COVID-19 pandemic and work from home has opened many new opportunities for everyone. Many people are looking for ways to start a small business at home or start a side business. There are various ways to start a small business at home.
If you are interested in learning how to start a small business at home, it’s still not too late to start your home-based business. But it requires thorough planning, research, and documentation to make it legal.
Starting a new home-based business is not an easy task to do, but these 10 steps will help you in getting started;
1. Determine your business idea
The first step in starting a small business at home is to determine the business ideas you have and what you can start. There are a number of different home-based business ideas, and they are more feasible and applicable than others.
This step is very important because it is the base of your whole business. Ideally, you need to come up with an idea of your interest, and make sure it also has a market need.
You can come up with your own unique and innovative idea that satisfies the need of your customers. Similarly, you can look for existing businesses. Ask yourself, how you can improve these businesses and fill the gaps in the market.
To start a new home-based business, you need to identify the following things;
- The skills or knowledge you have.
- How can you turn those skills and knowledge into a profitable business?
- Can you run this business idea from home?
2. Write a business plan
After deciding on your business idea, it is time to write a business plan.
Writing a business plan is a crucial and time-consuming part in learning how to start a small business at home. But it is one of the most important and essential parts. It is a clear roadmap of your business operations.
The business plan will help you in gaining clarity over many things and it will also help you in getting funds in the future. A good business plan is very helpful in gaining capital from lenders and investors.
In the business plan, you will add details about your business, what will be the products or services, how it will operate, how it will grow, and what will be the sales and marketing strategies.
A business plan consists of three things;
- Who are you?
- What is your plan to do?
- How you are going to do it?
In your home-based business plan, you will include;
- Write Down An Executive Summary
- Describe your business
- Define Your Business Goals
- Describe Your Business Products and Services
- Conduct A Market Research
- Conduct Competitive Analysis
- Establish Marketing & Sales Strategies
- Establish Your Business Financial Analysis & Projections
Read more: How To Write A Business Plan
3. Select a business name
After writing a business plan, you need to decide on your business name. Select a business that is memorable and should align with your business and its operations. Make sure it is available and you can use it, so it is better to select a unique name.
You can check for the availability of your business on various platforms. Like the secretary of state’s website or business bureau website, US patent and trademark office, and Google search.
If you are planning to launch your home-based business online and on your website, you can check for domain availability for your business website.
Read more: How To Come Up With A Business Name
4. Decide your business structure
Selecting the right legal business structure is very important to run your business. Your business structure will affect how you will file your business taxes and the risks associated with your business.
There are four business entity types;
- Sole proprietorship
- Limited liability company
If you want to get rid of the problems, then sole proprietorship is the best business structure for you. In this, you are not answerable to anyone. So, you are the sole owner of your business and have complete control over business decisions and operations.
But it also comes with some drawbacks. A sole proprietorship will leave you with no legal separation between you and your business. You will be responsible for any debts and lawsuits.
5. Register your home-based business
If you are going with a limited liability company or corporation form of business structure, then you need to register your business with the state to run your business legally.
The process of registering your business will be dependent on the state in which you live. For that, you can consult your local secretary of state or business bureau.
But you will need to register with the federal government, applying for an employee identification number (EIN). It is a nine-digit number and works like a social security number but for business, assigned by Internal Revenue Service (IRS) to businesses for tax purposes.
It will be helpful in hiring employees, opening a business bank account, filing taxes, and much more.
6. Apply for business licenses and permits
When you are starting a new business, it is better to check for state and federal legal requirements. You can face a fine if you fail to fulfill the legal requirements. Business licenses and permits differ according to businesses and states.
After choosing a business structure and fulfilling the state’s requirements, check for other laws, licenses, and permits that you are required to obtain. For this, you can also consult a business lawyer.
7. Open a business bank account
Open a business bank account that will be totally separate from your personal account. It will help you in sending and receiving money from customers, suppliers, and other parties. A business bank account will give your business legal protection.
A business bank account will help you, your customers, suppliers, and employees, in sending and receiving money. It will also help you in managing your accounts and finances, paying taxes on time, and protection.
8. Check for tax affairs and other legal requirements
Depending upon your business, there will be tax obligations upon your business. As a business owner, you will need to pay federal and state government self-employment tax quarterly. Similarly, set up a sales tax account with your state if you collect sales tax.
Tax affairs can be confusing and complex for most people. You can hire an accountant for this purpose. He can help you in managing your finances, set up payroll, structure your business, and much more.
9. Establish a home-based office
You are now in the phase of starting your own home-based business. When you are working from home it is better to separate your work life from home. Similarly, it is important to designate a place for your workspace that will help you in staying productive.
It is beneficial for you if you designate a separate empty room for your business. Otherwise, designate a separate place in your bedroom or living room. But choose a place where you will be productive and mindful.
10. Design your marketing plan
Marketing is very important to the success of your business but doesn’t go into it without proper planning. Lack of planning can lead to spending money wastefully, and not seeing any results. That is why it is important to design a marketing plan.
The outline of your marketing plan includes;
- Define your mission
- Identify your target market and your offerings
- Describe your content and marketing strategies
- Identify your competitors
- Set marketing goals
- Estimate your marketing budget
- Examine your results
Read more: How To Write A Marketing Plan
The Bottom Line
Here we conclude how to start a small business at home. Although you may have executed all the steps, your learning process will continue as you perform day-to-day actions. You will have to take tough decisions on a daily basis.
How To Start A Small Business At Home FAQ
1. What is the easiest small business to start at home?
The easiest smalls business to start at home is;
- Consultation services
- Digital Marketing
- Event planner
- Coaching services
- Freelance services
- App development
- Online teaching
2. How do I start a small home business?
You can start a small home business by following these steps;
- Determine your business idea
- Write a business plan
- Select a business name
- Decide your business structure
- Register your home-based business
- Apply for business licenses and permits
- Open a business bank account
- Check for tax affairs and other legal requirements
- Establish a home-based office
- Design your marketing plan