Home Business Issues
If you are thinking about starting a home-based business, or if you have already taken the leap, there are several issues that you should consider.
One key issue, like in Real Estate, is 'Location, Location, Location'. In other words, where will your home-base be? We would suggest starting small. Section off a room in your home, where you will be able to store files, have your computers set up, and do your paperwork. If you have supplies and/or stock, you may be able to store them in your basement or garage, or you may need to make other arrangements, depending on the type of product(s) you are storing.
If you are using a distinct area of your home, and if that area is not used for other purposes, you may qualify for a tax deduction. You can read more about how to qualify for deductions at www.irs.gov. For the Home Office deduction you must meet several criteria, and the deduction could be a flag for an audit, so be cautious, and always check with your accountant first.
Deciding on the type of business to go into can be one of your biggest challenges. Try to base your decision on your experience and skill sets. You should also consider the initial cash investment, which can vary from a few hundred, to a few thousand, to even more if you need to invest in heavy equipment or vehicles. Also consider the issue of supply and demand. What is the demand in your area for the service you plan to provide, and how many competitors are there?
Once you have an idea of what type of business you will go into, write a business plan. You may start with just one page, and expand on it later. Include your goals, and challenges. Do a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. You can read more about business plans and SWOT analyses in many books that are available at your local bookstore or library.
You will need to consider some regulatory and legal issues as you start your business. You should consult an attorney during your start-up phase and to help you review contracts. We recommend hiring an accountant for year-end processes, and to advise you on financial issues, as well as how to set up your files, and what items you need to keep track of. You will probably be able to handle the daily bookkeeping on your own. We recommend keeping all revenue and expenses separate from your personal finances, and keep bank accounts, credit cards, and files separate as well.
You may need or want to file some paperwork with your Town Hall. If you want to incorporate or even file for a DBA name, you will need to visit your Town Hall for the appropriate forms. You will most likely need to have the forms notarized, and will need to pay a small fee.
There are some emotional considerations as well. When you work from home, you may feel that you are always at work. Particularly if you have a 'workaholic' personality, you may find that you are working on projects at 9 pm. On the other hand, if you have little self-discipline, you may become easily distracted by personal and household issues, as well as by friends and family, which will make it difficult for you to accomplish your goals.