How to Begin a Home Based Business

This blog post will cover how to begin a home based business. There are record numbers of people starting their own small businesses and taking control and ownership of their working life; over 60% of these new business ventures are reported to begin at home.

If you have a business idea for a service or product then a home-business could be for you. Getting started and making your business work can take a lot of effort, but can also be flexible and thoroughly rewarding too.

So, if you have your business idea, what should you do next? Here are a few first steps that I would recommend.

Market research

Market research is a must before starting any business. As a prospective company owner, you need to carry out your research to see if there is a demand for your product or service and to establish whether your business is financially viable.

In your market research ask questions such as:

  • Who are my competitors?
  • Is there room in the market for my products?
  • What can I offer that is different?
  • Who will want to buy my products/service?
  • How much will they pay?
  • How do I let people know that my business is out there?

If from your research, you decide that your business is a real possibility and you are going to move into the home-small business market, then a business plan is the appropriate and effective next step to company launch.

Business name

You will need to choose a trading name for your business, which can be both fun and daunting dependent on how creative you are. Your name may also depend on the business structure that you choose for your company (see business structure section below). Remember to choose carefully, because a name change later on could cost you money and reputation.

Business planning

Creating a business plan is invaluable, it provides your map to success by detailing direct goals and objectives and how you will manage them through to achievement.

Your business plan also provides you with a document to use with banks and lenders if you are seeking business funding, for it includes managing cash flow, profit and loss projections and about your business in detail.

You should also seek as much advice as possible. Speak to your local business network groups, who have many self-employed businesses as members, ask their advice and for their help in your business start-up.  See if there are any local talks or seminars from entrepreneurs, look online for lots of tips, ask friends or family who may have started a business and will be able to give you important information…even think about speaking to your bank if they offer this facility.

Business structure

You will need to choose a structure for your business; whether it is a sole trader, a limited company or a partnership (these are the most common types). The structure of your business will determine what you are legally responsible for, what official paperwork you need to complete for taxes, how you will draw your profit and what happens if losses are made.

A sole trader runs the business as an individual and therefore if you select this business type you alone are responsible for the business, although you can employ staff.

A limited company is responsible for itself and everything that it does. Its business finance is kept separate from your personal ones and tax is based on corporation tax.

A partnership is where you and a partner will share the responsibility for the business. Profits are shared and each partner pays tax on their share.

Register your business

There are different ways to officially register your business dependent on the structure that you choose. A sole trader will register with HM Revenue and Customs for self-assessment and will trade under your personal name or a selected business name. A limited company needs to register with Companies House and have at least one director and one shareholder; it will trade under a company name that you have selected.

Select a bank account

Open a new business account if you are a limited company or use a personal one for a sole trader. Speak to your bank or your accountant who will provide you with sound financial advice.

 

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