Thanks to technology, almost anyone can start a business. I started a home business as a freelance writer almost 10 years ago, and it’s been a successful endeavor. However, you can’t just start out and expect success to appear. If you want to increase your chances of success with your home business, here are 5 tips to consider:
1. Make Sure Your Family is On Board
Realize that running a home business or other type of small business can be time consuming and difficult. In some cases, it can even be expensive. Before you get going, you need to make sure that you have the necessary support system in place. Is your life partner on board? Can you work around your kids?
Before you get going, you need to make sure you are work from home material, and that your family is ready to help out and support you.
2. Consider Your Business Organization
After a couple years as a sole proprietorship, it came to my attention that it might make more sense for me to organize as a Limited Liability Company (LLC) with my husband. Others that I know have organized a S-Corps. In some cases, it makes sense to stick to the sole proprietorship organization. Carefully consider your options, and do what you can to figure out which setup works best for you.
Understanding which legal structure is right for your business requires that you think about whether you want to expand and hire employees down the road, as well as the tax implications of your business. It also requires that you consider that you might need to separate your business assets from your personal assets. Most home business owners are fine starting out as sole proprietors for a year or so. However, once you start finding increased success, it makes sense to re-think that situation. Research the possibilities, or talk to a knowledgeable accountant or attorney with experience in small business matters.
3. Remember to Pay Your Taxes
Many home business owners neglect the tax question. I know that I didn’t pay attention to taxes when I first started — and I received an unpleasant surprise. As soon as you start a home business, you ned to think about taxes, and remember that you will be subject to the self-employment tax. The easiest thing to do is set aside a monthly amount designed to cover your tax bill later.
If you expect to owe $1,000 or more to the IRS come tax time, you are supposed to make quarterly tax payments. The government has a convenient electronic payment system that can help you out, and you can get help from an accountant if you have questions. You don’t want to find yourself in financial trouble later because you forgot about taxes. And don’t forget that your state expects you to pay as well as the federal government.
4. Get the Right Business Insurance
Realize that you might need business insurance, even if you have a home business. First of all, not all homeowners and renters policies cover home office space. You might need a rider to ensure that your home business activities are covered. Other types of business insurance include general liability, errors and omissions, business interruption, malpractice, and business owners. Think about your business, and the services you offer. Consider what would happen if something went wrong. From disability insurance to health insurance, make sure that you are covered individually, and that you have the right business insurance.
5. Don’t Be Afraid to Ask for Your Money
Sometimes I still have a hard time asking for my money. As a home business owner, you need to make sure you get paid. For large projects, I ask for a portion of my fee up front, since I want to make sure that I get something for my efforts. You also need to be willing to continue to ask for money if a client is late in paying. It can be awkward, but this is your livelihood, so you need to stand up for yourself. Make sure you are paid, and work on asking for what you’re owed. Otherwise, you won’t be able to maintain your home business.
What are your best tips for home business success?
Photo credit: Daniel Rashid