Is a Home Business What You’ve Been Looking For?
By Rhonda Campbell
It’s easy to focus on the rewards of running a home based business, especially while you’re burning up your gas commuting to and from a job you’d love to wave farewell to. Envisioning yourself waking at 8 o’clock in the morning instead of 6 o’clock, having the time to run errands before other businesses close and only having one boss to answer to – you – can make operating a home business appealing. By focusing on the rewards of working from home you might get blindsided. After all, like all business ventures, home based businesses have a mix of pros and cons.
Rewards Associated with Home Businesses
Pros of operating a home based business vary depending on the type of business you’re running. For example, if you operate a daycare from your home your business rewards will be different than if you operate a freelance writing or virtual administrative assistance company from your home. However, pros generally associated with running a business from home include:
- Ability to do work you love, work that causes you to feel joy
- Ability to set your own work hours
- Opportunity to claim business deductions when you file your annual income tax returns
- Chance to establish yourself as a bona fide expert in the industry your business operates in
- Ability to substantially increase your income as business sales grow
- Increased time spent with your children, especially if you have young children who arrive home from school early
- Opportunities to speak at professional, community and social events as a business leader
- Learning about professional networking events, places where you can meet established business leaders in person, people you may have admired for years
- Chance to set a positive example for your children, neighbors, etc. , showing them that they too can successfully operate their own home business
Home Based Businesses Offer Unique Challenges
Certainly the benefits and rewards of operating a home based business are plenty. However, to get a balanced view of what you can expect while operating a home business, consider the following home business cons:
- You may have to work long hours, perhaps six to seven days a week during the start-up phase (SCORE reports that a leading reason new businesses, including home businesses, fail is because entrepreneurs underestimate the amount of time it will take for their businesses to generate sustainable revenues.)
- May have to file more tax forms (e.g. 1099), especially if you hire employees or independent contractors
- Depending on the amount of revenues your company generates you may have to file and pay quarterly taxes (in addition to your annual income taxes)
- You’ll have to keep detailed receipts and business records
- Money to market, promote and maintain your business is your responsibility
- Should you hire employees or independent contractors to work for you offsite and they make customer errors that’s your responsibility too
Starting a Home Based Business
Additionally, as a tip, before you start a home based business you must:
- Register to receive an employer identification number (EIN) with the Internal Revenue Service (IRS). If you’re a sole proprietor you may be able to use your Social Security Number as your EIN.
- File to receive local, state and federal sales taxes
- Create a detailed business plan (financial institutions generally require a detailed business plan before they lend businesses money)
- Purchase necessary insurance associated with the type of business you operate
You don’t have to go it alone while you manage a home based business. The Black Business Association, SCORE, Black Women Enterprises, National Black Business Trade Association, the Minority Business Development Agency, Small Business Administration, Home Based Business and the National Black Chamber of Commerce are a few organizations you can turn to for ongoing support, networking opportunities and business management advice. Stay connected to business leaders within and outside your industry by attending conferences, seminars and annual events. This can prevent you from feeling isolated from other business leaders and laypersons as you continue to grow your home business.
Rhonda Campbell, an East Coast journalist, is the owner of Off The Shelf radio and publisher of Long Walk Up and the forthcoming Love Pour Over Me.