Home Business Startups
Australian businesses are continuously moving away from traditional ‘bricks and mortar’ retail outlet and office spaces and are now learning how to take advantage of low cost E-business platforms. As an accountant and business advisor I see more and more of our clients moving towards alternative business models such as home offices, virtual offices and café meeting.
The internet has enabled new E-businesses to startup and operate from the home while still enabling them to grow to a size that can maintain national and often international sales. When we look at some of the large iconic American companies that started as a home businesses, for example: Apple, Amazon, Google and even The Walt Disney Company, is not surprising that more and more people are becoming inspired to start a home business.
Enter the Independent Salesperson
It’s not just the possibility of financial success that motivates people to start a home business, but it’s also the ability to work your own hours, manage your work/life balance and the challenge of working for yourself.
Furthermore, working as an independent salesperson enables people to have direct contact with their customers and the ability to build and manage their own relationships. For example, a carefully planned marketing campaign on social media can enable independent salespeople to leverage personal relationships to help their friends become loyal customers. In this way, social media has also enabled businesses to gain access to customers that would otherwise not purchase their products.
A Genuine Business Opportunity
Direct selling businesses (particularly multi-level marketing) usually promote more than just their products. They also offer a business opportunity by encouraging the happy and enthusiastic customers to join the direct selling business as an independent salespeople. This new opportunity can also include the added benefit of being able to purchase products at a discount while also receiving commissions.
However, it can be difficult to determining if a genuine home business exists and we often see that direct selling businesses and independent salespeople get it wrong. A genuine home business can be characterised as having some of the following:
- The activities performed have a commercial character and they are being done for the purpose and likelihood of earning a profit
- The business has repeating transactions and appropriate business records are kept
- There is a separate bank account, a registered business name and other registrations
Where independent salespeople purchase products for personal use and for their immediate family, such purchases are private in nature and would not indicate the existence of a home business.
Please contact our firm for all your direct selling accounting and taxation needs.