There are countless reasons why you might be thinking about starting a home business, including the freedom to be your own boss, following a dream that you’ve had for years, or needing the convenience it provides as you raise your children. Regardless of why you want to start a home business, there are certain things that you need to do to begin the process. This simple guide will show you how to start a home business (because sometimes knowing where to start is the hardest part).
Create a Business Plan
Starting a company without creating a business plan is like getting in your car, pressing the gas pedal and hoping you end up at Disney World. Anything worth doing takes research, counting the cost and developing a strategy for how you are going to accomplish your goals. Here are a few things to consider as you formulate your business plan:
- What goods or services will your company provide and how will it be different than existing companies in a similar field?
- Who is the market group for your goods or services? What do they think of your offerings? How would they improve your product and is it at a price point they are willing to pay for?
- What is your sales strategy and how will you market your products? What is the lifecycle of your product and can your sales continue to grow?
- How will you fund this project? What costs will you incur including manufacturing, insurance, rent, marketing, IT costs, etc.?
For additional guidance in formulating a business plan before you start your business, check out the Small Business Administration’s (SBA) guide to writing a business plan.
Decide Which Type of Business Structure to Use
You’re going to need to fill out paperwork for the government for tax purposes, so this is a vital step in the process. There are basically five different business structures to choose from [Sole Proprietorship, Partnership, Corporation, S Corporation, and Limited Liability Company (LLC)] and knowing which one best suits your needs can help you concerning tax payments and also through protecting your legal rights and assets. As an individual small business owner, chances are an LLC is the best option for your company so that your personal assets are legally separate from your business and cannot be revoked to pay for outstanding business expenses or in the event your company is sued. If you’d like to form your LLC online in six quick steps, Incfile can help out.
Fill Out the Required Paperwork
This is where your business becomes official. You’ll need to start brainstorming names for your company and check to make sure that no other company in your state is using that business entity name. Once you’ve gotten feedback from friends, family and your target audience, it’s time to make it legal by filling out the paperwork for your state. You can also find the required forms and fees for your individual state on the SBA’s website. This process generally requires that you file an Articles of Incorporation which includes your name, the business’ name, the legal structure that you have chosen for your business and your mailing address.
Once your business is registered, you must obtain business licenses and permits. Since regulations vary by industry, state and locality, you can peruse online guides to find a listing of the federal, state and local permits, licenses and registrations you’ll need. Or, you can purchase an inexpensive Business License Research Package from Incfile.
Finally, some states such as Arizona and New York require the extra step of publishing a statement in your local newspaper about your LLC formation, so check to see if your state is among those in this category.
Making Your Home Into Your Office
The time it takes to process your corporation or LLC formation varies greatly by state; the average waiting period falls somewhere between a week to 10 business days while the slower states can take as long as four to six weeks. In states where it is available, Rush Processing will reduce the time to form your business to about two to three business days (but it does come at a higher cost).
In the meantime, you don’t have to wait to get your business up and running. You can use this time to set up your home office so that it will function efficiently when customers start contacting you. Here are a few things to put on your to-do list:
- Does your office space need to be modified? (For example, are you turning your garage into your office or storage space for product? How much will it cost? Does it need to have climate controls or additional electrical outlets?)
- Create a shopping list of office supplies you’ll need such as shipping materials, shelving units, extra power strips, labels, etc.
- Research and familiarize yourself with the computer programs that you plan on using such as a Google My Business account, QuickBooks, project management software, marketing automation software, social media management software, etc. This will prevent headaches and downtime when the orders start rolling in.
Okay, I admit that you might not be able to do all of these things “today,” but each day you can tackle one of these tasks to get you one step closer to living out your dream. Legendary leader Nelson Mandela once said, “Remember to celebrate milestones as you prepare for the road ahead.” Each of these steps is a small but necessary victory on the road to achieving your goal, and you can start planning to accomplish each of these steps today!