therefore is eligible for relief.

3. Property development or property investment?

Regular readers of these words will be familiar with this principle. Where you have a property portfolio, the question of whether its value is taxable on your death or on lifetime gift is one of what is going on in your mind. Do you hold the properties for the purpose of developing and selling at a profit or do you hold them for the purpose of long-term rent? If the former, you are a property developer with a business that is 100% outside IHT. If the latter, the whole value of the investment property portfolio is chargeable, in principle, at 40%.

So why is this mentioned in a list of planning points?

The answer is, because the distinction depends entirely, in the final analysis, on your intention. And intentions can change. Let’s take the example of the elderly person, perhaps in ill health, who has held a portfolio of properties for some years without change, and is living off the rents.

This is a prime candidate for planning of this sort, because if nothing is done to change that old person’s intention (which the Revenue will assume to be an investment intention) the whole amount will fall into his estate, and that could be rather soon.

He could, if circumstances were right from the commercial point of view, enter into partnership, perhaps with younger members of his family, with a view to developing the portfolio actively for sale. In principle, there is no reason why the whole portfolio should not thereby be transformed, literally overnight, into a completely non-taxable asset. But you need to make sure that the evidence is there, and one way to do this is to change the whole structure within which the portfolio is held into a corporate structure, more associated with trading businesses.

Note that this overnight transformation even gets round the normal rule that applies for BPR to the effect that you must hold the business property for at least two years before it qualifies. (This rule was clearly brought in to prevent ‘deathbed planning’.) The rule doesn’t say that the properties concerned need to have been business property for two years: merely that they need to have been owned for at least two years.

4. Double-dipping

This is one of our favourites, and works like this. Mr A has just died, leaving the shares in the family trading company, worth £1 million, together with £1 million cash, to his widow. As a bequest between spouses, this is completely exempt from IHT.

Mrs A, when she has recovered from her grief, consults a tax advisor, who suggests that she vary her late husband’s will to leave the shares in the family trading company to the children. This she duly does, leaving behind the £1 million cash that she has received. The variation of the will doesn’t give rise to any IHT, because of BPR. Fine.

The next stage, perhaps after an interval, is that Mrs A offers to buy the shares in the company back from the children. She pays them £1 million cash, and therefore they have the cash and she has the shares. (They make no capital gain because they are treated as having acquired the shares in the company at probate value on the death of the old man, that is £1 million.)

On Mrs A’s subsequent death, she leaves the shares back down a generation again, and the same shares therefore qualify for BPR again.

The result? The £1 million cash, which would have borne tax on Mrs A’s death, has been passed down a generation without IHT, by way of ‘double dipping’.