More than that, however, home-based businesses have a solid success record. According to the U.S. Small Business Administration, about 50 percent of startups in the nation begin at home.
The starting place does not limit the potential for growth of such companies. In fact, for quite a few, it’s been the key to quick growth because the location saved them time and money at the beginning when finances were tight.
If you doubt this, consider the following. Firms such as Apple, Amazon, Mary Kay Cosmetics, Ford Motor Company, Google, and even Disney were all started in a home. Although these companies have grown to multimillion – and even billion-dollar operations, they all began in a private residence.
So it’s entirely possible to achieve success with a home-based business, but you mustn’t expect it to be easy. You’ll encounter all the challenges of being a startup, plus a few that are unique to working from home.
Here are a few things to anticipate when you start your a home-based company.
- Incorporate Your Business
Just because you don’t conduct your business in a separate location doesn’t mean you can avoid incorporating your firm. This is a must for any business that aims to be profitable in the US.
Incorporation will improve your tax picture and limit potential liability for your company. Most home-based businesses start as a limited liability company (LLC), which is one of the simplest business structures.
Starting an LLC is easier and more affordable than in the past. Simply go online and follow the steps laid out by your state. You might also retain a third-party service that can explain the process and troubleshoot issues if you’re not sure how to start.
- Consider the Tax Implications
Taxes can be a challenging issue for home-based business owners. You may have to learn a lot about tax requirements for new firms. But you can also qualify for a variety of tax breaks, particularly when you’re a startup.
Research tax breaks specifically for home-based business owners. You should be able to deduct a portion of your mortgage and utilities each year because of your location. It may not be much, but every little bit will help!
- Separate Work and Home Life
Along with the legal and financial implications, you’ll also need to account for the emotional side. Starting a business in the same place where you’re accustomed to relax, spend time with family, watch TV, and keep up with household duties is not necessarily easy.
You’ll need to develop a routine that enables you to separate home and work. Perhaps designate a single room in your house, such as the garage or a spare bedroom, for all your business activities, and set a rule about not bringing business concerns into the rest of your home.
You’ll also want to designate business hours — guaranteed, they will be long at first — and try to allocate a couple of hours a day to spend at home not working. This balance is one of the many challenges home-based business owners face constantly, but it’s one of the most vital tasks to ensure you stay motivated and minimize undue stress.
- Select a Good Name
Companies located in commercial districts can enjoy an advantage of attracting passersby to stop in and learn more. You might not have that luxury, but that doesn’t mean your business will be any less recognizable than other firms if you have a strong, memorable name.
Of course it’s best if the name communicates what your business actually does, but it should also be easy to say, spell, and remember. For example, if you’re starting a beauty parlor, you might call it something like “Shear Delight Salon.” This features a play on words that make it memorable but also clearly states its purpose.
- Plan for Growth
It’s great of you can start a business in your home, but if it’s successful, you’ll eventually want to move out. Many residential neighborhoods aren’t zoned for larger companies, so if you reach a certain revenue level, you’ll probably be required by law to relocate to a commercial district.
It also becomes more difficult to sustain a booming operation in the same space where your family lives. The point when you move out of the garage or spare bedroom to office space at a separate location might be years in the future, but it’s wise to plan for it right away.
You should know at what point in your commercial activities you can and should start looking for a proper business location. Talk to the bank about your financial ability to do so, and factor in costs of the building as well as labor. The plan will make a transition simple when it must occur.
The option of a home-based business has made it easy to start a company, so why not take advantage of that? Think about these options and put your great idea to work!