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5 Steps to Starting a Home Based Business

Apr 11, 2008
Starting a home based business can be easier or harder than you think, depending on what you already know about home-based businesses. The important thing to remember, however, is that starting a home-based business is possible for anyone. It also has every chance to succeed as long as you're willing to work hard for it!

5 Steps to Starting a Home Based Business

Here are the general steps that you must take if you've decided upon establishing a home based business.

Step 1 Decide on a form of business.

Choose the form of business that will best fit your needs and goals. There are three basic kinds of business forms: sole proprietorship, partnership, and corporation.

Sole proprietorship is the simplest form of all. It is the easiest to set up, but if your business goes bankrupt, you're personally liable to settle all your business obligations. Partnerships are a notch more complicated and also comes with its own set of pros and cons. Lastly, you can opt to make your home based business a corporation. With a corporate setup, you will need the involvement of other people in this endeavor and you'll also have to comply with a more complex set of requirements.

Step 2 Register your business name.

It is important to register your business name as soon as possible. In the near future, your business could grow into a household success and if you hadn't registered your business name by then, other companies could easily register it for themselves and steal your customers right under your nose!

Choose your business name very carefully because it's better for businesses in general to have one name throughout its lifetime. Be aware as well of the difference between your business name and trade name. McDonalds, for instance, is the trade name of the world-famous fast food chain but what many people don't know that it isn't its business name as well!

Step 3 Turn your home based business into a legitimate enterprise.

Simply put, make sure that your home based business has all the legal documents and licenses it need to fully operate. The type of license you'll need will depend greatly on the kind of business you wish to set up. Selling food online for instance will require you to comply with certain safety and hygiene guidelines something that may not be required from a home based business offering legal transcription services online.

Step 4 Know what taxes you have to pay.

A lot of home based businesses have a hard time getting off the ground simply because their owners didn't take the time to research about the fiscal aspect of their business. It's only when it's too late that they realize they owe so much in taxes.

Like any other business, a home based business is required to pay income tax. If you don't know how much your taxes are at the moment, you can always pay an estimate amount. You should also pay self-employment tax if you're running a one-man company. And then there's the state sales tax certificate you'll have to pay for as well if your business is also engaged in selling.

Step 5 Know the zoning regulations in your area.

While it's certainly encouraged not to court trouble when there's none, it's better to keep yourself informed about zoning regulations in your area. Keep a low profile and don't broadcast to your neighborhood about your home based business if there's no need.

With these tips, you'll surely be able to start your home based business in no time!
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