Finalizing the Details: Setting Up Your Home-Based Business
Written by 36creative on May 11, 2015
A home-based job is more than just working in your pajamas from the comfort of your living room (though that can certainly be a pleasant part of it). Once you’ve decided on your business venture – be it working for yourself, for a company, or with a company – there are a few important decisions to be made during the set-up process.
(In case you missed it, the first post in this series walks you through the different types of home-based businesses and the second post helps you narrow down your options and choose the best home-based business for you.) The most important thing to remember as you go through those steps is that you’re going to have the most success if you take the time to consider what will make you the happiest. It may seem more indulgent than practical, but almost anything can be turned into a home-based business, if you have the passion and determination to do it.
When you’re actually setting up your home-based business, you’ll want to consult with experts and people you trust as you check-off the legal, financial, physical, and digital decisions of your home-based career. Because, there might be some rules involved with that part.
Be a Legal Eagle
Each home-based business option requires different paperwork. A person who starts her own graphic design company has different legal legwork than another who works for a company as tech support, and someone hosting parties for home goods will have his own set of paperwork to sign.
One of the great things about working for yourself is that it cuts down on the number of people you have to answer to, but it also means you don’t have a human resources department to contact with your questions. According to the U.S. Small Business Administration, “you need to be sure you have the right licenses or permits, make estimated tax payments on time, report your earnings each year, and deal with client paperwork such as contracts, non-disclosure agreements, and more.”
There are a lot of different ways to set up a business. Companies that hire people to work with them regard home-based employees as independent contractors and will work with you as an individual. (That’s the case with Traveling Vineyard, FYI. It’s really very simple – no extra legalities required.)
When you work for a company, talk to their human resources department to find out if you’re considered a regular or contract employee.
If you’re starting your own business from scratch, find out if you should be licenced as a limited liability company (LLC), a sole proprietorship, or as a “doing business as” company (also known as a DBA). If you’re unfamiliar with the ins and outs of these different kinds of companies, you’ll want to discuss your options with a trusted legal advisor.
Regardless of the option you chose, this step is likely to involve some important paperwork, all of which should be saved and filed for future reference.
In some cases, working for a company is as easy as filling out a simple contract and then submitting invoices to its accounts payable department once you’ve finished a particular project. Make sure, if this is the case, that you keep track of all money invoiced and received so you can accurately include the additional income when you file taxes. You’ll also want to check with your accountant or with the company’s human resources department to verify your specific tax situation and fill out any necessary paperwork for the IRS.
All that paperwork has been filled out, signed, submitted, approved, and filed. Great! Now it’s time to work on your financial setup. You’ll want to keep your business financials separate from your personal finances. You can certainly do your business accounting yourself or you can hire an accountant to help you balance bank and credit card statements. Do whatever works best for you.
Do you need to open a separate business bank account? This is a common move, even for the smallest of businesses, but not everyone will need one. Another consideration is to get a corporate credit card to pay for expenses, which is a financial tool offered by nearly every credit card company. Separate business checking and credit card accounts are a great way to stay organized financially and to keep track of the financial health of your home-based business. Again, it’s up to you. If you and your financial advisor – even if your advisor is an Excel spreadsheet – make an informed decision, that’s what will be best for you.
For those of you who love Excel, are you going to use it to track your finances? Whether it’s that program, other software, or the supercomputer in your brain, you have to keep your business’s debits and credits organized. An added benefit of tracking expenses is you can see where you spend the majority of your money (after your Starbucks purchases). If you need to, you can open corporate accounts with suppliers when you find yourself purchasing often enough or in high enough volume.
(In case you were wondering, income and expenditures are pretty simple with direct selling and marketing companies like Traveling Vineyard. But if you’re in doubt, it’s always best to consult an expert, especially for something like income tax for the self-employed.)
Home Sweet Office
Now that you’ve got that shiny new business paperwork, you need a filing cabinet to put it in. Or do you want to use a binder? An expanding file folder? Where are you going to put all this stuff? It’s time to go shopping!
The physical set-up for your home-based business is an important part of the process that will help you feel like a legitimate company or businessperson, even when you’re still wearing sweatpants. Where are you going to work? Do you need a desk, table, special chair, or space to create your product? Do you need to be mobile? For example, About.com recommends using binders to file important documents so they can easily be transported “for signing up representatives, hosting product parties or quickly referencing customer orders.”
Carpenters will need a completely different workspace than a virtual personal assistant, and they will likely need to extend that workspace into their vehicles (very few woodworkers drive coupes, after all).
And a virtual worker will need an entirely different set of tools, including fast internet, a reliable computer, and a quiet location. Is a landline necessary, or will a cell phone do? Should you have a cell phone just for business use?
For any enterprising businessperson, branding is an important step. Consider whether you’ll need a logo and branded stationery or if there are any trade publications you should subscribe to. You’ll want to keep learning so you can become an industry leader, which will bolster your business.
The good news is that many of your business expenses can be deducted on your taxes. The site sheknows.com has a quick list of common deductions and encourages you to keep careful records of anything you plan to list in your taxes. It quotes Deborah Sweeney, the CEO of MyCorporation Business Services, as saying, “It is important to record what was spent, the date, to whom it was paid.”
This Modern Age
Remember back in the day when you heard about new businesses only when they could afford to advertise? Times have definitely changed for the better for home-based businesses and entrepreneurs – the internet has made it easier than ever to expand and boost your business. With that in mind, let’s talk about what you need to focus on in your digital setup.
Will your business be served by a personal web page to advertise or sell your goods or services? There are plenty of free site-making tools out there if you’re looking for something simple. If you are looking for a more custom, robust site, Entrepreneur Magazine has made some recommendations for you to consider.
Depending on the business you’re starting, you might consider instead joining a specialized community site like Etsy to sell your goods or one of the many freelancer sites to find assignments and connect with peers and customers alike.
Finally, there are very few better ways to advertise a business or connect with the right people than by social media. It just takes a little bit of exploring to figure out which sites will serve you best.
Facebook is a popular and easy-to-use option, and many home-based businesses use at least a business page on that site. Be sure to look into all your options, however, to see if they’ll help you grow your business: Facebook, Instagram, LinkedIn, Twitter, Google+, Pinterest, and YouTube are the most popular and active in social media right now. You likely don’t need all of them, but you should use at least one.
Keep your online presence just as professional as you are in the real world. As we mentioned before, you want to work on personal branding, and your online presence is a huge part of that puzzle. You may be working in your pajamas, but that doesn’t mean your work isn’t worthy of formalwear.
And while you’re getting to know the online side of your community, keep an eye out for information on offline opportunities as well. Find ways to get involved in your industry’s local community. Are there advertisements for networking events or industry conferences? Craft fairs, trade shows, even just chatting with people you meet at your supply stores can be excellent opportunities for promoting your business.
3… 2… 1… Liftoff!
Congratulations – it’s time to launch your home-based business! Are you ready?
According to Entrepreneur Magazine, “the word ‘hustler’ has a negative connotation, but it is an extremely important trait in the startup world. Being a true hustler means being a persistent self-starter who kicks butts and takes names.” As someone working on a home-based business, it’s your turn to hustle, make some money, and have some fun.
When you work for yourself, launching means creating your products or refining your service offerings, and then promoting your wares. There are a host of ways to promote your work, through networking and social media, as discussed above, and through making your clients and customers happy enough to recommend you to their friends.
When you work for someone else, launching your home-based business is generally as easy as logging onto the network and getting started. It’s like many “normal” 9-5 jobs, just without a cubicle farm.
In direct marketing and sales, when you work with a company, it’s a matter of hosting your first event and promoting it. A company behind you generally makes working from home easier, as there’s an automatic, built-in community to support you.
Use your community. Reach out for help and consult with experts, especially when you’re going through the legal and financial set-ups for your home-based career. And to get you started, we have a checklist that will help you determine if you’ve asked all the right questions.
Now that you’re ready to launch, be sure to stay connected for more thoughts on running a home-based business. Helpful articles full of tips will be published regularly. We invite you to scroll down to the footer and sign up for our newsletter, and you’ll be among the first to know when a new post has been published.
And if you’re interested in finding out more about Traveling Vineyard and becoming a Wine Guide, click here for more information.