Now is an exciting time to kick off your home-based small business dream and join the “Great Rethink” (in the U.S. since the COVID-19 pandemic). Whether you are selling goods or services, you want to optimize your chances of business success.
A business law attorney will help you solidify your vision, sharpen your focus, and help you understand key strategies to launch your home-based business:
Key 1 –The home-based business terrain and why you want to be there
Most startups are home-based businesses. In Washington State, a whopping 75% (491,908 in 2018) of small businesses have no employees! This means that you are entering a very competitive marketplace of like-minded owners. Those who succeed are not only committed to challenging work, but they defy the odds of business closure by being intentional in how they approach their business.
Sure, being your own boss is exciting, offering you flexibility and low overhead, all great motivators for starting a home-based business. But you also want to improve your financial position, right?
Business ownership is important to building wealth, and the self-employed have a higher median net worth than others. Business equity is second only to a primary residence in non-financial assets! By taking your “why” to the next level, you can improve your financial future.
Your vision is worth the payoff, so be purposeful!
Key 2 – Covering your bases
- Use either your SSN or EIN (Employer Identification Number), and open a bank account to receive money or spend money as your business.
- Register your business name, as required in your state/county. If you want to protect your business name/goods at a national level, apply for a trademark. Don’t forget to secure your domain name to protect your website address. Get the necessary licenses/permits to conduct a home-based business in your area.
Pro Tip: Using an EIN and registering as a DBA (aka trade name) allows you to open a business bank account, with specific benefits to your customers.
Key 3 – Managing your business risks.
Calculate your start-up costs before you launch. Know your break-even point (which is also helpful when seeking financing).
Research whether general liability insurance is enough to protect you. Determine whether you need specific insurance for product liability, commercial property, professional liability, or errors and omissions.
Pro Tip: Home insurance policies might not cover losses out of a home office. A business owner’s bundle policy might offer the best protection for your money.
Have a system for managing cash flow, including invoicing (very important!).
Get up to speed on any reporting requirements (which differ depending on your business entity and state of residence). Know how to access forms and the frequency of requirements for filing.
Understand your liability for self-employment taxes, as well as any other taxes and liabilities arising out of your business.
Your business might be small, but your dream is not. We stand ready to consult with you on bringing your vision to life. Call us for a consultation today, and let our team of experienced business attorneys assess your preparedness, identify potential problems, and help you find solutions. We’ve got you covered.