According to the Dept. of Labor there are over 20 million home based businesses in the United States.  With gas prices sky rocketing this number should also skyrocket!   in fact, this summer instead of jet setting off to another travel assignment, I have been fortunate enough to be able to stay at home during this wonderful Idaho summer!  If you follow these steps you too can have a success with a home-based business.

1. Get an office.  The ultimate would be an extra bedroom that you can convert into a home office.  This would preferably be away from the hustle and bustle of the rest of the house if you have children.  The office basic should contain a computer, printer with scanner and fax preferably, a comfortable chair and a file system.  Storage can easily be accomplished in the closet.

2. Set your office hours.  This is usually the time that you can spend away from the family.  I'm lucky in that I'm an empty nester with a husband who also has a computer in the office.  For busy mothers, you might choose a few hours before the children get up, a few hours during their afternoon naps and after they go to bed....  just remember that at least you're at home.  I personally try to keep "9 to 5" hours, but that doesn't always work.  See, that is the best thing about a home office, you don't have to work 9 to 5 every day of the week.  You just have to have enough time to get your objectives done.

3. Of course, one of the first things you need to explore is what can you do online or with a home business that will make you money, but one that you will enjoy doing.  There are many options between filling out surveys, freelance writing, technical business, or software development.

4.  

STEP #4 CHOOSE A LEGAL FORM:  The three basic legal forms are sole proprietorship, partnership, and corporation. The most common is the sole proprietorship. As its name implies, a sole proprietorship is owned by one individual. It is the oldest form of business, the easiest to start, and the least complicated to dissolve. Here are some of the advantages of this business form: 

1. You own all the profits

2. Your business is easy and cheap to organize.  You don't need any government approval, although you may be required to carry a city, state, or county license.  You only other obligation is to notify the Internal Revenue Service for the purposes of sales tax.

3. You're the boss.

4. You enjoy certain tax savings.  You must pay regular individual taxes on your income, property, and payroll, but these are not levied as special taxes, as with a corporation. You will also have to pay sales tax which you have received from your customers.

5. Greater personal incentive and satisfaction. Since you have your investment to lose if your business is not successful, you should be more willing to put time, thought, and energy into the business. And when your business is successful, you enjoy maximum sense of accomplishment since you know its success was dependent upon your decisions about your management ability alone.

For more information about this and other forms of business, check out the Small Business Administrations website HERE.

STEP #5 DETERMINE WHERE THE MONEY WILL COME FROM:  There are three ways to finance start-up costs: use your own money, obtain a loan, or find investors. If possible, it is better to start small, use your savings, and not worry about repaying a debt. also keep in mind that since you are a home-based, chances of qualifying for a loan or finding investors are slim until the success of your idea is proven.

STEP #6 CHECK ON ZONING RESTRICTIONS:  Find out how your property is zoned, the call City Hall and ask what regulations apply to home businesses in that zone. Also, if you rent or live in a condominium, check the lease or homeowner's association rules to be certain a home business is allowed.  Generally, if you do not annoy your neighbors with excess noise, odors, and traffic, you will not be deterred from running a business at home. The neighbors may not even be aware of the business, but it is necessary to know exactly what you can and can't do before you start. This is important should any problems or questions arise later.

STEP #7 PICK A BUSINESS NAME AND REGISTER IT:  If the business you choose is different form your name, file an assumed (or fictitious) name certificate with the county. You are notified if another business already has that name, so you can select a new one.  Do this before investing in expensive stationery and brochures. It costs only a few dollars to file, and it protects the business name from being used by someone else in the county.

STEP #8 WRITE A BUSINESS PLAN:  A good business plan clarifies your ideas and establishes a plan of action. A good business plan should include a description of what you are selling, your background and qualifications, who the prospective customers are and where they can be found, what is needed to build the business, how you plan to promote, and how much money is need for start-up costs.  The SBA has a great starter guide HERE.

STEP #9 GET AN IDENTIFYING NUMBER:  If you are the sole proprietor of the business and have no employees, you may either use your Social Security number or an Employee Identification Number (EIN) as the business number on official forms. If you have employees, or the business is set up as a partnership or corporation, you must obtain an EIN.  You can find out more about EIN's at the IRS website HERE.

STEP #10 OBTAIN A SALES TAX PERMIT:  If the product or service you sell is taxable, you need a state sales tax permit. Call the local tax agency, explain the type of business you have and what you sell, and ask if you need to collect sales tax. If you do, they will send you the necessary information and forms to complete. You also use this tax number when your purchase items for resale.

STEP #11 OBTAIN LICENSES & PERMITS:  It's very important not to overlook any necessary license or permit. For example, some cities and counties require a general business license, and most have special laws regarding the preparation and sale of food.  Call City Hall to find out what is need for your particular business. In addition, Chamber of Commerce provide information on city, county and state licenses and permits. 

STEP #12 SELECT BUSINESS CARDS, STATIONERY, BROCHURES:  Spend time on the color, design and paper for these items. They make a definite impression-good or bad- on the people who receive them. If you are not certain what is most suitable and effective, consult a graphics designer or a creative printer whose work you like. 

STEP #13 OPEN A BUSINESS CHECKING ACCOUNT:  Call several banks to find out what services they offer, and what minimum balance, if any, must be maintained to avoid paying a service charge. Also ask about credit card  if you plan to offer this convenience to your customers. Bank fees can be significant, so shop around for the best deal.  If your personal checking account is with a credit union, see if it can also provide a separate business account. when you open your account, you may need to show the assumed name certificate and business license.  Finally, investigate obtaining a credit card in the business's name. If this is not possible, set aside a personal credit card to use for business expenses.

STEP #14 SET UP RECORD-KEEPING SYSTEMS:  Put together a simple and effective bookkeeping system with an 8 1/2 x 11" three-ring binder, columnar pad sheets and twelve pocket dividers from the office supply store. For each month, set up columnar sheets for income and expenses. Use a pocket divider for each month's receipts, bank statement, deposit tickets, and canceled checks.  In addition, an automobile log for business mileage, and filing system for correspondence, invoices, supplier catalogs, client records, etc. are two other useful tools.  Once you get established, it is a very good idea to purchase a software system to help with your records like Quicken Home & Business or Quickbooks.  You can get more helpful recording keeping idea's from the IRS HERE.

STEP #15 CHECK IRS REQUIREMENTS:  If you comply with basic IRS guidelines, you can deduct a percentage of normal household expenses (mortgage, interest, taxes, insurance, utilities, repairs, etc.) as a business expense. see the box accompanying this article and, for more detailed information, IRS publication #587, Business Use of the Home.  Also become familiar with these IRS forms: Schedule SE (compensation of Social Security Self-Employment Tax) and Schedule 1040 ES (estimated Tax for Individuals). Depending on circumstances, you may have to file them.

STEP #16 OUTFIT THE BUSINESS:  Make a list of everything needed to start the business, but before you buy anything, look around the house for things you already own that are usable.  When you are ready to start purchasing, check the classified ads and garage sales. Both are good, inexpensive sources for office furniture, typewriters, computers, answering machines, etc. But only what is absolutely necessary for start-up, and wait until the business is off the ground to get the extras.

STEP #17 DECIDE ON TELEPHONE REQUIREMENTS:  Call the telephone company to find out the cost of a business phone in your area. If you cannot afford a separate business line, investigate the telephone company's regulations on using your personal phone in a business. It may be possible to do this if you follow certain guidelines. Keep a record of long distance business calls as they are a deductible expense. Finally, consider the benefits of an answering machine to catch calls when you are out.

STEP #18 CHECK OUT THE POST OFFICE & UPS:  Using a post office box as the business address down plays the fact you are home-based. It also prevents customers from dropping in at all hours.  While looking into box rental, ask for information on the various postal rates, particularly bulk rate, if you plan to do large or specialized mailings. If you mail many packages, check out United Parcel Service (UPS), as it is less expensive than the Post Office. 

STEP #19 PURCHASE THE NECESSARY INSURANCE:  Check with your homeowners insurance agent about a rider for your existing policy or the need for a separate business policy. Also make sure you have adequate personal and product liability coverage. Shop around, as each company has different rules regarding home businesses  To save money on medical insurance, join an association and participate in their group plan.

STEP #20 ORGANIZE THE HOUSE & YOURSELF:  To have more time for business, organize and simplify household routines. Start by holding a garage sale to get rid of unnecessary possessions. Next, have a family conference and divide household duties, making sure each person does his or her part. The, set up a planning notebook to keep track of appointments, things to do, calls to make, errands to run, shopping, etc. Finally, set up a work schedule so you won't get sidetracked by TV, neighbor's visits, snacking, and telephone calls. 

Creating and operating a home business is a wonderful and rewarding challenge. The satisfaction is not only in the money earned, but in doing what makes you happy.

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