Whether you’re quitting your 9-5 or simply want a fresh challenge, starting your own small business can be an exhilarating experience. While it might seem a daunting task at first, you can start your own business from the comfort of your own home.
Start up your small business with proper legal guidance and documentation by connecting with a business lawyer.
Here are 5 steps to guide you through the ins and outs of how to start a business from home.
How to Start a Small Business from Home
Step 1: Create a business plan
Anyone can think of an idea. It’s the execution and strategy that turns a hobby into a successful home business.
A business plan identifies goals, opportunities and financial forecasts that you want to achieve over a specified period of time. Some questions to consider before starting your business include:
- Who will be the target market for your product/service? And how large is this market?
- How might you price your products and services relative to your competitors?
- Do you have a formal marketing plan in mind?
Step 2: Consider which business structure is right for you.
Choosing a business structure comes with important tax implications, liability limitations and reporting obligations. It is for these reasons that it is important to consider which structure is right your needs. The common business structures include:
- Sole trader;
- Partnership; or a
If you intend to work alone as a tradesman with a few jobs on the side, then a sole trader structure may be adequate as there are no registration or annual fees involved.
There are however some risks to keep in mind. The liability of a sole trader is not limited and your loans will be secured by personal assets. Sole traders also pay tax based on their personal marginal rate. Thus any operating income from your business will be considered as part of your taxable income.
Step 3: Register for an ABN
Regardless of which business structure you choose, you must register for an ABN to operate your business. 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.
Step 4: Establish a digital presence
Building a positive web 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.
Most small business owners are surprised to find that the cost of maintaining and building a website is very affordable.
Step 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. 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.
LawPath has access to all the legal documents you will need when starting a business from home. Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.