A woman is seated at her kitchen table. She has her laptop in front of her plus some books and papers spread out before her. She has a slight smile on her face. She is planning her home-based business.
Starting a business requires research and preparation, but with this guide, it's well within the reach of any budding entrepreneur. — Getty Images/Westend61

Many people want to start a business from home but hold back because they don't know where to begin. If you've been thinking about starting a home-based business, here are six steps to get started.

Brainstorm home-based business ideas

If you don't know what kind of business you'd like to start, brainstorm a list of home-based business ideas. One option is to leverage your existing skills and offer a service-based business. When you start a service-based business, there's no inventory to track or product to create. You could offer the following services to clients:

  • Freelance writing
  • Marketing
  • Graphic design
  • Accounting or other financial services
  • Legal consulting
  • Personal training

You could also start a drop-shipping business, sell homemade products through an Etsy store, start a home-based bakery, or create digital products. The possibilities are endless, so come up with a list of ideas and pick the one you think is the best fit.

Choose a business structure

The business structure you choose affects many different aspects of your business, from how much you pay in taxes to whether you hire employees. There are four main types of business structures you can choose from, including:

  • Sole proprietor: A sole proprietorship is the easiest way to start, but there's no legal separation between you and the business. This means your personal assets are at risk if you get sued.
  • Limited liability company: An LLC is easy to set up and creates a legal separation between you and the business, so your personal assets are protected in most instances.
  • Partnership: A partnership is formed by two or more people and can be a good option for a business with multiple owners.
  • Corporation: A corporation is a separate legal entity owned by its shareholders. It's a good idea to speak to a business attorney if you think you want to set up a corporation.

If you don't know what kind of business you'd like to start, brainstorm a list of home-based business ideas. One option is to leverage your existing skills and offer a service-based business.

Get your finances in order

Once you've chosen your business structure, the next step is to set up a business bank account. A business bank account separates your personal and business finances and can make things much easier come tax season.

You'll need to apply for your employer identification number (EIN) before you can open a business bank account. Your EIN is a federal tax number that identifies your business entity. You can apply for free on the IRS' website and receive your EIN within minutes.

Taxes are one of the most confusing aspects for many small business owners, so hiring an accountant is a good idea if you lack the expertise and time required to calculate your business taxes. Your accountant can manage your quarterly and annual taxes and help you determine what expenses you can deduct at the end of the year.

Promote your home-based business online

Marketing is an important aspect of growing any business, but it can be challenging for new business owners with limited resources. Fortunately, there are plenty of inexpensive ways to promote your home-based business.

Start by creating a website that includes a description of your products and services and a way that potential customers can contact you. As you gain customers and positive feedback, you can add testimonials to your site. Squarespace is a good option for service-based businesses, while Wix is an excellent e-commerce website builder.

Once your website is set up, you can blog about topics your ideal client is interested in. This helps you establish authority in your niche and bring organic traffic to your website. Posting on social media is another way to engage your target audience.

Manage licenses and permits for your home-based businesses

Depending on where you live, your state or county may have certain requirements for home businesses. Most residential zoning laws allow for home-based businesses, assuming the home is primarily used as a residence and your business activities don't disturb the neighbors. However, it's a good idea to check the local ordinance to see if there are any limits on home-based businesses.

The most common requirements small businesses may encounter are licensing requirements. You'll probably have to apply for a general business license, which allows you to engage in business activities within that jurisdiction. If you run a home care business or offer financial or legal services, you may also need to obtain a professional license from the state.

Set up a dedicated workspace at home

Finally, you'll want to set up a designated office space that you only use for work. Look for an area that is well lit and has minimal distractions, especially if you anticipate being on calls regularly. Invest in an ergonomic chair, a desk, and any other office supplies you might need.

A dedicated workspace allows you to focus and implement better time management strategies throughout your workday. But as an added benefit, you can claim the home office deduction at the end of the year. This deduction allows you to deduct qualified home expenses when you file your taxes.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

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