How to Start a Business From Home
When faced with employee burnout, unemployment and underemployment, people from all backgrounds can find new opportunities by starting a business from home. While many begin their home-based ventures as side hustles alongside their primary employment, these businesses have the potential to evolve into thriving full-time enterprises.
If you’re ready to launch your home-based business, getting organized with the right mindset, financing and marketing is crucial. If you’re unsure where to start, use our in-depth checklist to stay on the right track.
Before you start
Accomplish the following action items before you officially start your new home-based business:
- Conduct a personal evaluation. Ensure you’re ready to start your new business. One handy tool is the U.S. Small Business Administration’s (SBA) Entrepreneurship Readiness Assessment, which can help you better understand your skills, characteristics and experience in relation to your readiness to become an entrepreneur.
- Sign up for small business training classes. Free courses are available through the SBA’s learning platform, and SCORE.org has additional resources and mentors. These tools can help you develop a business plan, gain familiarity with small business accounting, better understand small business tax considerations, and learn effective marketing best practices.
- Research the market. It’s crucial to know your industry. Who is your target audience? Who else is in your space, and how can you stand out from the competition? Is the sector or industry poised for growth? Track your industry’s trends to understand precisely what’s happening.
- Write your business plan. After learning about business plans through expert resources like the SBA and SCORE.org, it’s time to formally write a business plan. You can reach out to mentors at SCORE.org for feedback and advice.
According to a Commerce Institute analysis of data from the U.S. Bureau of Labor Statistics, over 20 percent of businesses fail in their first year. Only about half are still operating after five years. Preparing for your new business as much as possible is critical to boost your chances of success.
Getting set up
It’s time for some practical considerations and tasks related to starting your home business.
- Name your business. Determine the perfect name and register your business name with your state. Keep your potential business domain name in mind when choosing your name.
- Establish a business address. Consider using a virtual mailbox service or coworking space address to maintain privacy and professionalism. Many entrepreneurs prefer these options over traditional P.O. boxes for receiving packages and maintaining a professional image. However, using a P.O. box at a business services location can be handy for mailing packages, getting documents notarized and more.
- Set up a separate phone line. You likely won’t want to conduct business via a home phone or personal cell phone. Look into business phone systems that cater to small businesses or run your business from a smartphone dedicated to work calls only.
- Design your workspace strategically. Create a dedicated work area equipped with ergonomic furniture, adequate lighting and convenient access to power outlets. Consider purchasing quality used office furniture from marketplace platforms or office liquidation sales to minimize startup costs.
- Document home office expenses. Keep detailed records of your household expenses including utilities, mortgage interest, insurance, repairs, property taxes and maintenance costs. Depending on how much space you use as your home office, you may be eligible for tax deductions and benefits for business expenses.
- Buy a laptop for work-only purposes. Your personal search history, family pictures and social media accounts should be separate from your work activities. Use a laptop or computer dedicated to your company to streamline operations and work more professionally.
- Choose business software and applications. Depending on your business and its needs, pinpoint the software best suited to your work. You’ll likely need an office suite, such as Microsoft Office or Zoho Office Suite. Then you’ll need to consider accounting software like QuickBooks or Zoho Books (read our Zoho Books review and our QuickBooks Online review to learn more). File storage tools like Dropbox and Carbonite can come in handy, too.
- Invest in an all-in-one printer. A multifunction printer combining printing, scanning, copying and digital faxing capabilities eliminates frequent trips to print shops. Current models offer mobile printing and cloud connectivity, essential features for home offices.
Legal considerations
Pay close attention to your new business’s legal considerations, as staying organized and compliant is crucial.
- Choose your business structure wisely. Consult with legal counsel to determine the best entity type. While LLCs offer personal asset protection and tax flexibility for many small businesses, sole proprietorships remain simpler for low-risk ventures. Corporations and S corporations provide different benefits for scaling businesses with multiple owners.
- Apply for an EIN. You will need an employer identification number (EIN) to act as your federal tax ID. You will need it to pay taxes, take out loans, open a bank account, apply for licenses and permits, and more.
- Properly register your business name. You’ll need to register your business name with the U.S. Patent and Trademark Office. Registering will prevent you from violating any trademark or copyright laws.
- Find small business insurance. Look into small business insurance, including general liability insurance and errors and omissions insurance. Also, double-check your homeowners’ insurance policy to understand whether or not it covers home-based business losses.
- Research workers’ compensation insurance in your state. If you don’t have any employees, most states don’t require you to purchase workers’ compensation insurance for yourself. However, if you don’t have it, you won’t receive any benefits if you’re injured on the job. Whether you’re starting out alone or you have several employees, it’s critical to understand workers’ compensation insurance laws in your state.
- Reach out to a local CPA. Whether or not you’re ready to hire a CPA, consulting with one is valuable. A CPA can answer any questions you may have and organize and submit your business taxes for the following year.
- Verify licensing requirements. Business licensing varies significantly by location and industry. Check with your city clerk’s office and state business website for specific requirements. Professional services might require state-level licensing, and home-based businesses sometimes need local permits or zoning approvals.
- Interview potential business lawyers. Developing a relationship with a business lawyer you trust is crucial. Choose one with whom you feel comfortable. Issues can arise unexpectedly, and the last thing you want to worry about in a crisis is finding a good lawyer.
A business lawyer can help you evaluate business investments, deal with submitting a trademark, handle copyright issues and much more.
Financial management
Finances are your business’s life force. Establish excellent financial management practices from the start.
- Get a bank account and credit card. Open a business bank account and apply for a business credit card. Establishing credit will help you apply for business loans and secure additional financing.
- Figure out your business’s budget. When determining your small business budget, consider how much money you’ll spend on supplies, advertising, operations, shipping and more. You must also decide on your salary.
- Secure startup funding. If you’re not self-funding your business, research your financial options. Financing options include crowdfunding, securing venture capital and getting a business loan. You may also consider reaching out to friends and family for seed money.
- Stay on top of deadlines and due dates. Pay your bills on time to increase your credit limit spending when you need to scale your business.
- Separate your business and personal accounts. With regard to credit cards, bills, banking and more, separating accounts will make it easier to keep track of debt and stay tax-compliant.
- Optimize inventory management. If your business has inventory, it’s crucial to avoid having too many or too few products. Inventory management software can help track costs, automate reordering, and prevent overstocking and stockouts.
Since organized finances are so critical, check out our reviews of the best accounting software to choose an application that puts your daily financial tasks on autopilot.
Building an online presence
Even if your business’s official address is your home, your online presence should be professional and impressive.
- Register your domain name URL. Use Instant Domain Search to ensure your name is available, and then register it properly.
- Create a website. Design a website that’s professional and easy to navigate. Choose one of the best website builders to fit your budget and needs, whether you require a complex online store or a straightforward business presence.
- Optimize your website for mobile devices. Work with your website designer to ensure an optimized mobile experience. You want users to be able to view your website easily on multiple platforms.
- Develop an SEO strategy. It’s crucial to prioritize your SEO strategy so your webpage ranks higher and enjoys more relevant traffic.
- Create an integrated digital marketing approach. Coordinate your content across websites, social media platforms and email campaigns to maintain consistent messaging. Develop a content calendar scheduling posts, promotional campaigns and customer engagement activities across all channels.
- Establish your business email account. Set up branded email addresses using your domain name (e.g., [email protected]) through providers like Google Workspace or Microsoft 365. This professional touch significantly impacts customer perception and trust.
- Claim your business listings. Establish verified profiles on Google Business Profile, Bing Places for Business, Yelp, Apple Maps and other relevant industry directories. Accurate, consistent NAP (name, address, phone) information across platforms improves local search rankings.
- Partner with influencers. Build brand awareness and increase organic marketing by using influencers and brand ambassadors who are genuinely enthusiastic about your products or services.
- Get set up to accept credit card payments. You’ll want to be able to easily accept credit card payments, so set up a merchant account with a top merchant account service. If you’re selling online, ensure your website has online shopping cart functionality.
The SBA estimates that 60 percent of businesses without employees are home-based. With 19 million home-based businesses in the U.S., there’s no reason you can’t start one and succeed.
Marketing your business
You’ll need to get the word out about your business by marketing your products and services.
- Design basic marketing materials with your contact information. This may include images for social media accounts, brochures, e-books, business cards and direct mail pieces.
- Set up an email marketing account. Email marketing is an inexpensive, effective way to reach your customers and prospects. The best email marketing services can handle your email campaigns and provide valuable metrics.
- Secure your social media presence. You’ll want to secure your business’s name on various social networks where you plan to have a presence.
- Promote your products and services with social media. Some best practices for social media content include publishing meaningful blog posts, offering exclusive content, providing thoughtful insights and posting discounts across social channels.
- Focus on collecting five-star reviews. When possible, request reviews from satisfied customers. Good customer reviews that praise your company and products are useful for boosting sales.
- Leverage analytics for audience insights. Use platform analytics and customer relationship management (CRM) tools to identify high-value customers, optimize marketing costs and personalize outreach based on data.
- Network your business as often as possible. While digital marketing efforts are essential, don’t forget about your local community. Take advantage of local marketing strategies like attending community events.
Kimberlee Leondard contributed to the reporting and writing in this article.
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With nearly two decades of experience under her belt, Julie Thompson is a seasoned B2B professional dedicated to enhancing business performance through strategic sales, marketing and operational initiatives. Her extensive portfolio boasts achievements in crafting brand standards, devising innovative marketing strategies, driving successful email campaigns and orchestrating impactful media outreach.
At business.com, Thompson covers branding, marketing, e-commerce and more.
Thompson’s expertise extends to Salesforce administration, database management and lead generation, reflecting her versatile skill set and hands-on approach to business enhancement. Through easily digestible guides, she demystifies complex topics such as SaaS technology, finance trends, HR practices and effective marketing and branding strategies. Moreover, Thompson’s commitment to fostering global entrepreneurship is evident through her contributions to Kiva, an organization dedicated to supporting small businesses in underserved communities worldwide.
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