Once you have equipped your office, you should protect what you have. However, insurance is one thing many small business owners would rather not worry about. It may seem like something that costs you time and money, but doesn't contribute to your business. In fact, having insurance could save your business one day.
Property insurance protects the contents of your business (e.g. your computer, any decorating materials, etc.) in case of fire, theft, or other losses. If you have a home office, your business property may not be covered by your homeowner's policy.
Imagine, for example, that you supervised the installation of a new floor in a client's home. Then a visitor to the home slips on the floor, is injured, and decides to sue for damages. Liability insurance can protect you from lawsuits.
This type of insurance protects you in case you make a mistake or have a misunderstanding with a client. For example, if you thought a client asked you to dispose of something that turned out to be a valuable heirloom.
If your family depends on your income, you may want to consider life insurance or disability insurance. Other types of personal insurance include health insurance or dental insurance (if you're not covered under a spouse's plan).
There are other types of insurance, and many different levels of coverage available for each type. An insurance broker (check the Yellow Pages) can advise you of your options and shop around for the best rates for you. You can find more information about business insurance by surfing the Internet.
Depending on how you set up your business, the cost of starting your interior decorating firm might range from almost nothing to thousands of dollars. Obviously, your startup expenses will be much higher if you decide to rent space and buy equipment. You will also need to consider your "working capital" requirements. This is the money you will need for the day-to-day operation of your interior decorating firm. If you are buying materials to decorate a client's home you can ask for a deposit. But there are other expenses that will come out of your pocket before you get your first client - such as business cards, telephone, etc. Many entrepreneurs are optimistic about how much money they will earn from their business, and how quickly they will earn it. While you may be tremendously successful right from the start and exceed your own expectations, it is wise to be prepared for the possiblity it may take longer than expected until your business is earning enough to support you.\
A standard rule of thumb is to have six months' living expenses set aside beyond your start-up costs. Or you might consider remaining at your current job and working part-time on your decorating business until it is established. Depending on the start-up costs you calculate in your business plan, you may find you have all the money you need to get started in your savings account (or available to spend on your credit cards). If your own resources won't cover all the things you would like to do with your interior decorating firm, you will need to look for financing. One place to look for financing is from family members. They may be willing to invest in your company or give you a loan to help you get started. To avoid any misunderstandings, it's wise to get any agreements in writing even with family members.
If you decide to approach a bank for a business loan, be prepared. Write a loan proposal that includes detailed information about your business, how much money you want to borrow, what you plan to do with the money, and so on.
There are a variety of resources available to help you keep track of your business income and expenses.
The first of these resources is a financial institution – bank, trust company, or credit union – where you will open your business checking account. You can shop around to find a financial institution that is supportive of small businesses, or use the same one that you use for your personal banking. In addition to your checking account, a financial institution may provide you with:
Your bookkeeping system is a record of your expenses and income. To keep track of your expenses, you will need to keep copies of all receipts. This can sometimes be a challenge for new business owners who might have a habit of tossing out receipts for small items (or not asking for receipts in the first place). However, you are likely to have numerous small expenses related to your business, and these can add up over time. The cup of coffee you buy for a prospective client, the latest issue of a decorating magazine, the mileage you travel to a client's house, the pack of paper you pick up at the office supply store - these and many other expenses should be accounted for so you can minimize your taxes. And, of course, knowing exactly where your money is going will help you plan better and cut back on any unnecessary expenses. So make it a habit to ask for a receipt for every expense related to business.
If you have the time, you can do your own bookkeeping. There are programs available, such as Quicken or QuickBooks, which can make the job much easier for you. The Quicken website offers some good advice to help you with managing your finances and developing your business.
If you find yourself so busy with decorating work that you don't have time to do your own bookkeeping, consider hiring a part-time bookkeeper on a contract basis to do it for you. Depending on how busy you are, it may take the bookkeeper a few hours per week to get your books up to date and balance them with your bank statements. You can find a bookkeeper through word of mouth or check the Yellow Pages.
Just as people will hire an expert (you!) to decorate their homes, you may want to hire experts to assist with your finances. An accountant or tax advisor can be expensive (e.g. you might pay $100 per hour compared to the $20 per hour you might pay a bookkeeper). However, their advice could possibly save you hundreds or even thousands of dollars at tax time. If you're not able to find an accountant or tax advisor through word of mouth, you can try the Yellow Pages. Of course the way to earn a lot of money is by getting people to hire you ...
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Note: This article was sent to us by: Mariele Leche at 03012010
1. Interior decorating is a visual business
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