Working in a modern glass office building in the heart of the city used to be the epitome of career fulfillment, but in the past years there has been a shift in what people perceive as the perfect work environment. Hectic traffic, unreasonably long commute times, cubicles, watercooler gossip and too much time away from loved ones are just some of the reasons why employees decide to quit their office jobs and start their own businesses at home.
Whether you plan on working as a freelancer or you want to start from home and grow your business gradually, a home office can be a great environment to boost self-growth and career development. However, people often forget that a home business is still a business and you need to keep things structured and organized. Many iconic and influential companies were started from a garage, but to get where they are now, you need a brilliant product, an innovative mindset, determination and you also need to watch out for these start-up mistakes that can set you back:
#1. Failing to check legal requirements
Because you work from home, a space that you are used to and don’t usually associate with rules or regulations, you might be tempted to start your business activity right away, without checking the legal requirements in your area. This is a huge mistake, because it can cost you a huge fine. The process of setting up a home business will be easier if you don’t work with specialized equipment and do something like web design or freelance writing, but if you’re starting a hair salon, cleaning service or food stall, requirements are harsher. Check the zoning laws, get a business license and don’t even think about starting the business without a dedicated bank account. Mixing personal income with business funds will get you an IRS audit and will complicate things for you in the long run. Also, don’t forget to get an employee identification number if you plan on hiring someone to help you.
#2. Not getting home business insurance
Once your house becomes your business headquarters, you need to be aware of the fact that it’s exposed to more risks and these risks must be managed through business insurance. Getting additional home coverage for your business might not be the first thing you have in mind, but forgetting about it can cost you later on. The average home insurance policy might not protect your property in case something happens to your equipment in circumstances of robbery, fires or floods. Even if business insurance requires an investment, it’s still more affordable than a lawsuit or covering damaged goods from your family savings.
#3. Doing your own bookkeeping
People who run a home business are often on a limited budget and try to take on many tasks themselves to save money, but bookkeeping is really not a DIY job. Unless you have a professional background in bookkeeping (and a lot of time on your hands!), you are bound to be overwhelmed by financial responsibilities and make mistakes that will cost you. Administrative tasks such as payroll, tax preparation and keeping books up to date should only be handled by a professional, especially today, when there are so many ways to find them. Whether you ask around in your area for a reliable bookkeeper or streamline things even more by choosing online bookkeeping services, there’s no need to resort to the risky DIY option.
#4. Neglecting your annual budget
As you’re starting out your home business, you’re probably very enthusiastic and think more about the exciting parts of being an entrepreneur, not the tedious financial plans. However, this can cost you and you should try to be as grounded as possible in your annual budget. You should have a clear overview in mind of your revenue and expenses and where each one goes. Website fees, office furniture, license costs—all of these are expenses you need to keep in mind before investing your revenue in other things. Can you keep your business afloat without a loan and if not, do you qualify? At one point do you estimate that investments will come in? Answering these questions isn’t very fun, but it’s essential to consider them if you want to avoid unpleasant surprises. To make sure you do not overspend, stick to your annual budget and make only wise, justifiable purchases.
#5. Not setting up adequate office space
One of the trickiest things about running your business from the same place where you sleep and spending time with your family is knowing how to set boundaries and make a clear distinction between work and leisure. Having too many distractions can make you lose your focus, so stick to a strict schedule and set up an area just for work. It doesn’t matter if it’s your office, your garage or a specially built annex; it will help you concentrate and make the most out of every minute. If you are a parent and find it hard to joggle work and parenting, consider hiring a babysitter or asking your family for help.
