In the past, home-based businesses weren’t taken seriously. If your office was in your home, you did everything you could to hide that fact. But that’s no longer the case. Home-based businesses comprise one of the fastest growing business segments today. People love the idea of being able to be their own boss and work from the comfort of their own home.
Technology is really the key driver behind this trend. Technological advances allow you to do business anywhere in the world, from your spare bedroom. But there are some things to consider so your business gets started off right.
- Do you need a permit or license? Some municipalities and neighborhood associations prohibit home-based businesses. Others require special permits or licenses so make sure you take time to check with the proper authorities.
- Does your home-owners insurance cover a home-based business? Many homeowners’ policies do not include home-based business coverage. You may need to purchase a rider to protect your business assets.
- Establish your legal structure. A lot of home-based businesses are sole proprietorships which require no formal legal documentation. However, depending on the type of business you are in, you may want to consider other possibilities such as an Limited Liability Company (LLC), or a Sub-S status corporation.
- Establish professional business practices. Set up a bookkeeping system to keep track of business expenses and income. Also, you need a separate business checking account and credit card. Do not mingle personal and business expenses. The IRS tends to audit home-based businesses more frequently, especially if you are taking the home-based business tax deduction. So keep excellent records of all business activities and transactions.
- Consider security. It’s a good idea to rent a post office box to use as your business mailing address – particularly if you are going to be alone most of the time.
- Set up a business-like work environment. You should have a dedicated space for your home-based business work area. Your computer should be used primarily for business only. Using your office equipment and space for children’s games, homework and other personal uses should be minimized. Also, your office area should be void of barking dogs, screaming children and other loud noises if you interact with clients or customers on a regular basis.
- Set work parameters. Simply because you work at home doesn’t mean you aren’t really working. Make it clear to family and friends that you have “work hours” just like everyone else and ask them to respect that.
- Commit to your success. There are many distractions when you work at home. Make a commitment to yourself that you are serious about your business. Be disciplined about your work effort.