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The Basics of Starting a Small Home-Based Business

A Small Home-Based Business

In today’s economy, there are definitely a lot of people that are struggling to find jobs, who don’t know where to turn. Instead of sitting around waiting for their unemployment benefits to run out or for someone to offer them a job, they are using the grace period of unemployment checks to start a small home-based business. A small home based business allows you to take control of your own financial situation, instead of having to rely on anyone else. In a small business, education and experience aren’t as important as the ability to get the job done. Having your own business also entitles you to a variety of tax benefits.  If you are interested in starting a home-based business, here are a few things that you’ll need to do in order to be successful.

Handle the Business Formalities

Small Home based business, home red

Home business, home red—nikcname (Flickr.com)

A Small home based business is not a hobby or a lark it is serious business. So just like with a large business, you’ll need to handle some formalities when starting your business. These ensure that you are doing everything legitimately, and that you will not be in violation of any local laws. When getting started, most localities require you to get a business license.

To get a business license, you’ll need to go to the local court house and pay a fee and possibly answer a few questions. Some localities regulate the types of business you can run from your home. Most allow work done on a home computer or over the internet but some may have zoning restrictions if you are going to store chemicals or have customers visiting your home office.

Most of the time, you’ll also want to set up some kind of business entities so that you do not have to put any of your personal assets at risk. Setting up a corporation or an LLC is pretty simple, and can usually be done by filling out a few more forms and paying a state filing fee. Filing fees for an LLC vary by state and can range from $50 per year to $1000 or more depending on whether you are in a state like Delaware or California.

Check Your Insurance

When starting a small home-based business, you should also make sure that you do not take on any extra financial risks. Most of the time, people in this situation rely on their homeowners insurance you cover their home-based businesses. In reality, you will probably need to buy a rider for your homeowners policy to cover your business, or buy a separate business policy. This way, you can get rid of a financial liability that could come when one of your customers is injured or wronged in some way.

Get the Equipment

One of the nice things about starting a home-based business is that you typically don’t need that much equipment to get started. Depending on what type of business you start, you may be able to get by with a desk, a chair, a computer, a printer, and a filing cabinet. When you are starting a business, any of the equipment that you pay for will be tax-deductible. Be sure to keep good records of your expenses.

Take Your Small Business Seriously

One of the problems that many entrepreneurs have with small home-based businesses is that they do not take them seriously. They look at them as a side project, or as a way to make a little bit of extra money. The problem with this is that your customers will think of your business in the same way. When starting a home-based business, you need to treat it just like you would any other business. Imagine that you are investing millions of dollars into new business venture, and then see how you act.

Set specific business hours that you will be available to work. Come up with goals and plans that you expect to accomplish in your business. Do some financial projections, to have something for your business to aim for in the future.

Market Your Services

One of the most difficult parts of running a home-based business is getting started. Once you have customers, you can simply do your job. However, until you have some customers who are willing to work with you, you don’t really have much. To get customers, you may need to invest the money in advertising. Setting up a website to market your business is a good way to show customers what you have to offer. In today’s market, most customers expect businesses to have a website.

Besides spending money on advertising, you should also do a little bit of prospecting on your own. Think about the types of people or businesses that could benefit from your services. Make a list of these people and businesses. Then start calling them to tell them what you have to offer. This is one of the hardest things about starting a business, but it is also a necessary component most of the time. After you get some customers, do a great job for them. They’ll help you get referral business in the future. At that point, you’re well on your way to running a successful home-based business.

See Also:

10 Awesome Jobs You Can Do From Home

Is it Time to Expand Your Small Business?

Small Business Credit Cards

Rising To Success As a Home-Based Business Owner

4 Low-Cost Tricks to Promote Your Small Business More Effectively

Overcoming Conflict in Your Family Business

It is Possible to Start a Profitable Company During a Recession

About the Author:

Chris Keenan is a blogger for a New Jersey IT lawyer. He writes on a variety of topics from business law to executive resume tips.