Home Business
(featured column)

Checklist For The New Home-Based Business
by Elena Fawkner

So, you've decided to take the plunge and start your own home-based business.  Congratulations!  You're on your way to true financial independence. Protect your business and your livelihood by making sure you have paid proper attention to the following:

1.  Cash Flow

Do you have adequate working capital to support your business (to support you!) during its early stages?  Have you started your business part-time while continuing to work full-time to make sure it is a viable income producer for you and that income is adequate for your needs?  DON'T give up your day job until you can give an unequivocal YES to these questions.

2.  Business Licensing

Have you obtained all necessary licenses and registrations for your business?  Do you comply with your local zoning regulations?  This is especially important for both legal and insurance reasons if you expect to have clients visit your home office.

3.  Insurance

If you expect to have clients visit your home office, have you taken out insurance in case they are injured on your premises?  Your normal homeowner's insurance will NOT cover business visitors unless you notify your insurance company that you are operating a business from home and the insurance company endorses your policy to include this risk.

In all other cases you should take out a separate policy to cover your business visitors.  In this regard, whether you comply with local zoning regulations may be important. Your insurance company may refuse to cover you if you are conducting your business illegally.  For these reasons it is imperative that you obtain all proper registrations and licenses for your business.

Another type of insurance you should take out is public risk insurance.  No matter the nature of your business, if you are dealing with other people (and what business isn't?), you should have public risk insurance to cover you in case of a claim for negligence.

A third type of insurance to consider is income protection insurance.  If you have made the transition from paid employment to self-employment, you no longer have the benefits that went along with your paid job which may have included disability or income protection insurance.  You will need to purchase this coverage for yourself.

4.  Benefits

Once you have left the paid workforce, you may find that you have also left behind your medical, dental and optical benefits.  You need to make sure you purchase adequate insurance for these expenses.

5.  Accounting and Tax Advice

The best time to seek accounting and tax advice is before you start your new business.  Your accountant will be able to advise you about things such as the most tax-effective structure for your particular business and what types of expenses you can claim against your business income.  

It is important to obtain this advice at the beginning of your business venture so you know exactly what records you should be keeping and whether it is best for you to purchase or rent capital equipment such as your computer.

6.  Time Management

Make sure you have thought through how you will deal with the day to day distractions that will come up when you work from home and plan accordingly.  For example, if you know you will not be working from 3:00 pm until 8:00 pm because this is the time between when your children return from school and when they go to bed, try to schedule as many
non-business activities for this time period as possible rather than taking breaks during your business hours.  

Need milk?  Get it when you're out picking the kids up from school, not at 11:00 am because it's easier than starting that new web page.  Remember, self-discipline is your best friend and vital when working from home.  Procrastination, on the other hand, is your greatest enemy.

Working from home is the dream of many.  Don't let that dream turn to ashes by overlooking the "basics" of sound business and risk management.

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Copyright © 2004 by Elena Fawkner