Many people want to start a business from home but hold back because they don’t know where to begin. If you’ve been thinking about starting a home-based business, here are seven steps to get started.
Come up with a list of home-based business ideas
Start by brainstorming a list of home-based business ideas you might enjoy. One option is to leverage your existing skills and offer a service-based business. When you start a service-based business, there’s no inventory to track or product to create. You could offer the following services to clients:
- Freelance writing
- Marketing
- Graphic design
- Accounting or other financial services
- Legal consulting
You could also start a dropshipping business, sell homemade products through an Etsy store, start a home-based bakery, or create digital products. The possibilities are endless, so come up with a list of ideas and pick the one you think is the best fit.
Write a business plan
Once you’ve found a business idea that interests you, it’s time to write out your business plan.
A business plan is a roadmap for your business, and it helps you gain clarity. A strategic business plan is also essential if you plan to bring on investors or apply for small business financing.
Your business plan will include an overview of your target market, what you plan to sell, and how you’ll attract and retain customers. If you’re feeling stuck, the SBA offers free business planning templates.
Choose a business structure
The business structure you choose affects many different aspects of your business, from how much you pay in taxes to whether you can hire employees. There are four main types of business structures you can choose from:
- Sole proprietor: A sole proprietorship is the easiest way to start, but there’s no legal separation between you and the business. This means your personal assets will be at risk if you get sued.
- LLC: An LLC is easy to set up and creates a legal separation between you and the business, so your personal assets will be protected in most instances.
- Partnership: A partnership is formed by two or more people and could be a good option for a business with multiple owners.
- Corporation: A corporation is a separate legal entity owned by its shareholders. It’s a good idea to speak to a business attorney if you think you want to set up a corporation.
Get your finances in order
Once you’ve chosen your business structure, it’s time to set up a business bank account. A business bank account separates your personal and business finances and can make things much easier come tax season.
You’ll need to apply for your employer identification number (EIN) before you can open a business bank account. Your EIN is a federal tax number that identifies your business entity. You can apply for free on the IRS website and receive your EIN within minutes.
Taxes are one of the most confusing aspects for many small business owners, so hiring an accountant is a good idea. Your accountant can manage your quarterly and annual taxes and help you determine what expenses you can deduct.
The business structure you choose affects many different aspects of your business, from how much you pay in taxes to whether you can hire employees.
Start selling your products or services
Once you’ve developed a plan and have a legal structure, it’s time to test out your business idea and begin selling your products or services. Business success is measured based on profitability, so you want to be sure there’s a demand for what you’re offering.
Expect that there will be missteps in the beginning, and it may take time for you to gain traction. Be prepared to learn from your mistakes and adjust your strategy. The important thing is that you’re creating a relevant solution that fills a need for your customers.
Check on local licensing and zoning requirements for home businesses
Depending on where you live, your state or county may have certain requirements for home businesses. Most residential zoning laws allow for home-based businesses, assuming the home is primarily used as a residence and your business activities don’t disturb the neighbors. However, it’s still a good idea to check the local ordinance at the city or county clerk’s office to see if there are any limits on home-based businesses.
The most common requirements small businesses may encounter are licensing requirements. You’ll probably have to apply for a general business license, which allows you to engage in business activities within that jurisdiction. If you run a home care business or offer financial or legal services, you may also need to obtain a professional license from the state.
Work on balancing home and work life
One of the biggest challenges for business owners is learning how to balance home and work life. It’s easy to let the two blend together, especially when your home is also your office. No one can achieve a perfect work-life balance, but there are ways you can set yourself up for success.
First, set up a designated office space where you only focus on and think about work. It’s also a good idea to set a schedule based on when you work best and to create daily to-do lists so you’re always completing your top priorities.
But most importantly, don’t jump back into work once the workday is over. It’s easy to find yourself checking emails in the evenings or catching up on the weekend, but overworking can lead to burnout.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
