|First Things First|
The first thing you want to do if you decide to start a home-based travel business, is to sit down and think it through from start to finish. That doesn't mean you need to know every detail that will eventually go into the growth and development of your business, but it does mean sitting down and obtaining advice, performing research, and understanding the basics of licensing requirements for a home-based travel business.
If you are completely new to the business world, it is strongly suggested that you do spend a bit of money and contact an attorney who can offer legal advice regarding the structure of your business. You may also wish to temporarily engage a certified public accountant for advice on the financial side of starting up your business.
The next thing you need to do is establish a name for your business. Your local County Recorder's office will be able to help you do this. You'll need a fictitious business name statement, also known as a DBA (doing business as). While many independent contractors who work from home utilize DBA information for 1099 and W-2 forms, you will need a business name if you decide to incorporate, form a limited liability company, or go into business with someone else.
|Going It Alone or Forming a Partnership|
Be advised that some states require travel agents, travel promoters, or anyone advertising travel to the public, to register their business with the state attorney general's office. Because these requirements vary from state to state, check with your state government resources regarding registration, bonding, or other paperwork that will be required to meet such requirements.
|Home Office Needs|
No matter where you decide to locate your home office, it should be used exclusively for business reasons. Try to limit interruptions by family, friends, and neighbors. There is nothing quite so embarrassing for many home-based business owners as to be discussing information with a client only to hear a dog barking in the background, a baby crying, or your husband hollering, "Where's the dish soap?" on top of television noise or music.
Remember that no matter what services you provide, your business is a serious effort and should be treated as such by everyone in the household. You're not going to get many clients, or encourage their trust, if they don't think that you're professional, organized, or efficient.
|Office Furniture, Filing, and Storage|
In addition, you want to avoid clutter to maintain organization and efficiency, so invest in file cabinets or storage boxes that can be easily labeled and accessed. You're going to have to do a lot of research for your travel business, and you may wish to have a separate file cabinet that contains destination information, and another for airlines, cruises, accommodations, and so forth.
|Growing Your Business|
Many independent contractors starting a home-based travel agent business decide to use the services of a public accountant for their first year of business to ensure that accurate and knowledgeable bookkeeping will help keep your growing business on track. You can determine the type of accounts you may need, depending on the type of services you offer clients.
For example, main revenue accounts may include:
Air sales - both domestic and international
Refunds or refund credits
For example, air sales are reported separately from any other type of sale. Some travel agents separate domestic air sales from international air sales, or cash sales from credit card sales. Cruises and organized tours are generally prepaid via cash, credit card, check, or a combination. Convention sales, tour product sales, and group sales are often itemized individually.
Here are some additional points to remember:
As a travel agent, you're also going to run into canceled trips and are required to offer refunds or refund credits. It is essential that you understand how such refunds and cancellations are noted in your books.
All commissions, for any service, should be reported as net amounts and not as the cost of sale or a gross sale. Doing so inflates the agency's sales volume, which will not be supported by adequate documentation come tax time.
Advertising income for the creation of flyers, brochures, magazine or other media ads should be listed as a separate income, as is banner advertising and affiliate revenues from your website.
Many travel agents also collect service fees, which should be separated from other fees on income statements. This enables the travel agent to determine an average yield per client transaction, most often utilized for domestic airline ticketing. In addition, any fees or income that you earn through seminars, consultations, or other services should be listed on an income statement. Travel school tuition and other education expenses should be separated into an independent category, as well.
What exactly is interest income? Interest income is defined as any monies earned from checking accounts, money market funds, or any other accounts an agency holds that generate interest, or "other income."
As a travel agent, you're also going to have expenses. Some examples of expenses may include:
Marketing and promotion costs
Licensing and certification fees
Printing, postage, and other supplies
Website development, maintenance, and hosting fees
Of course, there are many more expenses that you may have in the development and maintenance of your business. Keep track of every expense, no matter how small. Keep track of mileage and automobile expenses for business travel. All your expenses, or a majority of them, will be deductible on your yearly income taxes, including membership dues, education costs, reference materials including the cost of books, travel magazines, and so forth. Meeting clients for dinner or somewhere else to discuss family vacations can also be written off, as can familiarization tours and cruises, a legitimate business expense for travel agents. However, before engaging in cruises or other types of travel for such research, double check with your CPA to ensure that you are prepared to offer the adequate documentation necessary to support the legitimacy of such write-offs for the IRS.
From setting up a separate bank account for your business, to learning how to accurately keep track of income and expenses, access the print and online resources to make your business run smoothly and efficiently. Don't leave anything to chance. Other websites, such aswww.entrepreneur.com, is also an excellent resource for small businesses and home-based business owners.
If you operate a home-based business, you're also going to have to consider such things as medical or health coverage, small business or home office insurance, and perhaps even E&O (Errors and Omissions) Insurance to help protect you and your business.
Understand the difference between a Limited Liability Company, Sole Proprietorship, or a Corporation to enhance your appearance of professionalism. Learn about the benefits and drawbacks of each of these types of business structures, and determine which would best meet your needs.
Obtain a Federal Taxpayer Identification number instead of using your Social Security number to enhance your credibility and professionalism. In addition, using a Federal Taxpayer ID number will enable you to separate your personal income from your business income. You can obtain a Federal Taxpayer ID Number by contacting the IRS and asking that one to be assigned to you.
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