Starting a new business can be daunting--between drafting a business plan and applying for loans, there’s a lot to check off your list. You would think a home-based business would be simpler, right? No office space to lease, no permits to gain--and you get to stay in your pajamas!
But starting a home-based business can be a little more complicated than it seems, and you’ll need to have all your ducks in a row before you can enjoy the comforts of those pj’s. Fortunately, the following guide can help you get started and start checking off boxes on your to-do list.
Step One: Check Your Zoning Regulations and Insurance
Home-based businesses are subject to many of the same regulations as other business owners. Before you launch your business, make sure your home is zoned for business operation.
Zoning regulations can be determined by the nature of your business; for instance, if you plan on having regular client meetings at your home, or if your products will be shipped from that address. If your business involves construction or other frequent noise, this can also require a zoning permit.
In addition to zoning laws, you should read the fine print of your homeowners insurance. Most policies don’t automatically cover a home-based business, so you’ll need to purchase additional coverage to protect your business assets.
Step Two: Establish Your Legal Structure
If you already know the business you want to start, your next step is to determine its structure. Most home-based businesses are set up as sole proprietorships, so they do not require legal documentation. However, you can set up your company as an LLC or S-status corporation, which will require additional paperwork.
Step Three: Choose Your Office Space
Working from home sounds like a dream come true, but there are more distractions to contend with. Start by declaring a dedicated space--whether it’s your office, kitchen, or guest bedroom, you’ll need the best place for you to focus and get some peace and quiet.
It’s also helpful to have an outside option like an internet cafe or local library, for the days your home office might be too distracting or noisy.
Step Four: Invest in Technology
Technology will be the driving force of your home office. Investing in the right technology for your needs can mean quick success and efficiency. A business laptop, phone line, and multifunction printer are necessary, in addition to accounting software, second monitors, and conference-call technology as needed.
Step Five: Determine Work-Life Balance
This step involves getting your family and friends’ input and cooperation. Make sure you have a schedule both planned and in plain sight, so they know when and where you’ll be working. This is especially important if you have client calls or meetings, so you won’t be disturbed or distracted.
A home-based business can mean more work in the beginning than a regular 9-5 job, so make sure your family is aware you’ll be working later hours, even if you are just in the other room. Because of this, it’s important to make some time for them and yourself outside of work--after awhile, you might get a bit claustrophobic, so planning weekend outings or dinner date nights can help break up the work-from-home monotony.
Step Six: Establish Accounting Practices
If you’re planning on doing your own bookkeeping, you need to set up a system to track income and expenses. The first step is setting up a checking and credit account separate from your personal accounts.
Home-based businesses are more frequently subjected to tax audits, so keeping extensive and detailed records is a must. Investing in software like Quickbooks can help you stay on track.
A home-based business is a great way to earn income while being your own boss. Make sure you follow the steps to set up shop, then start looking for ways to advertise your products or services with a new website!