Basics to Starting a (Legal) Home Business

Entrepreneurship allows for flexibility in your schedule as well as the location for where you do your work.  This means that working from home is a legitimate option, and this comes with benefits and negatives.

 

Pros

 

Cost: Working from home allows for a lower overhead cost because it removes the need for the cost of rent and utilities.  You may also be able to claim any renovations or monthly payments on your house as tax deductible if you work from home.  The risk factor you face will be much less significant because of the lower investment you are making in the company.

 

Efficiency: Your schedule will become much more flexible because of working from home.  You remove the commute time everyday, and you have the ability to handle at-home responsibilities while you are at work.  You will be all set if you have children at home or a dog that requires a watchful eye.

 

Cons

 

Space: While you will have the benefit of being able to take care of household chores and watch children at work, these factors also become distractions.  Working from home also creates a distraction if you have customers and/or business partners who will frequently visit.  Depending on where you live, this may bother neighbors.

 

Remoteness: Working may give you the break you need from an over-stimulating workplace, however it may go too far.  Working from home takes away social interactions that can be taken for granted, and removes the possibility for many networking opportunities.

 

Keep in mind that there are certain zoning laws that will restrict how developed your business can be at home.  The appearance of the house will have to remain, and cannot develop into an office-type structure without approval or proper zoning allowance.  This may mean no signs.  Also, if your business deals with hazardous waste, it will likely have to be handled away from your home.

 

Other Factors to Consider

 

Proper registration is required like all businesses.  A safe decision when you make your home an entity is to make it an LLC, so your personal assets will be protected from potential liability.

 

Home-based franchises are also an option for you if you want to work from home.  However there is a strong history of these franchises being scams, so be extremely careful in your research before committing to this option.

Federal programs usually do not provide financial support for home businesses, so the best course of action for funding is through outside investors or a local bank/credit union.

 

There are many factors to consider when you start a business, which is even more applicable for home businesses.  There are many positives and negatives that have only been slightly touched on here.  Examine all of the factors within your business and your work style to determine if this choice is the most efficient for your business plan.  Consult an attorney if you have any questions about the steps needed to start a business.