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**Stay on top of accounts receivable. **It’s easy to get caught up with fulfilling your business obligations while invoices you've sent out go unpaid. Agree to payment terms in advance with new customers and immediately - but politely - communicate with them as soon as they miss a payment deadline. Keep current with regular invoicing and collections.


**Keep your bookkeeping records up-to-date.** You may not realize you have an unpaid invoice that's several months old unless your bookkeeping is up-to-date. Keeping accurate books involves more than balancing your bank accounts once a month. In addition to your monitoring your bank accounts, also consistently look at your accounts receivable, accounts payable, any debts (credit card, car loans or other borrowings), and all money you invest in your business. Ask for help if you don't have enough time to do the bookkeeping yourself, or if you need help properly setting up your bookkeeping software.


**Check on permit requirements.** Depending on what type of home-based business you have, you may be required to obtain various permits, licenses or other registrations. If you have not already done so, check with your town or city for local requirements. The Small Business Administration is also a good source to research information on permits.


**Get insured.** Obtain adequate insurance for the type of operation you’ll be running. Besides the insurance required for business activities, you might consider adding a rider to your homeowner’s policy for liability protection should an accident occur on your property.


**Stay on top of technology. **While you may not need a top of the line computer, be sure that the technology equipment you use can handle the bandwidth of everything you'll ask it to do, including video calls, software apps and data storage. Also consider scheduling a time for your internet provider to visit your home to make sure everything is in working order and your security protocols are top notch. Have a back-up plan in place for when a device breaks down, including where you'll go to have it repaired.


**Cash in on tax breaks.** Take advantage of the tax breaks available to home-based businesses, including deductions for supplies, equipment and vehicle expenses. You may even be able to deduct the cost of your home office, including a pro-rated amount of your real estate taxes and utilities, if certain conditions are met.


**Set aside money to pay your taxes.** Ask for help to calculate how much of your incoming cash you should be setting aside to pay your federal, state and local taxes. Consider opening a separate bank account to transfer your tax money into.


Home-Based Business Accounting 

**The rule:** If you receive rental income for less than 15 days per year, that income is generally not taxable income.

**Added benefit: **In addition to tax-free rental income, you may still deduct your mortgage interest expense and property taxes as itemized deductions. Neither of these tax benefits is reduced by the income from up to two weeks of rental activity.

## Would someone want to rent your property?

Sure it sounds good, but why would someone want to rent your property? Here are some ideas:

Special events. If a big event is in town, consider renting out your home for participants and fans. Common examples include:

*   Football games

*   Concerts

*   Golf tournaments

*   Conferences and expos

*   State high school tournaments

**Vacation home rental.** If you have a cabin or cottage, consider renting out your place for two weeks. If you find responsible renters, you may have an opportunity to find reliable repeat renters each year.

**Hotel alternatives. **Oftentimes travelers from other cities and countries would love to rent out homes or rooms within homes while traveling. This lets travelers have a real local experience.

### Know the risks

The hassle factor needs to be considered prior to taking advantage of this tax-free income opportunity. Having a proper rental agreement, damage deposit, and insurance are key factors to consider. Also remember that if you rent out your property for more than 14 days, all rent received is taxable and rental income rules apply. And don't forget to review any local regulations prior to renting your property.

Home rental sites like Vrbo and Airbnb can help you better understand your options for renting your property.


Tax-Free Short-Term Rental Property

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We value building client relationships and are here to help you with all of your accounting needs. We offer tax planning and preparation, audit representation, bookkeeping services, payroll services, management advisory services and other accounting services.


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