Many parents are opting to stay at home while the kids are growing up. Some are supplementing their family’s income by working from home, often launching a new business enterprise there. Here’s a quick stay-at-home guide for starting your own small business.
Decide on Your Business Structure
Most in-home businesses begin as sole proprietorships. This simply means that you are a self-employed individual who reports income on your personal income tax forms. You might, though, consider structuring your business as a Limited Liability Company (LLC) or even as a corporation. Both LLCs and corporations allow you to separate your personal assets from your business assets, protecting your home and other personal belongings, in case you experience any business liability.
Make Room for Your Office
For moms or dads working at home, it’s important to have an office or work space dedicated to your business. In fact, if you want to claim a home office deduction on your taxes, the IRS requires that the space be used exclusively for that purpose. (Home day cares are exempt from this requirement.) On the other hand, your home office doesn’t have to be a separate room. It can be a corner of a room or divided off with a partition.
Open a Bank Account
Financial advisers will tell you generally that it’s best to have a separate bank account for your business. That way, you have a better idea of your cash flow and where your business finances stand at any particular moment. A business credit card can also be a good way to track and report business expenses.
Write a Business Plan
It’s always good to know where you want to go and how you’re going to get there. Even a simple business plan that includes what you want to offer, how much you want to make, how many hours a week you want to work, and steps you need to take to accomplish your goal can help you focus on becoming successful.
Set Up Your Bookkeeping
Depending on the kind of business you have, you will no doubt need some sort of bookkeeping system to track your income and expenses. It may be as simple as a paper ledger or a computer spreadsheet. Or you might take advantage of any number of bookkeeping software options. If you just don’t have time for bookkeeping, consider hiring a professional bookkeeper to do the job.
Whatever product or service you offer, you’ll need to market it. Word of mouth is typically the most effective way to turn prospects into customers or clients. But you may need to research other ways to sell your products or services. An attractive website and posting to social media are often good first steps for fledgling enterprises.
Register with Taxing Authorities
Many states and localities require that you register your business, even if you’re a sole proprietor. There’s usually a fee for registering. Local taxing authorities also like to collect taxes from you for the privilege of doing business. Check with the regulations in your state, county, city, or town to see whether you need to register, what taxes you need to pay, and when you need to pay them.
Consult with an Accountant
Business taxes can be complex and confusing. Consider consulting with an accountant, who can explain your taxes and how you can get the tax deductions you deserve. A good accountant can also help you with strategic planning to build financial strength in your business.