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Starting a business is an exciting undertaking. Without proper planning, however, it can be easy to get overwhelmed with the process. Starting a business from your home is similar to starting any other business, with the only exception that you will not need to rent office space for your business. In this article, we walk you through the process by presenting the steps to start a home business.
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Develop and Fine-Tune Your Business Idea
If you’re thinking about how to start a small business at home, chances are you already have an idea of the type of business you want to start. If not, your first step should be identifying your concept. If you have a business idea, you’ll want to fine-tune it before starting your home business.
Consider Your Expertise
You have valuable insights, knowledge and experience that can shape your business idea. Consider your expertise as you develop the idea further. This may interest you : Loud music becomes a problem for homeowners living near West Phoenix bar. You can also use this information in your business plan, which is explained in more detail below.
What Problem Can You Solve?
When you’re refining your business idea, think about what problem you’re trying to solve. To see also : How James Clarke founded Clearlink. If you are in the early stages of developing a business idea, think of a problem you can solve and develop the business idea from there.
Look at the Competition
Research your competitors. On the same subject : Netflix’s vision for the future of streaming: More expensive or less convenient. Where do business offerings overlap? How can you differentiate yourself in these areas? And are there areas where the competition is lacking, or are there holes in the products or services they offer? If so, this might be a great opportunity for your business.
Create a Business Plan
A business plan is vital for two reasons: it will help you articulate your business goals and you can use it to present to lenders and investors to obtain funding for your new business.
Business plans can vary in the amount of detail provided and the length of the plan, but generally a business plan includes:
Determine Your Business Entity
You’ll need to determine the legal structure of your business, such as a sole proprietorship, partnership, LLC, or corporation—each of which has advantages and disadvantages.
Generate Business Name Options
Your business name is one of the most fun parts of the business start-up process. It can also be one of the most stunning. You want a name that tells customers, clients, competitors and others in the market who you are and what you do, and you want the name to be memorable and creative so it packs a punch.
The company name must be available in the country where you will be doing business. Our business name generator can take some of the stress out of the process by generating business name ideas that are available in your country.
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Click on the country below to get started.
Register Your Business Name
Once you have decided on a business name, you need to register the business name in the country where you will be doing business. The specific requirements for registering your business name will vary depending on your business structure (ie whether it is a corporation, partnership, LLC, etc.) and the location where your business will be registered. For most small businesses, registering your business name is done by filing a form with your state and/or local government.
Register Your Business
Unless your business is a sole proprietorship, you will need to register your business with a government agency, often the Secretary of State, in the state in which you will be doing business. You are considered to be “carrying on business activities” based on the following:
If you plan to sell in other states outside of your parent company, you may also need to obtain a foreign qualification in other states where you do business. In order to obtain a foreign qualification, most countries require the company to file a certificate of authorization in that country and a certificate of good standing from the country of incorporation.
Get a Business License
Once you register your business, you will need to obtain a business license. Depending on the industry of your business and the specific requirements of your state, county, and municipality, you may need licenses for the following:
Don’t assume that your business doesn’t need a license because you’re a consultant or self-employed. It is best to review the relevant codes and regulations. If in doubt, talk to a business attorney in your area.
File IRS Form SS-4 To Obtain an EIN
An Employer Identification Number (EIN) is required for businesses that have employees or are required to report excise taxes. The process of obtaining an EIN is quick and easy. To get an EIN, you’ll need to file Form SS-4, which you can do online. If you are self-employed with no employees, you can use your social security number to report your business income.
Get Your Finances in Order
Your financial needs will vary greatly depending on the type of business you plan to open. You’ll want to create a proposed budget and financial projections to ensure you’re financially prepared and present yourself to potential investors and lenders.
Create a Budget and Financial Projections
Before starting your business, you will want to confirm that the income will be sufficient to be sustainable. You will also want to estimate how long it will take to turn a profit and what the expected profits will be. For example, a service-based consulting business is likely to have very low start-up costs, while a product-based business, such as a home-based catering business, may have higher upfront costs.
Financial projections are estimates of how much money a company will earn and spend in two to three years. If you are looking to obtain a loan or other financing, potential lenders and investors will likely want to see your financial projections so they can clearly understand when their investment in your business will pay off. You can create your own financial forecasts or find a template to use, such as those available in Microsoft Excel.
Develop a Plan To Keep Tabs on Finances
Getting your finances in order also includes thinking about how you will process and record your sales, expenses, revenue and income once the business is up and running. There are several third-party providers that can help with merchant account services, and here we’ve ranked the best options for small businesses.
Open a Business Bank Account
Opening a business bank account helps separate personal and business income and expenses. Using a business bank account can make it easier to track and record business income and expenses for accounting and tax purposes. You can open a business bank account at a local branch. You may also want to consider getting a business credit card. Get step-by-step instructions on how to open a business bank account.
Consider Obtaining Business Insurance
If you are a sole proprietorship or partnership, you may want to consider getting business insurance to cover your business-related liabilities, as there is no liability protection in these business structures. Even if you’re set up as an LLC or corporation that offers personal liability protection, you may want to consider getting business insurance based on the nature of your business.
Create a Marketing and Sales Plan
Before starting your home business, you may want to create a marketing and sales plan to set yourself up for success. Consider how customers and buyers will find out about you. See who in your network could be a potential client/customer or can help spread the word about your business. And assess whether there is room in your budget for advertising, marketing materials or sales training.
Bottom Line
Starting a business is exciting, but it takes a lot of hard work and planning – whether you’re starting a home business or not. With careful planning, attention to detail, valuation and research, you will be in a good position to not only start a business, but also maintain a successful business.
Find Legal Answers For Your Small Business
Nolo offers hundreds of consumer-friendly legal do-it-yourself products written in plain English.
Frequently Asked Questions (FAQs)
I know my business, but sales and marketing scare me. How can I get help?
Many small business owners are experts in their business, but sales and marketing can be intimidating. There are several resources online that can help you, or consider investing in the services of a sales and marketing consultant to help you get your business off the ground.
Although you don’t need a website to start a business, a virtual presence is often an important tool when it comes to marketing and sales. If you don’t want to create a website, you can start your business by posting on third-party sites like Angi or Yelp. Learn more about how to create a business website.
