Do you dream of starting a small business at home? If so, this is the guide for you. You can generate an income stream while doing something that you love!
However, there are some things to keep in mind before jumping into any new venture. This article will walk you through what it takes to start a small business from your own home and provide tips on how to get started today!
Assess Your Talents and Skills
The first step to starting your own business is assessing what skills and talents you have that could generate a profitable idea. If you love cooking, maybe opening a restaurant as an at-home venture would be the right move for you! On the other hand, if you are more of a writer or photographer than chef, then perhaps writing cookbooks or taking photos of the food you prepare could be a profitable idea.
When it comes to assessing your skills, think about things that come easily or naturally to you. Do not get discouraged if you do not have any business know-how! There are plenty of resources today available for every skill level and financial situation. You can use these as a guide or ask your friends for their input to help you brainstorm ideas.
Advantages of starting a business at home
- You can work within your schedule: If you know that during the week, mornings are more productive for you and afternoons are a better fit for the family time, then use this knowledge to find an appropriate business opportunity. Maybe opening up a small boutique out of your home could be best so that customers come by at their convenience while you work your morning hours.
- You can do it in between other responsibilities: Taking care of kids, pets and a home all at once may leave little to no time for anything else. But that doesn’t mean you still can’t be productive! Setting up side projects or tasks allow you to do what needs done around the house while earning extraneous income.
- Start with what you’re good at: This is an obvious one, but start your home business off on the right foot by doing something that you know how to do and are comfortable doing because it will be less stressful for you. And if there’s no way around learning new skills in order to have a successful company, then take it in stride.
- The time you spend at home can be utilized as a way to build your business: If the idea of sitting around doing nothing all day doesn’t sound like it would work for you, then turn some of those hours into income generating tasks that will allow you more freedom and less worries about putting food on the table.
- Another advantage to working from home is the lack of commute: If you’re looking for a way to take the pressure off your car and minimize the amount of gas that is being used, taking on more work from home will allow you some peace in not having to deal with traffic or gas.
- The ability to be flexible: One downside about working at an office job is that if you have an emergency come up, you’re required to leave your work and deal with it. Working from home allows you the freedom to be able to deal with family emergencies without having to worry about how they will affect your job performance.
- The ability for working parents: If there are any more than two children at home who need attention or care, it could be difficult to leave them for a full day at the office. Working from home will allow you the ability to work around your children’s schedule and not miss out on their life.
- The convenience of working in your pajamas: If you’ve ever had an after-work date where they want to meet up with you, but all you have to wear is your work clothes, you know how awkward it can be. Working from home means that even on days when you’re working late or all day, you don’t need to worry about what type of clothing to put on.
- The ability for highly motivated people: If you are one of those types who thrive off the adrenaline rush of a deadline, working at home may be the best option for you. You’ll have all of that focus and drive to push through without distractions or other obligations.
- The ability to work from anywhere: With laptops, tablets, smartphones and wireless connections being commonplace in today’s society it might seem like everyone can do this type of work. That couldn’t be farther from the truth.
Disadvantages of working from home
- The lack of corporate culture: One thing that people tend not to realize when they work from home is the absence of a structured environment. This can lead to apathy, boredom and an overall feeling like you’re missing out on something.
- Loneliness: Working at home doesn’t just impact your physical space but it also impacts your mental space. The constant isolation can lead to feelings of loneliness and depression, which is not something everyone is equipped with the tools to handle on their own.
- Frustration: Working at home also means that you’re more in tune with your surroundings so any little thing – from a crying baby to an outside dog barking – can become incredibly frustrating.
- Scheduling: Managing your own time is often a difficult task when you work from home. You’ll either get too comfortable and overwork or go out of your way to never leave the house.
- If you spend a lot of time at home working, then it’s important to be aware that there are ergonomic issues with spending so much time in front of a monitor and taking breaks for rest periods.
Write a business plan
If you’re new to entrepreneurship, then a good way to get started is by reading up on some of the basics–particularly how to write an effective business plan.
A business plan is a written document that includes all the information needed to start and run your small business. It’s a broad overview of what you want it to look like. How will this new company make money? What are its main goals and objectives? Who is the target market for it, or who might use this service if we provide it? Keep in mind that just because an idea sounds good on paper does not mean that it will be successful.
A business plan can help answer these questions so that when you’re ready to start looking for investors or loans, you’ll be able to present a solid business plan.
Review your finances
You’ll need to make sure that you have enough money in the bank before starting your business. In addition, if it’s a physical product or service, make sure you know how much it will cost to get started and what ongoing expenses there may be.
Determine your legal business structure
You’ll need to make sure that your business fits within the legal structure of its industry. To do this, you can consult with a lawyer or tax advisor.
If you choose an unincorporated entity like a sole proprietorship or partnership, then it’s important for each person in the business to understand their respective roles and responsibilities because there is no separation between personal and business finances.
If you want to limit your liability, it may be best to form an incorporated entity like a corporation or LLC. You’ll need to determine whether you will operate the business as a C-corporation or S-corporation (see more about this below)
In addition, if there is no separation between personal and business finances, then you’ll be responsible for both the taxes on your income as well as any tax owed by the company.
If there is a separation in finances and responsibilities, then it becomes easier to divide up tasks like accounting or marketing. You will still have to prepare an annual report detailing all of your activities.
Register your home-based business
Registering your home-based business will make it easier to file for state and federal tax exemptions. In order to register, you’ll need a name that is not already in use by another company or individual.
You can choose any type of entity (i.e., corporation, LLC) as long as the paperwork has been filed with the state.
You’ll need to choose an agent and officers for your company, in addition to a mailing address (either at home or elsewhere).
The costs for registering can vary depending on the type of entity you choose but generally range from $100-$300.
In order to get started with filing taxes as self-employed, you’ll need to fill out the following forms:
- W-405 (Request for or Change in Exemption from Self Employment Tax).
- Schedule C, Profit or Loss From Business Formed at Home.
- H.R.A.-4438 (Information Regarding Self-Employment Income).
The first form is used to request an exemption from the self-employment tax, and is typically used by people who have no income other than their own.
The second form is for individuals who are earning a profit or loss from a business that was formed at home. It can be found online in PDF format on the IRS website (IRS Instructions Schedule C). The third form is used to report self-employment income and can be found in the Instructions for Form H.R.A.-4438 (PDF).
Coming up with a name for your business
A name can be anything you want it to be.
Be creative, but remember that your business will need a name for legal purposes which must include the words “limited” or “incorporated,” and a word indicating what type of enterprise you are running.
Consider the name of your business carefully, because you may be stuck with it for a long time. If you do change the name later on, you’ll need to get permission from any trademark holder and take care not to violate any copyright laws. For this reason, some people start their small businesses as sole proprietorships or partnerships until they’re sure about the name.
Examples of home-based businesses
Examples of home-based businesses you can start at home include:
- Website designer. This is a common small business that people often run from their homes by creating websites for clients on location or online, and then publishing them to the web in exchange for money. They typically charge between $200-$500 per website design project depending upon the size of the project.
- Blogger. This is another small business that can be started from home by using a blog to promote products and services, share information about different subjects, or act as an online journal for people who are interested in what you have to say. You could make money through advertising on your site and/or affiliate marketing, which involves promoting other people’s products and earning commissions for the work you do.
- Social media consultant. This is a great small business that can be done from home by working with businesses to promote their brands on social networks like Facebook, Twitter, Instagram or LinkedIn in exchange for money. You could start out charging \$25-50 per hour to manage social media and then increase your rates as you become more experienced.
- Personal assistant or executive assistant. These are the classic small businesses that can be done from home, with a personal assistants helping people to run their errands and an executive assisting someone in running their business day-to-day tasks to free up time for them. You could start out charging $25-50 per hour to do errands or work on a client’s business and then increase your rates as you become more experienced.
- Freelance writer. This is another great small business that can be done from home by writing content for businesses, such as blog posts or white papers, in exchange for money. The advantage of this small business is that your hours are flexible, but the disadvantage is you have to work alone.
- * Personal chef. This is another classic home-based small business idea where someone cooks meals for clients in exchange for money on a per meal basis or by subscription (e.g., once every two weeks).
Looking for more ideas for businesses to start from home?
If you’re interested in starting a business at home, you need to combine your skills and talents to generate the best small business idea for yourself.
If you’re looking for more ideas, check out this I Buy I Review article here to learn about several of the best businesses to start with $50,000, as well as other opportunities.
I buy and review courses so you don’t have to. Sometimes, I even find courses that are legitimate and worthwhile; and that’s how I accidentally came across one that led me to building a 6-figure business in a little under 5 years. Now, I still review courses because it’s my favorite hobby. 🙂 Learn more about me here.