Tasks to Do Before Starting Your Home Business

How do you start a home based business?

  • 1.  Choose your business idea.
  • 2.  Analyze the competition.
  • 3.  Decide how you will be unique.
  • 4.  Write your business plan.
  • 5.  Line up financing.
  • 6.  Name and register your business.
  • 7.  Plan your marketing.
  • 8.  Start making sales



You can do it!

Starting a business can be overwhelming. Like all things related to starting a new phase of your career, starting a new business from home can have its challenges. But don’t worry. With careful planning and flexibility, you’re well on your way to enjoying the benefits of a self-employed lifestyle.

To learn more

BizFilings is dedicated to making business easy so you can focus on doing what you love while leaving the rest to us. For more information check out our Incorporation Wizard or contact us today.

Work with an accountant

Taxes are confusing to most people, and they get even more complex when you’re running a small business. Plus, you need advice on how to structure your business, how to set up payroll and how to track your expenses. That’s why it’s a good idea to hire an accountant.

An accountant can help you with all of this and ensure that your business is up to date with the most recent tax laws. And in the unlikely event that your business is audited, an accountant can walk you through this process.

[Read more: When and Why You Should Change Business Entities]

9. Put financial systems in place

More than 60% of experienced business owners say the first thing you should get help with when starting a new business is setting up your financial systems correctly. 

According to the QuickBooks survey, these business owners wish they’d invested in things like expense tracking and invoicing sooner. Learn from their mistakes. Now is the time to invest in financial bookkeeping or accounting software for your business or recruit the help of an expert (like a bookkeeper or accountant).

Step 3: Make Sure You Can Do the Tasks That Need to Be Done

    There's a lot to be done in starting and r
There's a lot to be done in starting and running a home business. Credit: ImagesBazaar | Getty Images

There is a lot that goes into starting a home business. Along with the tasks, is the ability to deal with hassles and frustration, fatigue, and slow results. If you can't do the tasks, or stay the course when things get hard, then a home business may not be for you. To make sure you have the stamina to succeed, answer this question honestly: Can you handle the day-to-day general tasks that starting a small business requires, like:

  • supplying product/service
  • distribution of product
  • invoicing/billing
  • setting appointments
  • ordering supplies
  • bookkeeping
  • marketing
  • filing
  • answering the phone
  • checking and replying to e-mail
  • manage energy levels
  • deal with disappointment
  • manage overwhelm

Some of these tasks you can delegate to a virtual assistant, but many home business owners are solo-preneurs, starting on a shoestring budget and having to wear all business hats. If you plan to start on your own, make sure you have the stamina to carry you through until you can hire help. It helps to learn how to prioritize and manage time

14. Register for business licenses

Outside of registering your business, you might also need to apply for a business license. A business license gives you permission to conduct business in your city or state. 

If you’re operating as a sole proprietor, you might not need a business license, but it’s always a good idea to double-check. If you’re going to collect sales tax, you may need a sales tax permit. Get more information from your secretary of state’s office, your local Department of Revenue, or your county clerk.

Finally, you’ll want to apply for an Employer Identification Number (EIN). This number is assigned by the IRS to identify your business. Applying for an EIN is fast and free, and it protects your personal Social Security number. If you choose not to register your business, applying for an EIN is still a worthwhile step.

5. Test Your Home Business Idea

Next, you’ll want to test your idea to see if customers will actually pay for it. Your business idea may look good on paper, but you wouldn’t know for sure that you have something that works unless you put it in front of your market.

When testing your idea, generally avoid family and friends. Their feedback will be skewed due to your prior relationship. While it’s fine to get their feedback, the real test of success of a product or service is a paying customer with no prior relationship.

Here are a few tips to help you evaluate the viability of your idea:

Introduce Your Product or Service as Beta

Beta is when you’re testing out your product or service with the goal of receiving feedback. Find potential beta customers at trade shows, festivals, farmers markets, and other types of events where you can sell your product or service to a relatively small group of people. Consider offering discounts in exchange for customer feedback. While you can make some money with the beta, don’t let it distract you from your goal of testing and improving your idea.

You may be tempted to spend several months (or years) creating a new product to sell before launching it to a large market. We recommend starting small and thinking big. Get your product or service out to a few people as quickly as possible to receive feedback so you can tweak the product or service before going full-fledged.

Work Part-time for Your Home Business

Entrepreneurs take calculated risks. If you’re currently employed, it’s wise to use your free time to evaluate whether your idea has the potential to generate income before jumping ship. Sell the product or service part time to determine if it will sell before giving up your full-time income.

Offer Your Product or Service at No Cost

If you’re offering a service, find clients who require your expertise. Offer to work for them for free, but request an online testimonial in return. By working for free, you can gain valuable experience, build your portfolio, and build a quality online presence with positive reviews.

Run a Crowdfunding Campaign

A great way to test your business idea without spending a lot of money is to run a crowdfunding campaign. This is preselling a product before you’re ready to deliver it so you can raise money to create it. Crowdfunding is a great way to determine if there is a market for your product. Typically, a crowdfunding platform charges a 5% fee of the total amount raised plus a 3% transaction fee.

Use a crowdfunding platform, like Kickstarter, to

Use a crowdfunding platform, like Kickstarter, to receive product validation and raise capital for your idea.

3. Weigh the options before choosing your legal business structure

You need to determine the right legal structure of your business. The business structure will not only affect the amount of taxes you pay each year, but it also affects the protection of your personal finances in the event of a lawsuit or other serious matter.

Many business owners choose to start as a sole proprietorship. A sole proprietorship leaves the owner personally liable for all obligations of the business because there is no separation between personal assets and those of the business. Ease and low cost are two main reasons why a new business may start as a sole proprietor, allowing one to prove that their small business idea is viable.

If someone sues you and you are a sole proprietor, you have may have to pay money out of your own pocket. If you were an LLC or corporation, only the business assets would be at risk.

FAQs About Home Business Ideas

  • How do I start a small home business?

Wondering how to start a small home business? Here are 8 steps to starting an online business:

  • Choose an online business model that suits your business
  • Identify your target market
  • Identify the problem that your business is solving
  • Know your competitors and how you are different from them
  • Choose a sourcing strategy that your customers will love
  • Set up your payment system so you can get paid 
  • Test your business idea in the simplest way possible
  • Create your marketing strategy to start promoting your business
  • How do I make money from home business ideas?

There are many ways that online home business ideas make money. You could charge per product, create subscriptions, build affiliate links, and so much more. Once you have decided your business model you can start brainstorming the exact home business idea for you and get started.

What is a good business to start?

A good business to start is usually one that fills an unmet consumer need. Think of any everyday problem that’s yet to be solved or ways to improve an existing solution by making it faster, cheaper or easier to use. Preferably, your idea should be something that you’re passionate about or have some existing level of expertise.

Choosing the entrepreneurship that’s right for you will also depend on your financial situation. Some businesses, such as dog walking, have low start-up costs, while others, like a restaurant, may require considerable investment. And if you’re looking for a get rich quick scheme, you may be disappointed. Most small businesses take considerable time and effort before turning a profit.

Starting a business from home

Many entrepreneurs start a small business because they like the idea of working from the comfort of their home and setting their own hours. And while this is a great perk, it also limits the type of business you can create. Manufacturing products, for example, might not be feasible from your living room. Additionally, you may need to consider the zoning and legal restrictions in your particular neighborhood, and how your business will affect your neighbors and those who live with you.

7. Build your team

Unless you’re planning to be your only employee, you’re going to need to recruit and hire a great team to get your company off the ground. Joe Zawadzki, CEO and founder of MediaMath, said entrepreneurs need to give the “people” element of their businesses the same attention they give their products. 

“Your product is built by people,” Zawadzki said. “Identifying your founding team, understanding what gaps exist, and [determining] how and when you will address them should be top priority. Figuring out how the team will work together … is equally important. Defining roles and responsibility, division of labor, how to give feedback, or how to work together when not everyone is in the same room will save you a lot of headaches down the line.”

10. Grow your business

Your launch and first sales are only the beginning of your task as an entrepreneur. To make a profit and stay afloat, you always need to be growing your business. It’s going to take time and effort, but you’ll get out of your business what you put into it. 

Collaborating with more established brands in your industry is a great way to achieve growth. Reach out to other companies and ask for some promotion in exchange for a free product sample or service. Partner with a charity organization, and volunteer some of your time or products to get your name out there. 

While these tips will help launch your business and get you set to grow, there’s never a perfect plan. You want to make sure you prepare thoroughly for starting a business, but things will almost certainly go awry. To run a successful business, you must adapt to changing situations. 

Free download: Free download: We’ve created a sales plan template you can use to scale customer acquisition.

“Be prepared to adjust,” said Stephanie Murray, founder of Fiddlestix Party + Supply. “There’s a saying in the military that ‘no plan survives the first contact,’ meaning that you can have the best plan in the world, but as soon as it’s in action, things change, and you have to be ready and willing to adapt and problem-solve quickly. As an entrepreneur, your value lies in solving problems, whether that is your product or service solving problems for other people or you solving problems within your organization.” 

Look into insurance

There are a number of risks that come with running your own business, including lawsuits, data breaches or business interruption. So you should start by making sure you have the right insurance.

A good place to start is by looking into a Business Owner’s Policy (BOP). This type of insurance includes three different types of coverage:

  • General liability insurance: This insurance covers bodily injury, property damage or personal injury.
  • Commercial property insurance: Commercial property insurance protects the equipment used to run your business.
  • Business income insurance: If you’re unable to run your business for some reason, business income insurance can help pay for necessary expenses like payroll.

It’s a good idea to speak to an insurance agent for recommendations that are specific to your business.

Step 6: Find Out the Legal Requirements to Run Your Home Business

    Consult a Lawyer to Keep Your Home Business in
Consult a Lawyer to Keep Your Home Business in Legal Order. Simon Battensby | Getty Images

While it's tempting to set up shop and start selling right away, most areas have rules about running a home business. Failure to comply with these rules can result in fines and being forced to close up shop. Here are some legal issues to consider:

  • Check your zoning laws before starting a small business. If you won’t have a sign, work with toxic materials, or see clients in your home, you can usually get a waiver. Also check your homeowners association’s covenants and restrictions, as well as your lease agreement if you rent, for any restrictions on home business. 
  • Contact your city or county regarding a business license. Most areas have a business license requirement. Usually, it’s affordable.
  • Contact your state’s occupational regulatory agency to see if your business is regulated and requires additional permits or licenses. For example, most businesses involving grooming (people or pets), financial help, child care and food are regulated by the state and you may need to get a permit. 
  • Get a sales tax license from your state’s taxation or comptroller’s office if you sell tangible goods. This allows you o collect and pay sales tax.
  • Get a business bank account. The IRS doesn’t like to see your personal and business funds mixed together. 
  • Consider getting an employer identification number. While not required in a sole proprietorship, it is necessary if you employ people. It’s free and the advantage is that you can use it, instead of your social security number on business-related paperwork. 
  • Protect your intellectual property. ​If you’ve invented or created something, you can protect it with a patent, trademark or copyright.

Find a home-based small business idea that works best

How to start a small business at home really depends on your goals. Do you want a part-time gig as a stay-at-home mom or do you want to become a full-time business owner? How much capital do you have to start up? What skills are already in your arsenal that you can tap into? 

A home-based business in today’s world is simply a remote-friendly business where technology can close the gap between you, your suppliers, your employees, and your customers. Altogether, this is a home business opportunity to start small, grow nimbly, and invest conservatively—especially when you can cut out the costs of renting an office.

As you would when starting any type of business, think carefully about your goals and what you enjoy working on to create a new at-home business that works for you.

Tips for Running a Business Out of Your Home

Running a home-based business is a lot different than heading into an office for a 9 to 5 job. You’ll have to deal with considerably more distractions for starters, but you’ll also need to have a certain level of discipline to make it work. After all, you won’t have a boss looking over your shoulder anymore.

In addition to making sure you’re dedicated to your home-based business idea and ready to put in the hard work, here are some additional tips that can help:

  • Have a dedicated space to work. If your home-based business idea is one that actually runs out of your home, make sure you have some separate space to work. This could be an area of your dining room where you’re able to set up a desk, or perhaps you have a basement where you could set up a dedicated office space. Whatever you have to work with, make sure you have a work area where you can go to focus on the work ahead.
  • Set a schedule. When you don’t have a regular job, it’s easy to keep putting off your work to the point it never gets done. With that in mind, it’s smart to set strict working hours like you would have if you worked for someone else. You don’t have to work 9 to 5, but you should have set working hours that never change. 
  • Protect your work time from family and friends. Don’t let family and friends sabotage your home-based business since they know you’re home. Make sure you tell everyone that you are actually working from home, so you cannot chat on the phone, run errands for them, or keep an eye on their kids. 
  • Keep your business financials separate. Once your business is up and running, we recommend taking steps to separate your business finances. This typically involves setting up a business checking account, signing up for a business credit card, and creating folders for receipts and other paperwork you’ll need to keep track of for business and tax purposes. 
  • Learn how to outsource effectively. This tip is for intermediate home-based businesses, but it is still important. As you grow your operation, you’ll want to figure out what you should outsource so you can spend more time on your business. This may mean paying a bookkeeper to keep track of your expenses, or perhaps even outsourcing cleaning and errands at your home so you have more time to work. 

What home businesses did I start myself?

  • 1. Book publishing – Adams Media*
  • 2. Magazine publishing – Careers Group*
  • 3. House painting – College Painters
  • 4. Tourist maps – Nantucket & Cape Cod Maps*
  • 5. Classified advertiser – St. Paul Greensheet*
  • 6. Bicycle rentals – Bob’s Rent-A-Bike
  • 7. College newspaper -Spectrum
  • 8. Used boat sales – Bobby’s Boat Yard
  • 9. College directory – for Simmons College
  • 10. Rowboat building
  • 11. Handyperson service

*Denotes businesses that were sold. Does not include businesses that I began from commercial locations.


Bottom Line

If you’re thinking of starting a small business from home, you must first determine your idea before you build its foundation, launch your business, and grow your customer base. After starting your at-home business, make wise financial decisions. Start small and think big. Once you have built up sufficient income, consider a move to a larger location.