Work at Home – Starting a Home Based Business
Work at Home – Starting a Home Based Business
Are you one of the millions of disgruntled “9 – 5ers” who are sick of the rat race and truly want to figure out how to work for yourself?
Have you been bombarded with advertisements chock full of promises of wealth and freedom and now you want to taste the rewards just waiting for you?
Or perhaps you’ve actually tried a few things in the past that didn’t work out for you?
Don’t give up!
The fact that you’re reading this right now proves you are still interested in learning how you can realistically work for yourself, supplement your income, and maybe even quit the day job.
However, if you don’t have the obvious credentials – such as being a plumber or electrician, or even a physical therapist, nurse, or accountant – there is still hope.
With the proper planning, the right tools, some self assessment, and a sincere desire to succeed, you could well be on your way to “self employed” very soon.
STEP 1 – What will your business be?
First and foremost, what is it that you want to do?
Do you have a special skill or trade that can support you?
Most people fail to understand or recognize their marketable skills and they never give themselves the opportunity to learn how to capitalize on their God-given talents.
Whether you are looking for a way to be able to afford to stay home with your kids, or you are out of work and want to fully explore all your options, these are just a smattering of ideas to base a business on – full or part time.
• Babysitting / day care services.
If you have your own children to care for, invite other mothers to leave theirs with you as well. It’s the ideal play date.
• Cooking / catering.
You don’t need to be a gourmet cook. Cakes, appetizers, or even side dishes could be your specialty.
• Sewing.
I’ll bet you there isn’t one person in your neighborhood who wouldn’t kill to have some hems taken up or a skirt let out.
• Typing, bookkeeping services for small companies or even sole proprietors (like you!).
• Pick up / delivery / errands.
Have you ever wished you had a personal shopper to get the cleaning, pick up the kids, get to the drug store, or just get milk and diapers? So does everyone else!
• Crafts.
Can you arrange flowers? Make gift baskets? Knit? Design picture frames?
• Organize storage space.
This is a new in demand skill. Many would pay top dollar for someone to find room for the car in the garage, or to have someone organize closets and junk drawers.
STEP 2 – Choose a business entity
Now that you know what you will be doing in your business, you need to decide what type of business entity you will have.
In very simplified terms, here are the major choices:
• Sole Proprietor.
This is the most common for people who find a way to earn money at home. You don’t need to find an alternate name for the business; when you file your taxes at year end your Schedule C simply has your real name as the name under which you do business. Your income flows through your regular tax return. You may very well qualify for a refund, too.
• LLC (Limited Liability Corporation).
You can be a sole proprietor – the only person in your business – and have an LLC. The difference here is that your liability (if you get sued) is significantly reduced over that of a sole proprietorship. You are required to have a specific business name. Your income flows through your regular tax return. You may very well qualify for a refund, too. Depending on the type of business you have, this may be a good option.
• Corporation.
Should you incorporate? Probably not. There’s very little benefit and there is one big drawback: you don’t get a tax refund if you incorporate. A corporation is a separate entity. It is not you. It requires a real professional to fill out even the simplest of tax returns at year end. For most home based businesses, this is overkill. If you are really afraid that you might lose your house if you’re sued, and you really believe this is the way to go, spend some money and have a serious discussion with a CPA or tax attorney.
STEP 3 – Register your business
Now you need to get permission from your state to do business.
This sounds more intimidating than it really is.
You can do this all by yourself.
You don’t need to pay anyone to do this for you!
Simply go to your state’s business oriented website and search for where it shows you how to file “Articles of Organization for a Domestic Entity”.
You can usually print this out with the instructions; it’s about 4 pages long.
Fill it out and send it in.
This costs about $150 to file for the first time and another $50 + to renew each year after that.
Most states allow you to do this online.
STEP 4 – Get your EIN
You will probably need an EIN (Employer Identification Number). Even though you most likely aren’t going to have employees, this shows the IRS you are a little more “business like”.
If you have a business where you would need a business checking account, most banks even require this in order to open the account for you.
You can apply for this online at the http://www.irs.gov/ site. Look for form SS-4.
STEP 5 – File for a fictitious name
Depending on your state, you may be required to file a fictitious name if you are not using your own name to conduct business.
This costs about $50 in any state.
STEP 6 – Tools of the trade
No matter what your new business, there will be specific tools you will need at a minimum.
Whether it’s a computer, a sewing machine, or even pots and pans, make sure you get the best you can afford and make sure you know ahead of time what you will need at the very least to conduct your business, and have them in place.
STEP 7 – Profit and Loss
Know your cash flow!
Set up at least a simple Excel spreadsheet to list your expenses and your income.
Your success depends on how much money you’re clearing (your profit).
You don’t want to find out the hard way that you aren’t even breaking even.
STEP 8 – Paying taxes
You’ll need to pay at least self employment taxes.
Don’t wait until the end of the year to find out you owe thousands of dollars on what you made!
Put away at least 25% of your income into an interest bearing account so you will be able to pay these taxes when the time comes.
STEP 9 – Advertise
Get the word out! Print some business cards, hand out flyers, email everyone you know, have your spouse bring in some brochures to his or her workplace.
Place free ads online at Craigslist.
Ask people for referrals.
STEP 10 – Stay focused and organized
No matter what kind of business you have, you’ll need a way to keep track of what’s what.
This could be as simple as a notebook you carry with you or as intricate as a Blackberry.
Remember commitments and appointments, track quotes and proposals, follow up with prospects, and ask clients for add on business.
Everything you need to know should take no more than 30 seconds to find!
If you can accomplish all 10 steps above, you’re well on your way to being successful.
Developing a secure foundation is over half the battle.
