Thinking of Starting a Home-Based Business? Key Steps to Take First


Avoiding the stress, hassle and expense of the daily commute is great, and earning a good living from the comfort of your own home is even better. Many commuters have dreamed of leaving the office behind and starting their own home-based businesses, but only a small fraction of those workers have the courage and wherewithal to see it through.


An even smaller percentage of nine-to-five workers are able to make a go of their home-based businesses, and the failure rate for these endeavors is frighteningly high. That is why it is so important to do your homework and take the right steps before turning your home into your workplace. Here are some essential steps you need to take if you are thinking about opening your own home-based business.


Check Your Zoning


Before you do anything else, you need to check your zoning and make sure that home-based businesses are permitted where you live. The rules governing businesses and home offices can be a bit obscure, and it could take a bit of sleuthing, and a lot of time, to sort things out.


If you find that home-based businesses are permitted where you live, you will still need to pay attention to zoning regulations, including possible restrictions on the size of the business and the hours you are allowed to be open.


Check Licensing Requirements


Many types of home-based businesses, from hair salons and spas to interior decorating and massage therapy, have specific licensing requirements. Failing to obtain the required licenses or allowing that licensure to lapse could doom your business before it even gets off the ground.


Always be sure to check for licensing requirements before you open your business. It can be helpful to hire an attorney to perform this check, as licensing laws and associated regulations can get pretty complex.


Map Out Your Home Office


No matter what the nature of your home-based business, you will need a dedicated space in which to operate. That space could be something as simple as a desk in the corner of the bedroom or as elaborate as an entire room set aside for your business.


It all depends on the nature of your business, whether you will be working on your own or hiring employees and whether or not you will be serving clients and customers in that space. Once you have that space mapped out, you will need to make sure you have access to network resources, electricity, phone service and other essentials. If upgrades are needed, the costs of those renovations will need to be factored into your startup budget.


Document Your Workspace


Working from home and running your own business does have its perks, including a healthy IRS deduction for home office expenses. The amount of the deduction will depend in part on the size of your home office, so take a few minutes to photograph the space and document its resources.


Having the size and scope of your home office documented will make your life easier if the IRS questions the amount of the deduction. Save the photographs you take and the documents you prepare and keep them in a safe place. Hopefully, you will never need them, but having the information at your fingertips can give you peace of mind.


Open a Separate Bank Account


Before you sell a single product or welcome a single client into your home office, you need to carefully separate your personal and business finances. That means opening a separate checking account and/or savings account for your new business and erecting a strict wall of separation between your new company and your existing household budget.


A business credit card can also be helpful, especially if you will be purchasing supplies and incurring other expenses. As with the bank accounts, it is important to keep your personal and business-related spending separate, as compiling your purchases could be very dangerous.


Setting up your own home-based business can be a great way to achieve financial independence and success, but you need to lay a solid foundation before you open your doors. From acquiring the proper permits and checking local zoning laws to opening a separate bank account for your business, laying the groundwork ahead of time can make your life a lot easier down the road.


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