How to Start a Small Business from Home (2019 Update)
Thinking about starting a home-based business? Read this article to see how you can start and enjoy all the benefits running a business from home offers.
Whether you’re ready to give up the 9 to 5 life, want to pursue your side-hustle full time, or you want more flexibility in your work, starting your own business can be challenging. Running your business from home will give you more freedom, but it will save you the cost and time of renting a commercial space for your business. In this article, we’ll give you some helpful tips on starting a home-based business, so you can start on the best foot possible.
1. Make a plan
Anyone can think of an idea. It’s the execution and strategy of your idea that matters. If you do this, you can turn your hobby into a successful home-based business. Your business plan should be your guide when it comes to actually running your business.
Your plan should identify clear goals, opportunities and financial forecasts that you want to achieve over a specified period of time. Planning for a business is not merely day to day, you also need to map out what you want your business to do over the next 6 to 12 months.
Some questions to consider before starting your business include:
- Who will be the target market for your product/service?
- What does your budget allow for?
- Where do you see your business in 12 months?
- How might you price your products and services relative to your competitors?
- Do you have a formal marketing plan in mind?
2. Find your structure
One of the first things you need to do when starting a business is decide on its structure. Choosing your business structure comes with important tax implications, liability limitations, and reporting obligations. Your business’s structure will therefore have a significant impact on how you run your business and what you’ll have to do to be legally compliant.
The 3 main Australian business structures are:
- Sole trader (or sole proprietorship)
Certain structures will be more suitable depending on your circumstances and the kind of business you want to start. For example, if you want to work on a solo basis as an electrician, being a sole trader may benefit you. Sole traders do not however, have limited liability. This means your personal assets may be collateral, and your profits will be taxed as part of your individual income.
Alternatively, if you do not want to be financially liable, you may be better off registering a company. Your business’s profits will be taxed separate to your income and will enjoy the lower company tax rate.
3. Register for an Australian Business Number (ABN)
Regardless of which business structure you choose, you should register for an ABN. An ABN is a unique number that identifies your business for tax purposes.
Note that if you are applying for your ABN as a company, you must first register for an Australian Company Number (ACN). Once you have completed your ACN registration, you may then apply for a new company ABN.
4. Build a digital and social media presence
Building a positive online presence is important for any small business. A website is your first point of contact with consumers and reflects the credibility of your business. Your website provides information about your services, generates leads, and builds your brand image.
In a digital age where 79% of Australians are smartphone users and 81% of consumers research a product online before buying (Deloitte 2015), having a digital presence is essential to starting a successful small business from home. Further, most small business owners are surprised to find that the cost of maintaining a website is very affordable.
5. Consider your legal needs going forward
As your small business grows, you might need employment agreements for hiring employees or increased asset protection and decide to apply for a company registration. By taking LawPath’s free Legal Health Check you will be able to identify the legal gaps of your small business and keep up-to-date with all your legal obligations.
Preparation and planning is key to starting a business from home. Make sure you also understand your local council’s guidelines and comply with any zoning laws. As exciting as it might be, it is important to analyse your business goals and set up a sound legal foundation to ensure that your business is legally compliant.
Dominic is the CEO of Lawpath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.