If the idea of being your own boss and doing it from the comfort of your home sounds like a dream job, you’re not alone. In fact, 52 percent of the small businesses in the U.S. are home-based. Granted, being your own boss is hard work and it requires grit, determination and a whole lot of patience to get your business off the ground. But once you do, the satisfaction of watching something that you created grow is priceless. But before you jump in with both feet, there are some things you should know about starting a small home-based business that will help you take the right steps to success.
How to Start a Small Business At Home
Starting a small business at home requires more work than just setting up shop and telling people you’re open. Once you’ve identified what it is you’re going to do and come up with a name for your small business, the next step is to apply for a business license.
As soon as your license is issued, the next step is to work with your accountant to figure out how you’re going to set up your income taxes. Since you will be working for yourself, you will need to pay quarterly taxes. Your accountant will be able to help you determine how much each of those payments will be.
It’s also a good idea to apply for an employer identification number (EIN). This is similar to a Social Security number, but it’s for your business. If your state requires you to have a tax ID number, that will be next on your list, followed by opening a business bank account.
Another area you need to address is insurance. If you are starting a business such as personal training or car builder, you want to make sure you have business insurance to cover anything that might happen.
Finally, you need to write a business plan to help you set short-term and long-term goals for your business. It will also help you make decisions about where you want to spend money, how you want to use your time and the overall vision for your business.
Ideas for Home-Based Small Businesses
Technology has allowed businesses to operate from virtually anywhere around the world. This makes starting a small home-based business easier than it's been in the past. If you’ve already decided that working from home, as your own boss, is the next step in your career, you might be wondering what opportunities exist for making money.
One of the first places to look for ideas is your current place of employment or career. If you are doing a job that you enjoy, take some time to consider how you could do something similar from home.
Expand on your hobbies: Think about what you do for fun. Is there a way to expand on that and make it a business? Examples include fitness instructor, personal trainer, music teacher, car builder or caterer, etc. It’s a win-win situation if you can turn your hobby into a profitable business.
Freelance: Freelancing is becoming one of the most popular home-based business ideas. Freelance work covers a multitude of services including writing, editing, graphic design, copywriting, web design, social media consultant and other services.
Childcare provider: Providing in-home child care has become a popular business in recent years as more parents are going back to work right after a short maternity leave.
Direct sales: Direct sales have boomed in the last decade as more people start a small home-based business selling goods. Selling products online, hosting in-home parties to sell clothing, books, jewelry, cosmetics and cooking products are all examples of direct sales.
Bookkeeping or business manager: Managing the books for a local business is an ideal job to do from home. If you are a skilled, efficient bookkeeper, you may be able to take on more than one business.
Virtual assistant: If you have good technical skills and like organizing people and their day-to-day tasks, working as a virtual assistant might be worth considering. A virtual assistant is a home-based business version of an administrative assistant.
Transcription work: Legal and medical transcription is big business, especially when you consider how busy medical and legal offices are.
Examples of Successful Home-Based Small Businesses
If you Google “successful home-based businesses,” there’s a good chance you’re going to find an idea or two you like. While business and market trends tend to determine the financial success at any given time, there are some home-based businesses that fare better than others.
- Medical claims billing
- Direct sales
- Legal and medical transcription
- Software or web developer
- Online teacher
- Social media/strategy consultant
- E-commerce store
- Freelance writing or editing