How to Start a Home Business

If you’re looking for a career that allows you freedom over your work, where your voice will always be heard, and the personal satisfaction that comes from making your own decisions, you may be a good candidate to start a home-based business.

starting-a-home-based-business_smAccording to Forbes, over half of all businesses are home-based. The internet makes operating a company from anywhere easy and less expensive than in the past.

Are you thinking about hanging your own shingle? Check out our step-by-step plan to jump headfirst into the gig economy.

1. Roadmap to Success: Your Business Plan

If you’re traveling to a location you’ve never been before, would you just jump in your car and start driving? Of course not!

The same holds true for starting a business. While you could just hang a shingle and start working without any idea what you’re doing, chances are you won’t make it too far. That’s why you need a business plan.

If you’ve never created a business plan before, you may want to start by taking a free or low-cost business planning class sponsored by the US Small Business Administration. These courses offer step-by-step instruction on creating a formal business plan that will allow you to secure financing or plan your next steps.

Even if you’re not looking for financing, creating a business plan will help you figure out how to achieve your financial goals. You can also write an informal business plan to get you on the right path.

No matter what kind of business plan you choose to create, it should have at a minimum:

  • A product or service description
  • Who your target customers are 
  • How you’ll reach your target customers
  • Financial goals and projections

2. Determine What Licenses & Permits Are Necessary

Many home-based business operators are surprised to learn they need approval from their local zoning department in order to do business out of their house, even if you are working primarily online. You’ll need to check with your state and locality to find out about licensing and permit requirements.

Here are some of the most common business licenses you may need to obtain:

  • General Business Licenses – An annual license that allows you to legally operate in your city or county. Check with your local Economic Development department for more information.

  • Home Occupation Permit – Check with your local zoning department, because most of these agencies require all home-based businesses to get a Home Occupation Permit. Even if a permit is not required in your city, check with them to find out if your neighborhood is zoned for the type of home business activity you plan to conduct. You may be able to file for a variance or conditional-use permit if it isn’t allowed.

  • Sales Tax Permit - If you intend to sell certain physical or digital products or services (online or offline), you probably have to collect state and local sales taxes. If you sell your products in a state that charges a sales tax or levies either a gross receipts or excise tax on businesses, you will need a tax permit or register with your state revenue agency.

  • Professional and Trade Licenses – Certain types of businesses are required to get professional or occupational licenses from their state government, such as a child care operation or real estate agent.

  • Health and Safety Permits – Some businesses require a safety permit and/or annual inspection from your local fire department depending on your location or industry. This is usually only if your business involves the use of flammable materials or the assembly of several people in one location, such as a child care business. Health Department permits are typically issued by the county government upon completion of an inspection of the business premises. Depending on state regulations, additional permits may be required for food service or food preparation.

  • Sign Permits – Your locality may restrict the type, size, or location of signs allowed on your property.

  • Construction Permits – These are necessary if you need to make structural changes to your property to accommodate your home business. Check your local government’s building and planning or zoning department before starting any construction projects.

  • Home Owner’s Association (HOA) – Your local HOA won’t require specific licenses or permits, but they have the ability to restrict the type of business activities you conduct in your home. Check your bylaws or call your HOA for more information.

3. Weigh the Options Before Choosing Your Legal Business Structure

You need to determine the right legal structure of your business. The business structure will not only affect the amount of taxes you pay each year, but it also affects the protection of your personal finances in the event of a lawsuit or other serious matter.

Many business owners choose to start as a Sole Proprietor because it’s convenient. But this is not always the right structure for your business.

If someone sues you and you are a Sole Proprietor, you have may have to pay money out of your own pocket. If you were an LLC or Corporation, only the business assets would be at risk,

4. Create the Right Work Space

It’s true that Stephen King’s first home office was nothing more than a kitchen table and an old manual typewriter. But today’s work from home environment has changed drastically.

Even if you don’t meet clients in real life, you’ll likely participate in video chats and phone calls that require distractions be kept to a minimum.

Here are some suggestions for an efficient work environment:

  • Dedicated space in your home with a door (that locks) free from distractions and intrusions like children and pets
  • Hard-wired internet connection separate from your personal internet account
  • Comfortable chair and adequate lighting
  • Large monitor and laptop docking station (if you are working from a laptop as opposed to a desktop computer)
  • Printer

You Can Do It!

Starting a business can be overwhelming. But don’t worry. With careful planning and flexibility, you’re well on your way to enjoying the benefits of a self-employed lifestyle.

To Learn More

Bizfilings is dedicated to making business easy so you can focus on doing what you love while leaving the rest to us. For more information check out our Incorporation Wizard or contact us today.

Guide toStarting a
Home-Based Business

Learn what to expect when you're starting a business from home.