| Fifty million home-based businesses will be in operation | | | | start-up costs. SBA Publication #M925, The Business |
| by 1997, according to Link Resource's National | | | | Plan for Home-Based Business ($1) is helpful. STEP |
| Work-at Home Survey. All around the country, people | | | | #10 GET AN IDENTIFYING NUMBER If you are the |
| who want more control over their lives are starting | | | | sole proprietor of the business and have no |
| home businesses In New Orleans, Rick Hart's home | | | | employees, you may either use your Social Security |
| based cajun Cargo ships seafood nation wide. In | | | | number or an Employee Identification Number (EIN) as |
| Palatine, Illinois, Stephaine Heavey works from home | | | | the business number on official forms. If you have |
| designing and selling original patterns for fabric dolls. | | | | employees, or the business is set up as a partnership |
| And in Dallas, Lisa McElya published the Dallas Party | | | | or corporation, you must obtain an EIN. To do this, |
| & Event Planners Guidebook from the entire first | | | | complete IRS Form SS-4 (Application for Employer |
| floor of her two-story home. These three people are | | | | Identification Number) and file it with the nearest IRS |
| living the new American dream of owning a business, | | | | Center. STEP #11 OBTAIN A SALES TAX PERMIT If |
| but avoiding the high overhead and start-up costs of a | | | | the product or service you sell is taxable, you need a |
| commercial location. If the idea of working from home | | | | state sales tax permit. Call the local tax agency, |
| is appealing, but you don't know where to begin, here is | | | | explain the type of business you have and what you |
| a step-by-step guide. STEP #1 DECIDE WHAT PART | | | | sell, and ask if you need to collect sales tax. If you do, |
| OF THE HOUSE TO USE Select an area away from | | | | they will send you the necessary information and |
| family activity. The perfect space is a separate room | | | | forms to complete. You also use this tax number |
| (or perhaps the garage), but any area will do, if it can | | | | when your purchase items for resale. STEP #12 |
| hold all the business supplies and equipment, and also | | | | OBTAIN LICENSES & PERMITS It's very |
| provide enough work space for desks, tables, or | | | | important not to overlook any necessary license or |
| counters. STEP #2 DETERMINE HOW MUCH TIME | | | | permit. For example, some cities and counties require a |
| YOU CAN SPEND ON THE BUSINESS Many people | | | | general business license, and most have special laws |
| start a home business on a part-time basis while | | | | regarding the preparation and sale of food. Call City |
| raising children or working outside the home. Others | | | | Hall to find out what is need for your particular |
| start full-time when family and finances allow. However | | | | business. In addition, Chamber of Commerce provide |
| you begin, figure out how may hours per week you | | | | information on city, county and state licenses and |
| can devote to the business Make a weekly chart of | | | | permits. STEP #13 SELECT BUSINESS CARDS, |
| your activities, examine it, and determine where the | | | | STATIONERY, BROCHURES Spend time on the |
| business fits. Don't assume you have time and find out | | | | color, design and paper for these items. They make a |
| later you don't. STEP #3 DECIDE ON THE TYPE OF | | | | definite impression-good or bad- on the people who |
| BUSINESS Make a list of things you like to do, your | | | | receive them. If you are not certain what is most |
| work and volunteer experience, and items you own | | | | suitable and effective, consult a graphics designer or a |
| that can be used in a business. Look over this line-up, | | | | creative printer whose work you like. STEP #14 OPEN |
| and using ideas from it, list possible businesses to start. | | | | A BUSINESS CHECKING ACCOUNT Call several |
| Eliminate any business that isn't appealing or doesn't fill | | | | banks to find out what services they offer, and what |
| a need people have. For ideas on different types of | | | | minimum balance, if any, must be maintained to avoid |
| businesses, consult the end of this article. Other ideas | | | | paying a service charge. Also ask about credit card if |
| can be found in the source material listed at the end of | | | | you plan to offer this convenience to your customers. |
| this article. STEP #4 CHOOSE A LEGAL FORM The | | | | Bank fees can be significant, so shop around for the |
| three basic legal forms are sole proprietorship, | | | | best deal. If your personal checking account is with a |
| partnership, and corporation. The most common is the | | | | credit union, see if it can also provide a separate |
| sole proprietorship. As its name implies, a sole | | | | business account. when you open your account, you |
| proprietorship is owned by one individual. It is the oldest | | | | may need to show the assumed name certificate and |
| form of business, the easiest to start, and the least | | | | business license. Finally, investigate obtaining a credit |
| complicated to dissolve. Here are some of the | | | | card in the business's name. If this is not possible, set |
| advantages of this business form: 1. You own all the | | | | aside a personal credit card to use for business |
| profits | | | | expenses. STEP #15 SET UP RECORD-KEEPING |
| 2. Your business is easy and cheap to organize. You | | | | SYSTEMS Put together a simple and effective |
| don't need any government approval, although you | | | | bookkeeping system with an 8 1/2 x 11" three-ring |
| may be required to carry a city, state or county | | | | binder, columnar pad sheets and twelve pocket |
| license. Your only other obligation is to notify the | | | | dividers from the office supply store. For each month, |
| Internal revenue Service (IRS) for the purposes of | | | | set up columnar sheets for income and expenses. Use |
| sales tax. | | | | a pocket divider for each month's receipts, bank |
| 3. You're the boss | | | | statement, deposit tickets, and canceled checks. In |
| 4. You enjoy certain tax savings. You must pay | | | | addition, an automobile log for business mileage, and |
| regular individual taxes on your income, property, and | | | | filing system for correspondence, invoices, supplier |
| payroll, but these are not levied as special taxes, as | | | | catalogs, client records, etc. are two other useful tools. |
| with a corporation. You will also have to pay sales tax | | | | For more information on record-keeping, see IRS |
| which you have received from your customers. | | | | publication #583, Information for Business taxpayers. |
| 5. Greater personal incentive and satisfaction. Since | | | | STEP #16 CHECK IRS REQUIREMENTS If you |
| you have your investment to lose if your business is | | | | comply with basic IRS guidelines, you can deduct a |
| not successful, you should be more willing to put time, | | | | percentage of normal household expenses (mortgage, |
| thought, and energy into the business. And when your | | | | interest, taxes, insurance, utilities, repairs, etc.) as a |
| business is successful, you enjoy maximum sense of | | | | business expense. see the box accompanying this |
| accomplishment since you know its success was | | | | article and, for more detailed information, IRS publication |
| dependent upon your decisions about your | | | | #587, Business Use of the Home. Also become |
| management ability alone. For more information about | | | | familiar with these IRS forms: Schedule SE |
| this and other forms of business, send for the U.S. | | | | (compensation of Social Security Self-Employment |
| Small Business Administration (SBA) Publication MP25. | | | | Tax) and Schedule 1040 ES (estimated Tax for |
| Selecting the Legal Structure for Your BUsiness (50 | | | | Individuals). Depending on circumstances, you may |
| cents). It outlines the advantages and disadvantages of | | | | have to file them. STEP #17 OUTFIT THE BUSINESS |
| each legal type of structure. If after reading it you are | | | | Make a list of everything needed to start the business, |
| still uncertain what form of the business should take, | | | | but before you buy anything, look around the house for |
| consult an attorney. STEP #5 DETERMINE WHERE | | | | things you already own that are usable. When you are |
| THE MONEY WILL COME FROM There are three | | | | ready to start purchasing, check the classified ads and |
| ways to finance start-up costs: use your own money, | | | | garage sales. Both are good, inexpensive sources for |
| obtain a loan, or find investors. If possible, it is better to | | | | office furniture, typewriters, computers, answering |
| start small, use your savings, and not worry about | | | | machines, etc. But only what is absolutely necessary |
| repaying a debt. also keep in mind that since you are a | | | | for start-up, and wait until the business is off the |
| home-based, chances of qualifying for a loan or finding | | | | ground to get the extras. STEP #18 DECIDE ON |
| investors are slim until the success of your idea is | | | | TELEPHONE REQUIREMENTS Call the telephone |
| proven. STEP #6 GATHER INFORMATION Spend a | | | | company to find out the cost of a business phone in |
| few weeks researching home-based businesses. A | | | | your area. If you cannot afford a separate business |
| library or bookstore can provide numerous books on | | | | line, investigate the telephone company's regulations on |
| business basics, and on the specific type of business | | | | using your personal phone in a business. It may be |
| that interest you. Homemade Money by Barbara | | | | possible to do this if you follow certain guidelines. Keep |
| Brabee (see sources) is an excellent book to start | | | | a record of long distance business calls as they are a |
| with. If you are considering a computer business, get in | | | | deductible expense. Finally, consider the benefits of an |
| touch with the association of Electronics; Cottagers, | | | | answering machine to catch calls when you are out. |
| P.O. Box 1738, Davis, CA 95617-1738. To keep | | | | STEP #19 CHECK OUT THE POST OFFICE & |
| informed of what is happening in home business world, | | | | UPS Using a post office box as the business address |
| contact National Home Business report, P.O. Box 2137, | | | | down plays the fact you are home-based. It also |
| Naperville, IL 60566, for subscription information; and | | | | prevents customers from dropping in at all hours. While |
| Mothers Home Business Network, P.O. Box 423, East | | | | looking into box rental, ask for information on the |
| Meadow, NY 11554 (send SASE for free information). | | | | various postal rates, particularly bulk rate, if you plan to |
| STEP #7 CHECK ON ZONING RESTRICTIONS Find | | | | do large or specialized mailings. If you mail many |
| out how your property is zoned, the call City Hall and | | | | packages, check out United Parcel Service (UPS), as it |
| ask what regulations apply to home businesses in that | | | | is less expensive than the Post Office. STEP #20 |
| zone. Also, if you rent or live in a condominium, check | | | | PURCHASE THE NECESSARY INSURANCE Check |
| the lease or homeowner's association rules to be | | | | with your homeowners insurance agent about a rider |
| certain a home business is allowed. Generally, if you do | | | | for your existing policy or the need for a separate |
| not annoy your neighbors with excess noise, odors, | | | | business policy. Also make sure you have adequate |
| and traffic, you will not be deterred from running a | | | | personal and product liability coverage. Shop around, |
| business at home. The neighbors may not even be | | | | as each company has different rules regarding home |
| aware of the business, but it is necessary to know | | | | businesses To save money on medical insurance, join |
| exactly what you can and can't do before you start. | | | | an association and participate in their group plan. One |
| This is important should any problems or questions | | | | such body is The National association for the |
| arise later. STEP #8 PICK A BUSINESS NAME AND | | | | Self-Employed: they can be reached at 800-527-5504. |
| REGISTER IT If the business you choose is different | | | | STEP #21 ORGANIZE THE HOUSE & |
| form your name, file an assumed (or fictitious) name | | | | YOURSELF To have more time for business, organize |
| certificate with the county. You are notified if another | | | | and simplify household routines. Start by holding a |
| business already has that name, so you can select a | | | | garage sale to get rid of unnecessary possessions. |
| new one. Do this before investing in expensive | | | | Next, have a family conference and divide household |
| stationery and brochures. It costs only a few dollars to | | | | duties, making sure each person does his or her part. |
| file, and it protects the business name from being used | | | | The, set up a planning notebook to keep track of |
| by someone else in the county. STEP #9 WRITE A | | | | appointments, things to do, calls to make, errands to |
| BUSINESS PLAN A good business plan clarifies your | | | | run, shopping, etc. Finally, set up a work schedule so |
| ideas and establishes a plan of action. A good | | | | you won't get sidetracked by TV, neighbor's visits, |
| business plan should include a description of what you | | | | snacking, and telephone calls. Creating and operating a |
| are selling, your background and qualifications, who the | | | | home business is a wonderful and rewarding challenge. |
| prospective customers are and where they can be | | | | The satisfaction is not only in the money earned, but in |
| found, what is needed to build the business, how you | | | | doing what makes you happy. |
| plan to promote, and how much money is need for | | | | |