Running a business in your pajamas might sound like an appealing idea, but for many, making a distinction between home and office space can be challenging, especially with the surrounding distractions—including family members. But with the right structure and self-discipline, it's more than possible to start a successful home business. According to the U.S. Census Bureau, more than 51 percent of American businesses are based at home.
Three months after Jason Sadler launched IWearYourShirt, a business where he wears company-branded T-shirts for a living, he sold out of half of his inventory for the year. Catherine Keane of HungryPod also succeeded at her home business: She makes more than $100,000 a year by uploading music into other people's iPods.
If you're thinking of starting a business from home, read the following tips to make sure you're on the right path:
1. Decide on a business structure
Starting your home business as sole proprietor is the simplest solution—you only need to mark your business earnings on your tax return—but it doesn't give you much legal protection.
Websites like MyCorporation provide information for starting and maintaining an LLC or a corporation. An LLC combines the limited liability advantages of corporations with the control and tax advantages of a partnership. A corporation is a separate legal entity from its owners, created under state law. By forming a corporation, you have the ability to sue and be sued, hold assets in its own name, hire agents, and sign contracts.
2. Prepare to be your own boss
It's up to you to keep yourself accountable. Try to switch your thinking from boss to employee: Spend half of the day scheduling things you need to accomplish, and the other half getting them done. Set up a regular work schedule and take normal breaks—including lunch. It will help you feel like you're "in the office" and make you use your time more productively.
3. Keep track of paperwork
Without accountants or bookkeeping, it can be hard to handle all the paperwork a business needs by yourself. Try out sites like Freshbooks.com and Wave Accounting, which help small businesses handle accounting.
4. Define your work space—and work hours
The biggest complaint from home business owners is that if they wanted to, they could be working all the time. But just because you're at home most of the time, it doesn't mean you have to available 24/7. A separate phone line will help you avoid work-related calls after-hours. AT&T and Verizon offer home business plans to clients.
A home-based office is a great option if you don't need to meet clients regularly, but if you do, make sure to maintain a professional area at home. Preferably with a client-only entrance and a well defined space—so you can't trip over children's toys or hear a TV on the background.
5. Keep your family out of it
Set boundaries from the beginning. The home office should be used as an office, and an office only. If you have children, try to set a schedule so that you can focus on working for a couple of hours a day without having to juggle babysitting and work at the same time.