Starting a home-based business is a great way toconveniently supplement your income, but there are a few things you need toconsider to ensure you get off to a good start.
For entrepreneurs who want to start a home-based small business, there are a variety of factors they need to consider before hanging a shingle on the front door and opening for business. Home-based businesses can provide great sources of supplemental income or become full time careers for their owners.
More than 12 percent of American households now operate a
home-based business, according to the Small Business Administration. All
totaled, there are more than 18 million small home-based businesses in the U.S. and nearly 70 percent of them last three years or more.
Considering the trends, and the instability of the
traditional workplace in today’s economy, there’s little wonder that more and more people are starting home-based businesses as a means of providing
supplemental income or as a potential launching pad for a new career.
It’s no small decision to launch a business in your home,
however. Your business will take up space and will require some compromises
from your family in order to function. When considering starting a home-based business, you should take the following into consideration:
Appropriateness: Is your home the right place for the
business you want to start? Does it have the facilities needed for your
business? Will customers feel comfortable coming there? Is it easy to find? If
your business won’t entail customer visits, does it have what you need to
perform the work of your business?
Making sure that your home is the right place for a home business is essential. If having your business in your home violates zoning or safety laws, it may be shut down by government regulatory agencies. Even worse, serious violations may lead to your home becoming unsafe for habitation. Make sure you’re in the clear regarding zoning and safety before setting up shop at home.
Space: If you’re setting up a home office, you need an area
where you can have the quiet, distraction-free environment you need to talk to clients on the phone and work unimpeded. If your work involves equipment or machinery, you need an area of the home where your equipment is not in danger of being damaged by children, guests or pets and ample storage space for your products.
Tax exemptions. There’s some pretty advantageous tax breaks
out there for home business owners. Home business owners may be able to deduct a portion of their rent or mortgage and utility bills from their income taxes.
When starting a home-based business, it pays to check into the tax exemptions and deductions that you may be able to claim. These tax advantages can help you keep more of the money you earn in your business, making it even more profitable. Remember that most of the expenses you incur as a result of your business, supplies, materials, professional dues, etc. can be deducted from your taxable income.
Family support: Having a business in your home will require
the support and cooperation of your family to provide you with the space and
time to handle your work. Scheduling, space and other issues will have to be
agreed upon by your family to prevent conflict.
Before choosing to start your home-based business, have a family meeting to discuss the business and how it will impact the family. By getting your spouse, children or parents involved and enthusiastic about the business, you may be able to improve its chance of success.
Insurance considerations: If you start a home based business, you may
need to purchase a rider to your homeowner’s policy to provide liability
protection to yourself and your home-based business.
Having appropriate insurance coverage can be important, as damage to your home resulting from your operation of a home-based business may not be covered by an ordinary homeowner’s policy.
Business licensing. Depending on the type of business you’re
starting, you may need to purchase a business license. Contact your local
municipal government if you think you may need to purchase a license to operate your business.
Think about zoning regulations. Cities and towns may have
restrictions on what kind of business you can operate from your home. If your business results in substantially increased traffic on your street, parking issues, noise or involves chemicals or hazardous materials, you may not be able to operate your business from home.
By considering all the angles, you improve the chances of your business being one of the lucky few to survive its first year and prosper.