Is a Home-based Business in Your Future?

A variety of distinct business models provide structure for entrepreneurs, so there’s no cookie-cutter professional solution, guaranteeing universal business success. What works for an owner, in one industry, may not lead to prosperity for another entrepreneur, in a different line of work.

Because each business is unique, the most effective entrepreneurs are those best able to identify workable strategies and maintain the infrastructure required to execute their plans.  For some successful owners, the path to prosperity is paved with a home-based business.

Home business isn’t for everyone, but there are distinct advantages associated with running a commercial operation out of your house. The commute is short, work-life balance is at your fingertips, and using space at home can help keep your overhead low. If you’re in the formative stages, working toward a home-business launch, consider points recently shared in Architectural Digest piece exploring home-based business possibilities.

Does Your Home Have What it Takes?

Each business has unique physical demands, so it’s important to match your commercial space with the needs of your organization. Your home office may be an outstanding resource, provided there’s proper infrastructure available to support your business needs.

Hosting clients and housing inventory are two small business concerns to consider when evaluating whether or not your home is a suitable worksite. You can accommodate the need to host clients by meeting offsite, particularly if there’s a coworking space nearby. And if small amounts of inventory are expected in your trade, offsite storage or adapting existing areas of your home may solve the dilemma.

Try to be realistic as you assess home-inspired potential – not all businesses flow well from home. You don’t want to undercut your success, by expecting too much from your residence. And before making commitments, it’s important to look ahead, evaluating how well a home-based model aligns with your growth plans. If your growth ambitions quickly outgrow your home, it may not be a worthwhile stepping stone.

Are You Work-from-home Material?

Not everyone possesses the personal attributes needed to succeed from home. A “self-starter” personality type provides a good base, helping home-based entrepreneurs find drive and motivation from within, rather than relying on an office or meeting schedule to push productivity.

Discipline separating work and personal time is challenging for some work-from-home entrepreneurs, and the early days of self-employment are often lean. Are you resilient enough to weather the storm and adapt, without losing passion for your at-home venture? If you’re prone to distraction and can’t draw a strict line working from home base, you may set yourself up to fail, expecting yourself not to become too comfortable at “work.”

Designated Work Space Draws a Line

In order to minimize distractions, it’s important to partition off designated workspace from the rest of your home. If your floorplan allows it, converting a room or adjoining areas creates adequate separation between home life and work life.

When you can’t dedicate an entire room or convert unused space into an office, creating an artificial barrier blocking off your computer, printer, and office accessories is the next best approach. And don’t forget basic infrastructure. At a minimum, you’ll need power, internet connectivity, adequate work lighting, and some space to move around. Even better, your home office environment is also well-ventilated with pleasant surroundings and visual appeal.

In addition to separating workspace from living space, keeping “tools of the trade” apart from household items is another prudent step. Your phone, computer, and any equipment used for business purposes should be dedicated to professional pursuits, and kept out of general household circulation.

Keep it on the Up-and-up

Local laws may prohibit certain home-based business activities, so familiarizing yourself with licenses, permits, and local practices can help prevent surprises. Zoning laws applicable to your property may restrict commercial operations, in which case, only a portion of your residential parcel can be used for home business.

If you rent your home, your landlord’s written permission is required, authorizing commercial use of the property. Property owners can’t unreasonably deny the request, though you may incur additional expense for utilities and other costs associated with commercial activities.

According to the AD article, some of the required licenses for home-based small businesses may include:

• General Business License
• Professional or Trade Licenses
• Home Occupation Permit
• Sales Tax Permit
• Sign Permit

Tackle Tax Law For Home Businesses

If you’ve never run a business, tax matters may be unfamiliar at first. However, it won’t take long getting accustomed to the requirements – there’s no way around it. You may choose to hire an accountant at tax time, but you’ll also want to manage routine tax matters on your own. For your home-based business, the process includes accounting for all your expenses, in order to maximize deductions related to commercial costs, such as:

• Direct Business Expense – Supplies and materials used in the ordinary course of business are direct deductions on your taxes. Services you pay for in order to conduct business also qualify for this direct deduction.
• Business Use of Your Home – The IRS allows a tax deduction accounting for a particular part of your home, used for business purposes. Once you’ve identified the share of your floorplan dedicated to work functions, you can then apply the formula to write off a portion of household costs like mortgage interest, utilities, and maintenance expense.
• Vehicle Expense – Self-employed, home-based, entrepreneurs are allowed to expense mileage, according to the IRS, per mile limit. The expense deduction applies to the total number of miles driven during the year, but allows only those miles travelled while conducting business.

Keep to Your Schedule

Running your business from home has flexible advantages, but you must also commit to the discipline required to execute your professional plans from your household. Establishing a steady schedule is one way home-based entrepreneurs stay on track, without going to an offsite office each day.

For prolonged home business success, resist temptation to stray from your set schedule, and redouble your efforts to accomplish everything you set out to achieve each day. Stay realistic, however, because it’s also possible to err in the wrong direction, using home access as an excuse to put in too many hours on the job.

Among the many business strategies at your disposal, home-based ventures have unique benefits and demands. Before designating your house a business operations center, consider all the ways if might change your personal and professional life. As long as you know what you’re getting into, working from home may be the best business decision you ever make.