How to Start a Small Business From Home (Checklist)

Starting a small business from home is an exciting idea and one that could turn into a full-time job if you follow all of the necessary steps. If you’ve got a great idea and the motivation to make it work, you’ve made a great start—but there are still several other practical steps to take.

Taking time to set your business objectives in stone and get all of the paperwork done will put you in good stead when you eventually begin. This “starting a small business from home” checklist will help you launch with every chance of success.

Steps to Set Up a Small Business from Home

Setting up your business from home will require planning, preparation, and a fair amount of paperwork to make it legal and ready to operate. However, 99% of Europe’s businesses are small or medium-sized enterprises, so your small business has every chance of making its mark. Sometimes it can seem like an uphill task, but if you take it one step at a time, the process will be a lot more manageable.

1. Perfect Your Idea

The first step in starting a small business from home is deciding what you’ll offer. Consider the following when making the all-important decision of which kind of business to set up:

• The skills or talents you have: Starting a business in something you’re good at is a great approach to take. Don’t discount your passions, as a real love for your business can push you to excel. For example, if you’re talented at needlework, you could think about starting a tailoring business or selling your own brand of clothes.
• Whether your skills translate into a viable business idea: Sadly, not every talent translates into a successful business. Study the market and see how (or if) your passion or skill could be turned into a profitable business.
• Whether you can run your business from home: If running your business from home is non-negotiable, you must make sure you can run it from home in practical and legal terms. For example, chefs or home cooks may be able to cook in their home kitchens, but special licences and industrial cooking equipment may be required by law if you want to sell your homemade goods to the general public.

Make Sure Your Idea Is Viable

Once you’ve got your business idea clear in your head, you’ll need to ensure that your idea is viable. Complete this short business checklist to find out:

• Conduct thorough market research: Is there demand for your product or service? Who are your competitors? How will your business be different from other similar businesses? Who are your target customers?
• Evaluate startup costs: You’ll inevitably run up some initial costs to start your home business. The costs involved can vary considerably depending on the nature of your business and whether or not you need inventory.
• Give your idea a test run: You could offer your services for free to test the market and get useful feedback from potential customers. If you’re selling a product, you could test it out on a select group of people or use a crowdfunding platform to gather feedback.

2. Write Your Business Plan

The next important step will be to write your business plan. This can be a time-consuming process, but it’s essential for your future growth and progression. Your business plan should contain information you need to run your small business from home, including:

• An executive summary
• An overview of your vision for your business
• Your market analysis
• A description of your service or product
• Your marketing and sales plan, for example, marketing your products via various social media accounts
• A financial plan including projections

Writing a business plan will allow you to take time to think more about what you considered in the first step. Consider your business plan a roadmap for how you’ll make your business grow and thrive.

3. Choose a Name

Deciding on your name is a hugely important step. You want a name that’s memorable and makes it clear what your business does. If you anticipate your business working in different European countries, consider how your name sounds in different languages.

You then need to make sure your business name is available to use. Your government will have a register you can use to check the availability of different business names.

4. Choose a Business Entity

Your business structure will affect how your business is taxed and the legal risk to which you’re exposed. It’s best to get expert advice to ensure you’re choosing the right entity. For example, setting yourself up as a sole proprietorship will have different legal implications than setting up as a corporation—even if you don’t have any employees.

5. Register Your Home Business

The exact process you need to follow to register your home business will differ from area to area. Familiarise yourself with how the process works where your business operates or ask an expert in small business administration.

You’ll probably need to get an employer identification number which will allow your business to hire employees, open a company bank account, and file business taxes.

6. Get the Relevant Business Licences

You will need a business licence to get your business up and running. Investigate any licences and permits your business might need.

For example, an online protein powder business or other businesses selling products for consumption may have to apply for specific licences before selling their products to the public.

7. Set Up Payment Processing

You will need a payment processor to accept credit card payments. A payment processor that understands a wide range of industries and the challenges faced by small home businesses will be a valuable e-commerce partner for your business as it launches and grows.

An end-to-end payment processor can also set you up with an integrated global payment gateway that gives your business control over its sales and transactions. In addition, you’ll benefit from protection from fraud and chargebacks that can become costly for new businesses.

8. Separate Your Personal and Business Accounts

It’s easy to get your personal and business funds mixed up when operating as a sole trader. That’s why it’s so critical to separate your personal and business finances. To do this:

Open a Business Bank Account

Open a business account to manage money coming in and going out of your business. You will also use this account for paying suppliers, services, or any employees you have.

There are many business bank accounts from which to choose. Take time to choose an account with the best conditions and a business credit card that offers rewards.

Choose Accounting Software

Accounting software can help you manage your finances as a novice business owner. While accounting software isn’t necessary for all businesses, it makes bookkeeping and tax filing easier. It can also take off some of the burden of looking after your finances and save you precious time.

9. Secure Funding

One of the main benefits associated with setting up a home business is that you can sidestep some costs. These include renting an office space or opening a brick-and-mortar location. Depending on your business, you may have minimal or no startup costs at all.

However, you may need to secure some financing to help you get going. This is especially true if your business requires inventory or equipment. If your costs go above what you can or wish to invest yourself, you may need to explore other options.

10. Set Up Your Home Office

Working in the same space where you live has several benefits but requires some adaptations to ensure maximum productivity. Designate a specific area of your home for your business to separate your work from your home life and minimise distractions.

Setting up your home office may include these steps:

• Choosing a space for your work
• Investing in furniture, tools, or technology you need for business operations
• Decorating your office in a way that is conducive to work

11. Understand Your Tax Obligations

You may have unique tax obligations as a home-based business. For example, you’ll probably need to pay taxes related to your self-employment, sales taxes, or other taxes specific to your area or country. If you have employees, you’ll also need to establish a system for tax withholding.

Set Up Your Home Business for Success

Following some logical steps will set your home business up for success from its inception. This includes taking time to lay the groundwork with a detailed business plan and conducting a high-quality market analysis.

Setting up payment processing is also one of these vital first steps. Choose a payment processor that understands the challenges and rewards facing small businesses and will help your home-based business succeed from day one.