Working from home can be a dream come true, but running a home-based business is far from easy. If you want to be successful, you will need to set up a professional and productive home office environment. The following 10 tips can get you off to the right start.
1. Dress for Success
Working from home does not have to mean staying in your pajamas all day. If you want to run a professional business, you will need to look the part. Ditching your office job and working from home should not mean totally abandoning your business wardrobe.
It is important to look your best when meeting with clients, but dressing up can make you feel better even when no one is visiting. You can dress comfortably, but it is still important to maintain a professional appearance.
2. Scope Out Your Office Space
Your home office is ground zero for your home-based business, so you need to set it up carefully. Start by deciding which space you want to dedicate to your home office, then spend some time deciding where everything will go.
You will need to make sure the space you choose has plenty of electrical outlets for your computer, monitor, printer, copier and other business essentials. You may also need a dedicated phone line if you will be conducting teleconferences or talking to clients on a regular basis. Setting your office up the right way from the start will help you avoid costly mistakes later on.
3. Keep Formal Files
Working from home is serious business, and you need to take it seriously. Invest some money in a set of file cabinets and use that space to store your business records. Keeping formal records will make everything from client billing to tax planning easier.
It also pays to make an electronic backup of all those paper files. Having a backup will allow you to recover from a disaster like a house fire or theft. You can use a cloud-based service to keep your records safe if your computer crashes or your paper files are lost.
4. Set Aside 30 Percent of Your Income
One of the most unpleasant parts of working for yourself is the taxes you have to pay. When you work for an employer, that employer is responsible for withholding taxes from your paycheck, and for paying half of your Social Security and Medicare taxes. When you go out on your own, you are responsible for all those taxes.
The self-employment tax can substantially raise your tax bill, even if your bottom-line income does not change. If you want to successfully run your business, you will need to set aside 30 percent off the top for taxes. If your final tax bill ends up being lower, you can always plow that money back into your business.
5. Set Up a Business Bank Account
Keeping your business and personal money separate is very important when you are running the show. If you want to run a successful home-based business, you will need to set up a separate business bank account. You can set the account up at your current bank if you wish, but it is important to use the business account properly.
All of the income your business brings in, from client payments to interest on investments, should be deposited into your business account. You should also use that account to pay all business-related expenses, from office rent to employee payroll. Keeping the accounts separate will make recordkeeping and tax preparation much easier.
6. Stay on Schedule
Part of the appeal of a home-based business is setting your own hours, but try not to go overboard. You might think you can work efficiently at four in the morning and sleep till noon, but chances are that is not the case.
Sticking to regular hours and a set schedule can improve your productivity and ultimately help you land more clients and make more money. You do not necessarily have to mimic your old office hours, but staying on schedule can improve the professionalism of your home-based business.
7. Block Out Distractions
Commuting from the bedroom to your home office is great, but it is important to set some boundaries. The door to your home office can be your best friend, and you should not be afraid to use it.
Make it clear that your home office is your space, and that you are working. Close the door to keep the distractions of the household as far away as possible, and make it clear to other family members that you are not to be disturbed except in an emergency.
8. Check the Local Laws
Some home-based businesses may require special licenses and permits. You do not want to be blindsided by these requirements, so be sure to check local zoning laws and regulations before you set up shop. Checking the requirements ahead of time can help you avoid big problems later on. If you fail to get the proper permissions, you could find your new business shut down before you even get off the ground.
9. Create a Business Plan
No matter how small it is, your home-based business still needs a formal business plan. Setting up a business plan can make your tax planning easier and more effective. Your business plan can also make it easier to get a loan when you need it. Creating a business plan might cost you a bit of money up front, but the investment is worth it.
10. Market Your Business
If you want to grow your business and make it succeed, you will need to market it effectively. The exact type of advertising will depend on the nature of your business – and your budget – but you will need a way to get the word out to potential clients.