Working from home is a dream for most. Can you really make a live-able income all while working from the comfort of your home? Working from home might seem perfect to some, but there are many things to think about.
What is needed to start working from home.
The tools you’ll need to work from home may vary significantly depending on your chosen services that you decide to offer. For many at-home jobs, the primary prerequisites involve technology. Most importantly, you may need a computer, phone and possibly other devices to stay connected to your clients or customers.
If you need much more than that, make sure to put some thought into your idea before you jump in, as upfront costs for a new business can be steep. Make a schedule so that you know how much time is needed for your side jobs.
Legal and tax implications of working at home.
Before you take the plunge, you’ll also want to address the legal and tax implications of your new venture. There are many things to think about, and you should outline a plan as soon as possible.
For example, even if you are working solo on your project and freelancing services, you may want to incorporate your business, set up a limited liability company, set up a partnership or formally organize yourself in another way. Laws vary from state to state, so consulting an attorney knowledgeable about business entities and their formation could help you figure out the best way for you to operate your business. Costs for setting up your business vary as well, as in some states it might be as low as $50, and in others it might be in the hundreds. This cost shouldn’t prevent you though, as there are many, many positives of setting up your business legally.
In addition, the owners of many small businesses find out the hard way that some cities and states require licenses to operate businesses, no matter how small that they may be. Therefore, you should check with your local officials to find out if you’ll need a business license to proceed as it’s much better to know before you start offering your services or selling your products.
In addition, talking to an accountant or other tax professional to find out how you’ll be taxed is very important. Self-employment tax rates are generally high (you could be paying as much as 40% in taxes altogether!), and you may need to make quarterly estimated tax payments to the IRS and your state taxing authority in order to avoid paying penalties and having to make a rather large check to Uncle Sam at the end of the year.
No one wants to find out at the last second that they owe a lot of money and can’t afford their dream of self-employment anymore. If you don’t think about taxes until when they are due, then you will most likely be shocked at how much you are taxed.
Can you actually work at your home?
Furthermore, while many at-home businesses can easily be conducted without any resulting disturbance to others, you should carefully consider whether anything about your business could annoy your neighbors and whether operating the business from your residence could violate any local zoning ordinance, any restrictive covenants governing your neighborhood or the terms of your mortgage.
It would probably not be a good idea if you constantly had people coming in and out of your house, as it can be annoying for parking in your neighborhood and your neighbors most likely will not like to have a lot of strangers in their neighborhood every single day.
A financial plan is needed.
Finally, you need a financial plan for your business or at least a budget. Although operating your business from home could potentially save you thousands in upfront startup costs, you need to carefully examine how much money you’ll need to conduct business before you get started. You don’t want to start a new business without a budget and then find out only months or even weeks later that your self-employment dreams are not possible anymore.
A budget will help you realize where you can spend and where you might want to hold back until funds are found for it.
The amount you’re willing to shell out on the front end for your new business should be determined, at least in part, by the earning potential of your new venture. For example, if you’re going out on a limb with a risky idea and have very few potential clients lined up, consider easing into the project so you minimize your financial exposure.
How would you prepare to work at home?
This post was mentioned on Dreams Cash True.