Tips for Starting a Home-based Business

Starting a home business can be an exciting time. It can also be a stressful one if you don’t plan properly. Here are three ways to make sure your home-based business not only succeeds, but soars.

Write a Business Plan

Whether or not you’re applying for a business loan, you need a business plan. The research you do while writing up your business plan will help you determine if your business idea is a viable one. If it isn’t, find a new home business idea and work through a new business plan. Most people work need to work through a few business plans before finding an idea that will grow into a profitable business.

Get Your Legal Agreements in Order

While it can be tempting to close a deal with a handshake, situations can change over the course of a business relationship. Having a proper contract agreement in place can save you from potential legal problems down the road. Your contract needs will depend on the type of business you’re running, but there are three common legal agreements that every business owner should have drawn up: a partnership agreement, a master services agreement, and a non-disclosure agreement (NDA).

• Partnership agreement – This is a legal document that outlines which assets each partner owns, how business decisions are made, how ownership interests are divided, and how the profits will be divided.
• Master services agreement – This document is similar to an independent contractor or consulting agreement. The master services agreement defines the relationship between the business owner and an independent worker.
• Non-disclosure agreement (NDA) – Also called a confidentiality agreement, this document protects your business’ proprietary information should you need to share it with someone. An NDA can be used to protect anything from your client list to the code written for a software product.

Hire an Accountant

If you don’t have accounting experience, managing this aspect of your business will be a challenge. Hiring an accountant will ensure your taxes are prepared properly, saving you money in the long run. Budget permitting, you may also want to consider hiring a bookkeeper to keep records of your profits and losses so that you can focus on running the business itself.

There is an element of uncertainty and risk involved in starting up any home business. By following the three tips above, you’ll eliminate many of the problems that plague first-time business owners. While there are no guarantees, having the proper business plan, legal agreements, and accounting practices in place is the best way to set your home business up for success.