Start & Run an Internet Research Business. Gerhard W. Kautz

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СКАЧАТЬ Home office usage: You probably will not rent an office to start with, but you will use a spare room in your home, a corner of the basement, or even your kitchen table. There is a legitimate cost associated with this. For example, if you use a spare room in the house, you can assign a percentage of the household costs to your business. The percentage may be based on the square footage of the room compared to the overall house square footage, or if it is one of six rooms, you can simply say it takes up one sixth or 17 percent of the household costs. The following list includes household costs:

      • Rent or mortgage interest

      • Insurance

      • Taxes

      • Heating

      • Electricity

      • Telephone (if you do not have a company line)

      • Water

      • Maintenance

      • Security (if you pay for a service)

      • Cleaning (if you pay for a service)

      • Office supplies: You will need all of the standard items you have in an office, and you will have to buy them yourself for your company. Some of the office supplies will include:

      • Printer paper

      • Printer cartridges

      • Company stationery such as business cards, letterhead, envelopes

      • Storage boxes

      • Desk tools such as staplers, hole punches

      • Telephone: You may want to have a separate company line in your house. You may even need two lines — one for the telephone and another for the fax. Some telephone companies offer these two services on one incoming line, but with two telephone numbers. The second telephone can be connected to the fax and it can be distinguished by two quick rings while the other line has the normal telephone ring.

      • Cell phone: You may just use an ordinary cell phone, or go with more capability such as the BlackBerry® or equivalent messaging system.

      • Postage and courier.

      • Office furniture: Usually you charge a percentage, perhaps 20 percent, each year as depreciation.

      • Computer and peripherals: These are usually depreciated on an annual basis, but at a higher rate such as 30 percent.

      • Software.

      • Internet service.

      • Website: As explained in Chapter 7, there are a number of expenses associated with having a website. These include the monthly or annual hosting charges, the annual registration charges, as well as the developing and maintenance charges.

      • Research material: You will sometimes have to do research through sources other than the Internet, such as in a book on a particular subject that you will have to purchase. Also, to keep up-to-date in your specialization you may subscribe to certain magazines or newspapers. These are part of your cost of doing business.

      • Transportation: The main cost in this category will be your vehicle, especially now with vehicle costs running in excess of 60 cents a mile, or 40 cents a kilometer.

      • Advertising and promotion: You may not spend much, if any, on advertising. However, you will spend money on promotion, such as taking clients to lunch or sending them season’s greetings. These are all business expenses, but sometimes only a portion can be claimed as income tax deductions.

      • Miscellaneous: There will be unanticipated expenses that do not fall into any of the above categories. At this stage, just take an estimate of what these expenses will be.

      3. Salary Expectations

      Next you have to establish how much money you expect to make. You can base this on the annual salary you made in your last job or on what you would like to make. If you use your previous salary, don’t forget to add something for unpaid company benefits such as health insurance. But don’t be greedy. Make your expectation realistic, because you do not want to price yourself out of the market.

      4. Billable Time, Company Time, and Personal Time

      Billable time is time you actually spend on a project, for which you can charge a client. Company time is time you spend doing work associated with your company that you cannot charge against a project or client. You will have to set up a system to keep track of both of these on a daily basis, as described in Chapter 13. Personal time is just that — time for holidays, sick days, or time off.

      Your billable time will probably be very low at the start of your business, as you struggle to get clients. Hopefully the business will pick up and you will arrive at the happy state in which you are working on client paid projects most of your time. You should use this future percentage of billable time to establish your pricing, and at this stage you will have to estimate it. It would be great if your billable time was four out of five days a week, but in all likelihood it will be less.

      Company time will be high at first as you sort out your administration procedures and generally get organized. You will also have to devote considerable time to promoting yourself to clients. Even initial marketing visits to potential clients cannot be billed, and so it must be counted as company time. In the first year you can count on spending a lot of your time and effort on company time, but it should reduce as your business gets going. Again, it is the company time you spend later on that you should use in your pricing calculations.

      Example

      As Mr. A was setting up his Internet research business, he visualized what he thought would be his future time allotments. He did his estimates for the three categories of time as follows:

      Personal time:

      He allowed for three weeks holiday each year, or 15 working days. He would also take off statutory holiday Mondays, Christmas, New Years, etc. These would total about 10 days a year. He estimated he would have to take off 10 sick days on average during the year. His total personal time for the year would be 35 days.

      Company time:

      He figured he would have to spend about one day a week promoting his business to get clients. In a 52-week year this would be 52 days. He also allowed a half day per week for administrative activities, or 26 days a year. Thus the total company time would be 78 days annually.

      Billable time:

      The maximum amount of billable time he could have would be the time available in the year less the allowed personal time and company time. With five “working” days per week, and 52 weeks per year, the available days are 260 annually. Subtracting from this the 35 personal days and the 78 company days, the maximum billable days he could have was 147 annually.

      5. Markup Factors

      Once you have calculated a basic charge-out rate or price for your time, like all for-profit companies, you may want to mark it up to allow for other factors. Companies СКАЧАТЬ