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| © Illustration by George Wylesol |
By Danine Alati, Architectural Digest
You’re intent on launching your own design firm. You have your finances in order, you’ve thought about your business plan, and you’ve researched how to start a small business. And rather than lease office space, you’ve decided that your endeavor is going to be home-based. Starting a business from your home demands foresight, due diligence, and all the planning it would take to launch a company anywhere. But what do you need to know before you mix your personal and professional space? AD PRO has outlined a list of tips and strategies to help you successfully start your small business from the comfort of your own dwelling.
1. Assess whether it's the right call for you
Working from home is not for everyone. You must first take a realistic look at the type of person and worker you are to evaluate whether or not your home-based business will flourish. Do you have the necessary entrepreneurial spirit, passion, and motivation to get your business off the ground—even when your couch and TV beckon from just a few feet away? Because there are so many potential distractions at home, only those who are self-motivated and find it easy to stick to their goals will feel that it’s the right environment for them.
2. Figure out if your home is appropriate for your business needs
Not all business concepts will work well as a home-based company, but there’s no reason why you shouldn’t be able to launch your design firm from your residence—provided you carefully evaluate the situation.
Could you host clients if necessary? If not, is there a coworking space you could rent nearby for meetings? Would you need to have any sort of inventory, and does your home have the space for it? Could you reconfigure an area to store products, materials, etc.? Anticipate these and other potential challenges to make sure you're setting your home-based design firm up for success.
3. Designate dedicated office space within your home
Working in the middle of the dining room table with your child’s high chair at one end and laundry that needs to be folded at the other end is definitely not the most efficient way to run your business. It’s essential that you carve out a dedicated workspace within your home. Convert an extra bedroom into an office. Or if you don’t have a spare room, partition off an area of living space where you can set up your desk, computer, printer, and any other necessary equipment. Your business tools and materials should not be intermingled with the rest of your household belongings. Making the effort to establish a fully equipped home office will pay off in the long run.
Simple infrastructure needs for your small business at home include the following:
• Power: Computers, printers, scanners, and more will greatly increase your power usage. Be sure your home’s electrical system and circuitry will suffice, and be wary of warning signs of electrical problems such as dimming lights or blown fuses.
• Internet: Confirm that your internet signal will be strong enough in your home office. There’s nothing more frustrating than receiving weak Wi-Fi reception in your workspace because your router is too far away. You may have to purchase a new router or contact your cable provider to purchase a better internet package.
• Lighting: Residential lighting is much softer than harsh, fluorescent office lighting, but home illumination is not necessarily suited to your business needs. Be sure to adequately light your workspace to avoid consequences like eye strain, headache, or neck or shoulder pain.
• Ventilation: Bringing extra equipment and lighting into your home office can elevate the temperature and create an environment that lacks proper ventilation. Consider using a window or floor fan, installing a ceiling fan, or running the air conditioner to create optimal climate control in your home office.
• Circulation: Declutter your workspace and delineate a clear circulation path. Secure cords and wires and remove unnecessary furniture. Design your workspace to be as minimal as possible while still including required materials and devices.
• Pleasing visuals: Whether it’s a window with a view outside, a house plant, photos of family, or a drawing from your child, include at least one visually appealing item to make your home office more pleasant and comfortable. But be careful not to visually clutter your workspace, as that can be distracting.
4. Familiarize yourself with zoning laws, licenses, and permit requirements
Find out if there are any zoning laws that might prohibit you from running a business out of your home. Legally, no more than 40 percent of a residential property may be used for commercial purposes; if you’re operating your small business out of one room or a portion of a room in your home, you should be fine. If you rent your home, you must have written permission from your landlord in order to run a home-based small business. However, according to regulations passed in 2015, landlords cannot “unreasonably” forbid tenants from running a business from their property. Be aware that your landlord might try to raise your rent if heating or electricity is included in order to mitigate an anticipated increase in usage due to your home business.
While all businesses are subject to license and permit laws, which vary by state (the U.S. Small Business Administration offers information and links pertaining to the application process), there are specific licenses that pertain to home businesses, such as:
• General Business License: This entitles you to operate your business in your specific locale for a small fee.
• Professional and Trade License: Certain occupations demand a license; half of the states in the country require interior design licenses.
• Home Occupation Permit: Consult the SBA’s guide to zoning laws for home-based businesses to see if your neighborhood is zoned for home businesses.
• Sales Tax Permit: If you plan to sell taxable products or services, you may need a tax permit, so check with your state revenue agency.
• Health and Safety Permit: A permit or inspection from the local fire department might be necessary, and some towns monitor for air and water pollution; check with your local branch of the EPA.
• Sign Permit: Refer to local authorities to see if your town requires permits for company signage.
• Construction Permit: Check in with your local planning department before embarking on any construction to your property because of your new small business in case a permit is required.
• Homeowners Association restrictions: Certain residential areas or complexes may restrict the type of businesses that are allowed in your home, so seek advice before getting too far into the planning process for your home business.
5. Learn tax laws for home-based businesses
How your small business is taxed depends on the business structure you’ve set up for your company. However, running your company out of your home entitles you to additional tax deductions. While you’re allowed to deduct all the same expenses that any company can, having a small business at home also affords you deductions for:
• Direct business expenses: This includes supplies, materials, product samples, meals, and entertainment.
• Operating costs: If your home is your main place of business, the IRS allows you to claim some expenses for operating your small business. To determine what you can write off, calculate the percentage of your home devoted to your work (by dividing the square footage of your home office by the livable square footage of your entire home), and then apply this percentage to expenses such as your mortgage interest, property taxes, utilities, repairs, and maintenance.
• Vehicle expenses: You can deduct a portion of your vehicle expenses by multiplying the IRS mileage rate (58 cents for 2019, up from 54.5 cents in 2018) by the total miles you drive in a year for business.
Do your own research on the tax laws ahead of time so that you’re not caught off guard come tax season. But also consult a professional, as your accountant can confirm that you’re getting the most deductions you are allowed for your home-based business.
6. Be diligent about your work and your schedule
Once you have gone through the preparation process of starting your small business at home—from creating a business plan and establishing your bank account to accruing a team and promoting your company—it’s time to get to work!
Set a work schedule that you will follow. It can be easy to get distracted while working from home—doing household chores, spending time with family, sleeping in a bit later, and so on. But your work ethic is the key to your livelihood, and maintaining a strict workday schedule will help you and your business stay ahead. Be extremely diligent about getting through your daily to-do list. Attaining daily objectives positions you to achieve your goals down the line in three, six, and 12 months.
On the flip side, do not work around the clock. If you reported to an office every day, you’d have a finite workday. However, when working from home, it’s easy to fall into the trap of working all hours of the day and night because technically you’re always at the office. While your company is in the development stage, you may find yourself working upward of eight to 12 hours per day, but once you’ve settled into the routine of working from your home, you should aim for a more reasonable workday in order to avoid burnout. Part of the joy of being self-employed and running your small business from home is flexibility in your daily routine, so just be sure to maximize your schedule, get the most out of your day, and also take the time to recuperate between creative sessions. If you follow these steps, your home-based business will be thriving in no time.
