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Home-Based Businesses Add Income and Life

By: Author Unknown, http://www.ncpssm.org 

June 23, 2002

Annie Hirsch, 73, and her partner Jack Carey, 75, formed a home-based dance-service agency that specializes in judging contests and providing demonstrations around the country. They're following in the footsteps of a growing number of older Americans who are, in effect, "unretiring" to make extra money and enjoy more interesting lives.

Hirsch, who had worked in retail women's clothing, and Carey, who had been a supermarket product manager, love to dance and are concentrating on the West Coast Swing style. "It's not Jitterbug or Lindy," Hirsch says. "It's much smoother—real couples dancing."

Follow Your Bliss

"If you keep busy working at something you like to do, with a sense of purpose, you may be able to live longer and live better," says gerontologist Robert N. Butler, M.D., president of the New York-based International Longevity Center. Hirsch agrees and says, "Dancing is great exercise and gives us a sense of extended family, belonging to a close-knit group of enthusiasts around the country."

Catherine D. Fyock, author of "Unretirement: A Career Guide for the Retired … the Soon-To-Be Retired, the Never-Want-To-Be Retired" (AMACOM Publishing, $10), spells it out: "Any time you start your own business, it needs to be a passion, your bliss, to make it work."

Millie Szerman, author of "A View From the Tub: An Inspiring and Practical Guide to Working From Home" (Stairwell Press, $17.95), advises home-business aspirants to "primarily rely on what you know." She talks about her mother, a retired school teacher in her 70s who tutors children in math at her home. "She loves it," Szerman says, "and she likes the extra money too."

Other seniors, like Sue Harrison, 58, want to do something totally new. Harrison turned a knack with colors and decorating into a home-based decorating and interior design firm in Marietta, Ga.

Harrison began to study interior design 15 years ago and began doing friends' apartments and houses bit by bit. After retiring, she formed an alliance with a remodeling contractor who gives her business on top of her word-of-mouth network. "Whatever your passion is," she says, "work at something where your pleasure can be combined with making money."

Covering Your Assets

Whether you are selling products from your home or offering services, you should meet with your insurance agent to spell out exactly what you are doing. Many times, your homeowners insurance, renters insurance or even your car insurance will not cover various risks to which you may be exposed as a business owner. "Anyone who manufactures or processes items to sell raises the most concern," says Michelle M. Holmes, property and casualty specialist with the Rust Insurance Agency in Washington, D.C. "If you're cooking up peppermint patties or hand-making dolls," Holmes says, "you'll need product liability coverage." "If someone becomes ill after eating your peppermints or a child is injured by a pin or other such item in a doll," Holmes warns, "you could be facing a devastating lawsuit. If you're doing handyman work, you'll need completed operations exposure coverage."

Otherwise, she says, "if there's an electrical fire, flooding or some other breakdown, customers could come after you with lawsuits." Ensure that your business equipment, such as computer, printer, fax machine and special furniture, are properly covered. You'll also need an auto insurance policy if your car is used for business.

"Older women like to take care of small children whose parents are at work," Holmes says. If it's just occasional baby-sitting, it shouldn't be a problem. "If you are regularly looking after several children—watch out," Holmes says, "because you may need a local government license and additional liability coverage to protect yourself."

If you run a business from your home, you could run afoul of local zoning laws. "Any business that does not interfere with neighbors rarely gets into trouble with zoning," says Bernard B. Kamoroff, CPA, author of "Small Time Operator: How to Start Your Own Business, Keep Your Books, Pay Your Taxes, and Stay Out of Trouble" (Bell Springs Publishing, $17.95)."Be courteous to your neighbors," Kamoroff says, "and don't let customers or suppliers do such annoying things as blocking off neighbors' parking slots."

Zoning officials only respond to neighbor complaints, he says.

Benefits and Taxes

For years the government punished those who made extra money after retirement. It was called the "earnings test." The more money earned, the more money subtracted from your Social Security checks. The law was reformed a couple of years ago with the help of the National Committee.

"We asked our members to let their elected officials know how they felt on this issue," says Scott Frey, senior legislative representative for the National Committee. "National Committee members showed tremendous support for reformation of the law and they were instrumental in its passage," he says. Basically, the new law eliminates the Government Pension Offset for combined benefits up to $1,200 per month. The two-thirds offset would only apply beyond this threshold, which in subsequent years would be indexed for inflation.

Now, according to Social Security Administration spokesman Mark Hinkle, "People from 65 on up can earn any amount they want without reducing benefits."

Also, Hinkle says, by unretiring you might be able to boost your benefit payments. It's a complicated calculation based on your best earnings during the past 35 years. Call your nearest Social Security office for details (the number is usually on your benefit stub). Of course, your benefit checks are counted as income when you pay your taxes.

But, you may diminish the tax bite by taking deductions for your business expenses. If your home-office space is used exclusively for business, it can be written off annually. The cost of your business equipment, such as a computer, fax and printer, can qualify for deductions as well. This can become complicated and you should consult with a tax.

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