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new business either through a bank or the SBA, a formal business plan will be a necessity. Home-operated businesses will have a much more difficult time in obtaining financing.
Don't Forget Uncle Sam As in all undertakings of life from birth to death and beyond, the IRS will be there to watch over you. Almost all small, home-based businesses will start out as "Sole Proprietorship." This legal status is best for ease of handling and for tax benefits. Your net business income or loss becomes an addition or deduction to other income declares at the end of the year. Careful record keeping of all business revenue and expenses is a must. Keep a separate business-checking amount for your business. Do not intermingle business and personal expenses. Other special tax benefits and regulations apply to home-operated businesses. You should obtain professional advise from your tax adviser.
Free Publications available:
"Record-Keeping For A Small Business" IRS publication 583. Call the IRS 1-800-829-3676.
"Business Use Of Your Home" can also be obtained free from the IRS.
"Tax Guide For Small Business" is an annual IRS publication #334. It is also free.
Insurance
One disadvantage of being self-employed is not having health and disability insurance. You may also need liability insurance. Your homeowners insurance covers your belongings in your home, but it may not cover all business inventory and equipment. Check with your insurance agent to make sure you have the right coverage.
Factors that will Determine Your Success
Do Your Homework
The more you know about your business, the better your chances of success. Attend seminars and join trade associations. Read books and trade publications. If you do not have a business background a business introductory class at a local college would be advisable.
Planning is Key to Your Success
You and your family's future and livelihood are at stake. So your decision and planning to start a business are very serious matter. Establish a long-range plan, which encompasses your business, and financial plans. You should obtain legal or financial advice from an attorney or accountant before committing to nay-long range or major financial transactions. Agreements with suppliers or customers should be put into writing.
You Must Wear Many Hats
Small business owners over time can become experts on a variety of subjects. At the start the most important aspect is the mind-set. Your communication to the rest of the world through all available means will determine your success. Here is an abbreviated marketing checklist:
Telephone equipment
Promotional Material
Advertising (Don't forge the Yellow Pages)
Stationery
Direct Mail
Membership in Organizations
Direct Sales
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