The ABCs of Starting a Small Business at Home
- Hosted October 16, 2020
- By Admin
As commercial rents increase and overhead get steeper, many entrepreneurs are swapping out the office for the WFH life by launching their small businesses at home. If you’re one of the many entrepreneurs wondering how to start a business in your home—whether that’s in your garage, attic, or kitchen—we’ve got you covered.
Here are the ABCs of starting a small business from your home. Keep in mind that as always, it’s best to seek advice from a professional.
How to Start Your Business at Home:
A: Account: The lifeblood of your business is a bank account. What you need from your account depends on your business. There are many different options to consider. Azlo, for example, offers optimized and automated digital banking solutions, which can be fully managed from the convenience of your at-home business.
B: Business Banking: Experts advise opening a separate business account from your personal account so that you do not commingle funds.
C: Calculate Your Budget: Before launching any business, you may want to map out a few budgetary considerations, such as:
- How much do I need to pay myself?
- How much do I expect to pay in monthly bills?
- How much am I trying to put away in savings each month?
D: Determine EIN Eligibility: Determine your eligibility for an employee identification number assigned to you by the IRS. This could be an important step in being a compliant business entity in the United States.
E: Establish a Home Office Space: Whether you’re in the garage, spare room, or at the kitchen table, consider dedicating a space for your home office. Keep in mind that come tax season, you may be able to write off the square footage of a dedicated home office space, so setting that space aside for only your business can come in handy.
F: Funding: Sometimes, as a new entrepreneur, you need startup capital. Just because you’re operating your business from home, doesn’t mean you can’t potentially secure funding from investors, small business loans, or through crowdfunding.
G: Grants: An extension of funding, grants can be a great way to acquire capital for your business. There are numerous small business grants available to entrepreneurs.
H: Hire Employees: This may not be a catch-all item if your business model does not require you to hire employees. However, after you’ve established a viable business entity, you may look to grow the business by hiring employees.
I: IT: It’s helpful to see to it that your computer, smartphone, tablet, software, and systems are all in line to help your business function from day-to-day. Having reliable IT support can give you incredible peace of mind.
J: Joint Account: If you have a business partner, having a joint account can be a good way to ensure both of you have equal access to the company’s finances.
K: Keep Good Credit: Keeping good credit can be crucial when the time comes for you to secure a loan for your business. New businesses often don’t have the necessary credit history for traditional loan products, so lenders may rely on the business owners’ credit score.
L: Liabilities: Speak to a professional about your particular situation in order to best understand your possible liability.
M: Marketing: Even if your business is an at-home endeavor, it doesn’t mean it needs critical marketing elements, such as a website and social media accounts. Consider how your at-home business will market its goods or services.
N: Net Income: You should know how profitable your business is each month. After calculating your gross revenue and then subtracting the totality of your business expenses, you will identify what your net income is. Where and how you choose to invest, save, or repurpose that income can be defining decisions for your at-home business.
O: Overdraft: Knowing whether you’re at risk at overdrafting your bank account, in which you spend more than the account has funded, will likely be a priority. You may want to explore a business banking solution that rethinks digital banking in a way for you to see your funds any time, anywhere.
P: Profits and Loss Statement: A Profits and Loss Statement (P+L) is a useful tool for understanding your net income. It may be even more helpful in a home or remote environment, where transactions may be happening out of your purview. This clean and concise way to see your company’s profitability can be a lifesaver while you’re working at home.
Q: Quitting Time: If you’re working from home, don’t spend all your time working.
Schedule some time for rest, personal time, and family time.
R: Register a Domain Name: If you’re working from home, you may not have an office for people to come see your business. Registering a domain name is the first step to having a website, which can be a crucial element for small businesses operating from home.
S: Savings and budgeting tools: Some business bank accounts provide savings and budgeting tools. Essentially, they are funds within your checking account that allow entrepreneurs to use that money in a focused or concentrated way, such as payroll, saving for taxes, or even to make a big purchase for your business.
T: Taxes: Tax season is a critical time for entrepreneurs. From year-end taxes to estimated quarterly taxes, having a plan for meeting the tax demands of your business should be a proactive endeavor. Having a reliable and secure online banking solution can be a great way for at-home small businesses to keep themselves on track toward meeting these critical deadlines.
U: Understanding Insurance Needs: Keep in mind that your business will likely need some kind of insurance provider. Even in a scenario where you work from home, having insurance is a way to secure your business from any day-to-day liability. Talk to an insurance professional to understand what may be right for you.
V: Venture Capitalists: Venture capitalists, often referred to as VCs, are investors looking to back up-and-coming businesses. They can be great resources for you to explore getting capital for your business. Don’t let the fact that you’re working from home deter you from getting the capital you need to take the next step.
W: Website: If you’re working from home, having a clean website can help you direct potential customers to your business.
X: X-Factor: Determine within your business’ finances what that X-factor will be when it comes to maintaining your financial books. In the modern business world, it may be having a secure remote banking solution that will give you real-time tools to help you make more informed decisions.
Y: Year-End Bonus: If you’re a small business owner working from home, logging long hours and managing to secure new business while maintaining your day-to-day workflow, try to get yourself a little year-end bonus to reward your hard work.
Z: Zero Debt: From having no balance on your credit card to having all of your debts and loans paid off, having zero debt can help your financial confidence and day-to-day business operations. Showing the ability to keep zero debt can also help improve your credit score, which can make you a more appealing candidate to business loans, grant opportunities, and investors.
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