4 Mistakes to Avoid When Starting a Home-Based Business
Thursday, December 13, 2018, 6:00 AM | Leave Comment
Starting a home-based business is stressful. For many first-time entrepreneurs, the hardest part isn’t filing the paperwork or getting your first customers, it’s navigating the world of business ownership all on your own.
It’s easy to make mistakes when you’re figuring it out alone, but in the business world, small mistakes can cost you big.
Use these tips to avoid common mistakes many first-time business owners make. That way, you can get your business off the ground without the stress.
Image via Unsplash
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Don’t wait to make it official
There are several important benefits to adopting a legal business structure like an LLC or corporation rather than operating as a sole proprietorship.
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Managing business finances and paying taxes is simpler with a business bank account. But you can’t open a business account unless you’re officially a business.
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Banks prefer lending to LLCs and corporations over sole proprietorships, which are viewed as riskier.
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Registering as an LLC or corporation protects your personal assets from business liabilities. If you operate as a sole proprietor or general partnership, your personal assets can be seized to satisfy business debts.
To register your business, file paperwork with your state’s Secretary of State and the IRS.
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Keep it legal
If your home-based business doesn’t require signage or generate a lot of traffic, you can probably skirt around zoning ordinances. But if your business attracts attention or affects the character of the neighborhood, you could find yourself in trouble with the local government.
Zoning laws restrict where businesses can operate. Businesses must apply for home occupation permits or business licenses before operating out of a home.
If the permit is denied, you can apply for a zoning variance to get special permission to open your business. But if the variance is denied, you’ll have to choose another location for your business.
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Don’t be afraid of debt
A fear of debt can hold you back from growing your business. While it’s wise not to take on more debt than you can handle, you shouldn’t avoid debt entirely.
Financing is a valuable tool for quickly starting and scaling businesses — according to SCORE, 77 percent of business owners say access to capital is important to their business’s success.
Entrepreneurs who avoid debt face slower growth, lower profits, and more stress in the early stages.
Home-based businesses have several options for small business lending, including traditional options like SBA loans, term loans, and business lines of credit, as well as less conventional funding like invoice financing and merchant cash advances.
Do your research to determine the best funding option for your business.
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Keep your home office sacred
Nothing beats the convenience of waking up and heading to a home office just a few feet away. But if you don’t maintain a clear distinction between “home” and “office,” working from home could do more harm than good.
Working from home opens you up to constant distraction. Between family interruptions and household chores competing for attention, it’s harder to maintain productivity at home than at an off-site office.
By setting up a home office that’s separate from the rest of your home and professionally furnished — and setting rules around work time versus family time — you can reap all the benefits of a home office without the downsides.
Opening a home-based business is one of the easiest ways to get started in entrepreneurship. However, that doesn’t mean it’s foolproof. There are a lot of mistakes that can derail your business goals or hurt your finances. But with a great idea, a strong business plan, and these tips, you can avoid the expensive mistakes and find your path to business success.
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