Starting A
Home BusinessFollowing this simple roadmap will guide you
to starting a home business that will best meet the needs of
you and your family.
Begin with
the end in mindFirst, you need to determine what you want
to get out of your business.
- Is the business to build up a
retirement income?
- Are you looking for a little extra income?
- Do you want to fire your boss?
- Is the goal to build your dream life?
- Do you want to have more freedom
and security?
- Looking for a Plan B
Each will be very different. The person looking for a little
extra income will probably be looking for work that can be done
as an independent contractor. The person who is after the
ultimate dream life will need a business that provides a high
income and the time freedom to live the dream. Starting a home
business that will allow you to 'fire your boss' means having
one that you can run initially part-time and eventually turn
into a full-time position.
Are you looking for a business that you can sell in a few years
or that you can turn over to your children? Do you want to be
able to move in the future and have the business travel with
you?
Take
Inventory
 What are your
passions? What do you feel are your strong and weak
points? How much money do you have to work with? How much
time do you have to devote to the business? Are other
family members going to be involved?
Choose
Your BusinessKnowing what you want to accomplish when
starting a home business will guide you in your selection of
the business that is right for you.
Line Up
Your AdvisorsLook for people that are experienced in
starting a home business, they can tell you the in and out's of
it. Family and friends that do not have a business will most
likely try to discourage you since they have been afraid to or
unable to create their own. Those that own traditional non-home
based businesses will not be as useful those who do have the
home business.
A lawyer should review any contracts before you sign them. It
is cheaper to use an attorney to keep you out of trouble than
to get you out of trouble.
A tax accountant can guide you to best ways to avoid paying any
more taxes than you are legally required to do.
Involve your home
and family in the process. The business will have a
direct effect on all. The success of your business depends upon
knowing how
to work at home.
Choose the
Form of Business
There are several ways in which to choose
to operate when your starting a home business.
The simplest way is to operate as an
independent contractor. This requires no setup; you
operate under your own name and use your social security number
for your tax id.
If one chooses to operate under an
assumed name, the filing can be done at the County Clerk's
Office. If one person owns the business, then it is Sole
Proprietorship. If there is more than one owner, then it
becomes a Partnership. The cost of registering the
business this way is very low. The downside is that it
offers no protection of your personal assets in the event of
debt collections against the business or from lawsuits filed
against the business.
To protect your personal assets, the
business would have to be registered at the state level.
The easiest state filing is as a Limited Liability
Company (LLC). Filing as an individual with no employees
one can do so without having to file for a Federal Tax ID
number, the individual Social Security Number can be used.
An LLC can also be used in place of a
partnership.
The final form is the Corporation.
The corporation provides the personal asset protection
and allows you to raise money for your business by selling
stocks in it. Frequently referenced are the S Corp and
the C Corp. The difference is in the way that the
corporation is taxed. With an S Corp, the taxes pass
through and taxes are paid on the individual level. C
Corp you will hear about "double taxation" because the
corporation pays taxes and then the individual pays taxes on
income and dividends.
The best choice of for the type of
business is very dependent upon individual circumstances.
It is recommended that you consult with an attorney and
tax accountant first to choice the best one for you.
Local
Ordinances
Before starting your business you will
need to check out the zoning
laws for your community. You want to make sure you
can legally run your business from your home. You will
also need to check to see if your desired business requires any
special license. If selling or making food is part of
your business you will also need to check with the health
department.
Financial
ConsiderationsFinancing for a home based business will
most likely have to come from personal sources. Small business
loans will be very difficult to get now with the current
downturn in the economy. It has made credit very difficult to
obtain.
Best sources will be savings, credit cards, family and friends.
Create
Your Plan of ActionThe
plan of action becomes your
business plan. When starting a home business, this
will be your roadmap to keep you on track. The more
clearly that you can lay out your action steps and assign
priorities to them, the more effectively you can make your time
count and achieve business success quicker.
Do It!Do not wait
until everything is perfect, it never will be when starting a
home business. No matter how much you plan you will have
surprises, and setbacks. Welcome them, for they will make you
stronger, and often open up new opportunities for you. Make the
business fun. Keep in mind what you stand to gain, and that
will get you through the tough times. But success only comes to
those who DO IT!
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