Like any business, starting a home-based business is not to be taken lightly. You must have a clear plan to execute the business whether it is in a brick-and-mortar storefront or your home office. Some important considerations must be taken into account before you officially open for business. Although I am not a financial expert, I hope the following information will be helpful in your new endeavor into entrepreneurship.
Business Idea Before a business can become a reality, you must give some deep thought to the business venture that you are considering. Key questions that you should ask yourself are the following:
- What am I genuinely interested in doing for business purposes? When brainstorming about business ideas, you must decide on a business that you are genuinely interested in. If you are not sincerely interested in what you are doing, you will become bored or tired of the business venture. Ultimately, the business will suffer. Your business should be something that you are truly interested in and passionate about. A key element of success for an entrepreneur is to be happy about what he or she is accomplishing through the operation of their business.
- What is the likelihood of success for this business? Starting a business is a huge step. You must do your research on the industry that you are considering entering. Market research is essential. It will give you an understanding of your industry. Research on your business industry should be done on a global level, a national, and a local level. Knowing your competition is imperative for gaining a foothold in your industry. This research will provide you with the necessary data to gauge whether your business can and will be profitable.
- Do I have the skills required to successfully operate this business? Your home-based business idea should be something that you can achieve. Realistic goals are a must. If you do not have the skill set to achieve the mission and goals of your business, you should obtain the education and training required to do what is necessary for the business before you start the business. Learning as you go is a risky way to operate a business.
- Will I need special financial considerations for the business? One of the major reasons for starting a business is to make a profit. It takes money to get business ventures off the ground. The amount of money required to operate a business varies with the business. Depending on your business, you may need to obtain capital from outside sources whether it is banks or venture capitalists. You must have all of your ducks in a row to get these outside sources to take a risk on your business. Here’s where a business plan will come into play.
Business Plan Do you have a business plan for your business plan? A business plan will help you stay focused on the goals and mission of your business while mapping out a strategy to achieve them. It will help you decide on key factors of your business such as identifying your target audience or consumer and a strategy for reaching financial goals. Banks and potential investors will want to see an extremely well-prepared business plan that will minimize their risk of losses when investing in your business. At the end of the day, the potential for profits is what matters to banks and investors.
Business Administration Before you can officially start your home-based business, you must perform some required administrative duties as a business owner.
Obtain a business license from your city revenue clerk A business license is required to run most businesses. In most local municipalities, a business license can be obtained from the city’s revenue clerk. A business license is the first documentation of the legitimacy of your business to the world.
Register your business with the city for city tax remittance, if applicable In some cases, when you obtain your business license, you can immediately register to remit taxes to the city. The type of tax remittance will depend on your type of business. You will need to ask the city’s revenue or finance officer what type of tax your business will need to register for.
Apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) Before you register with the state, you should obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Even if you are the only person working in your business, it is a good idea to get an EIN for your business. If you think your business will grow enough to one day hire employees, you will need an EIN. The EIN will help you to separate your personal finances from your business finances, which is great for accounting purposes. An EIN is essential for getting a business banking account and bank loans. It also provides credibility to your business, which helps to encourage third parties to do business with you. In addition, your business will be able to establish a credit history with your EIN.
Register your business with the state for state tax remittance, if applicable In most cases, after you receive your EIN confirmation, you should register your business with your state revenue department to remit state taxes. The specific taxes that you will be required to remit will depend on your business type or industry. You may be able to remit your taxes monthly, bi-annually, or annually. You should contact the state’s tax department to obtain the exact process for remitting taxes.
Register your business with industry trade groups A great way to grow your business is by registering your business with relevant trade groups. These groups offer the opportunity to collaborate with industry leaders. Membership in trade groups could provide current local, state, and national information on events, such as trade conferences and workshops, that could be beneficial in the form of business-to-business networking. Networking with other professionals could grow your business exponentially in a relatively short amount of time.
Setup a website No matter the business, most businesses have a website. To show potential partners and consumers that your business is legit, it is important you have a functional and easily navigable website. Often the website is a business first opportunity to make a great first impression. Depending on your business, the website could improve consumer and business partner relationships.
Set up social media profiles on relevant social media platforms All businesses can benefit from social media. Choosing the right social media platform for your business is key. Your business may not benefit from every social media platform. Social media management is very time-consuming. Therefore, you do not want to waste your time and effort on a platform that will not reach your target consumers and potential business partners. It is best to research and observe potential social media platforms for some time before signing your business up.
You must perform these basic administrative duties to prevent headaches for your business down the road.
Now, you have a general idea of some of the necessary steps for starting any business.
