Warning: top tips for starting a home business you can ignore at your peril...

In today's economy a lot of people have started looking for alternative ways to secure their future. No one really knows for sure what the future of the job market is going to be either in terms of available jobs OR types of job opportunities. One thing that has become clear though is that one of the most viable options to working for someone else is working for yourself. And one of the most attractive 'work for yourself' options is the home business. Essentially a home business is a small business that operates from the business owner's home office. Some home businesses may employ one or two staff members, which are usually immediate family.

Working from home is certainly a very attractive option for a large number of reasons:
  • being your own boss
  • flexible working hours
  • less expenses (travelling costs, premises hire)
  • greater rewards if you're prepared to put in the hard yards.

Avoiding costly mistakes when starting up a home business:

Starting a home business might sound like a good idea once you've figured out a good way to go about making money. You will certainly save a heap on office space and if you've already got a computer and all the various peripherals you'll save there too. However, depending on what type of business you plan to operate there are legal matters you really should check into before you go too far.
  • Zoning Laws
  • Do you need to be a 'legal entity'
  • What are your tax reporting responsibilities
  • Do you need licenses and permits
  • Protection of intellectual property
  • What sort of signage are you allowed to display

Zoning Laws

Working from home is not always legal.  All councils and municipalities have zoning laws which limit types of activities that can be operated from a domestic dwelling.  If you're running a home business that doesn't require much more than a computer and other office equipment ie writer, consultant, affiliate marketing etc you will most likely be fine but if you want to employ staff, put up signs and have customers visiting the premises you will no doubt find that there are laws in place to regulate those activities.  So call your local council or zoning board for more information before starting.

Another thing to check out if you live in a housing community or type of co-op are the regulations for that particular community or co-op.

Become a Legal Entity?

Running your own business carries risks, not the least of which is legal or public liability for any products or services you sell / provide. For instance, if you are selling a product you've created yourself and someone causes injury or harm to themselves through its use, you could well be liable for that.  Likewise, if you are providing a service and in providing that service you cause damage to person or property, you are legally liable.  Check insurance requirements and find out what is the safest way to protect yourself.
The other thing to consider is creditor's claims should you become bankrupt; if you are not protected by being some form of business entity then your home and your personal assets will be at risk from creditors claims.

Quite often becoming a business entity like a limited liability company will give you personal liability protection BUT DO YOUR HOMEWORK.

Check out your tax reporting responsibilities!

Contact your Taxation Office, or go to their website, and investigate what your tax and reporting obligations are.  Fines for tax evasion and incorrect reporting are a serious offense and very expensive to rectify.

Find out what you need in the way of licences and permits....

Running a home business does not exclude you from federal, state or local permit and licensing regulations.  Again, do your research before you start so you have everything ready to go prior to 'opening your doors.'

Intellectual Property....

If you have invented something, whether it's a physical product, a name, a digital item or whatever, you have the right to protect it from copying and theft by taking out a trademark, patent or copyright on it.  Without this protection others can use your work without compensating you.  So, if you're using intellectual property as part of your business, protect them before investing time and money in your business.  Most countries have a copyright office or department of some description.

What type of signage is permitted....

Another important consideration; if you are permitted to run a business from your home, are you allowed to have signs up and if so, what type, size etc.  This information will be freely available from your local council offices or equivalent.  Don't spend the money on expensive signage only to find that you aren't allowed to use it because it doesn't conform.

Top Tips

Starting a home business is an exciting prospect and should also be a rewarding one.  Here are a few tips to help make sure it is:
  • Do the important preparation work BEFORE you start as it will save you money in the long run
  • Do your research on the viability of whatever it is you're going to be selling or providing
  • If in doubt about the legalities of anything, consult a lawyer.
If you're offering digital products, consulting, running a multi level marketing or online business then obviously some of the above will not apply.



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