QuickBooks
Is Having A Home Based Business Right For You?
With more than 3 million home-based businesses now operating around the country, we are finding ourselves being approached more often than ever by clients considering the idea of walking away from their desk jobs and opening up shop on the internet.
The concept is certainly attractive. Who hasn’t dreamed at times of padding around the “office” in your underwear and working only when it suits you?
The internet has certainly created a boom in home startups. All across the country, people are converting spare bedrooms, basements, garages and attics into their personal corporate headquarters.
Is it a wise move, however? That depends on several factors:
- Are you a self-starter who doesn’t require others to establish your goals and motivate you to accomplish them?
- Do you have the discipline to avoid home-based distractions?
- Are you content to work in home-based isolation?
- Is there a market for the product or service you plan to offer?
- Do you have the expertise to fully develop and market the product or service?
- Do you have adequate capital to fund the startup costs and support yourself while you grow the business?
- Have you fully considered all of the market forces driving the demand for your product and developed a viable business plan that will help you be an effective supplier?
Simply having a desire to be your own boss isn’t a good motivation for starting your own business. Starting any business involves hard work, long hours and an honest assessment of your own personal strengths and weaknesses. Working at home can be an even tougher assignment. Your family will typically present a tremendous distraction and maintaining a professional environment can often be critical to your success.
Having a business operate out of your home also doesn’t mean that you will escape any of the various laws and regulations that other businesses face. As a matter of fact, many people have established businesses in their homes only to find out months later that they are in violation of their neighborhood zoning laws prohibiting home businesses.
Before you even consider a home-based business, your first call should be to your city’s equivalent of a zoning council to determine the applicable regulations. You will find that many products such as poisons, food, clothing, pharmaceuticals and medical products are prohibited from being produced in the home in many areas.
After any zoning requirements have been addressed, you are ready to tackle the next obstacle – obtaining financing if needed and registering the business with state and local agencies. If you plan to hire employees or operate as anything other than a sole proprietorship, you will need to register your business with the federal, state and possibly local governments.
Selling items or services subject to sales tax will also require you to obtain a sales tax number from the state and collect the applicable tax from your customers. Having employees means you are also responsible for withholding income and social security taxes as well as complying with wage and safety laws.
Of course, we can assist you in many of your “startup” endeavors. In addition to examining your own strengths and weaknesses and registering your business, you will also need to develop a sound business plan which will examine your product, your competitors and your cash needs not only at the beginning, but during those long, lean months when few potential customers know you even exist.
If you intend to use your business plan to obtain financing, there are numerous strategic points that creditors are going to look for in your report. It would definitely be advantageous for you to at least let us give your plan a “critical review” before taking it to the bank. Starting your own business can be an exciting time, but there are a lot of financial pitfalls that we can help you to avoid from the outset.
Who knows? A year from now, you may still be sitting in your pajamas sipping a cup of coffee while you read the newspaper waiting to begin your “work day” at around 10 AM (well, maybe 11 today – the squirrel is still quarreling with the Blue Jays in the backyard!).