How to Start a Home-Based Company
Many home-based companies only require low-cost startup investments; working from home eliminates certain operating expenses, such as office rental. Additionally, some expenses involved in operating a home-based business may be tax deductible, such as utility payments or rent. However, some home-based companies require business permits or licenses to operate legally.
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Instructions
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Determine whether there are any zoning restrictions that limit or exclude certain types of businesses in your neighborhood. Comply with any local government regulations for maintaining a home-based company. For instance, there may be limitations to any structural alterations to the residence. Also, local government regulations may place restrictions on the number of employees in the home, or the noise that the business may generate.
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Apply for any required business licenses or permits at your local government offices. The secretary of state's office, or the Department of Revenue, can provide information regarding regulations for business licenses and permits.
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Set up an office space in your home that will allow you adequate space to operate your business on a daily basis. Many expenses associated with setting up a commercial office space may not apply to a home office. However, office equipment, such as computer equipment, computer software, furniture and a workstation, desk and fax machine are the basic equipment needed to physically set up a home office.
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Calculate your operating expenses and determine what costs are tax deductible. The Internal Revenue Service limits what is considered business use in your home. Also, Internal Revenue Service Publication 587 stipulates what constitutes business use for tax purposes.
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Set up an organization system for your files and other paperwork. Additionally, set up a work routine or schedule to operate the business. The routine can change daily, weekly or monthly. However, the work schedule is an important part of establishing an organization system for your business.
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Establish an accounting system to record and keep track of monthly accounting. Some home-based business owners may hire an accountant to prepare their accounting records. However, smaller businesses may not require the use of an accountant. For instance, sole proprietors may choose to set up a simple accounting system, or utilize accounting software programs. On the other hand, small home-based business owners may seek out the advice of an accountant on certain matters. As a whole, a basic accounting system records sales transactions, expenses and business income.
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