Protecting Your Home Based Business

There are many advantages to having a home based business. Low start up and overhead costs, flexible working hours and no commuting are just a few of the many benefits.

It is important however to consider that even though you are operating in your own home there are considerations that you should follow to ensure that you are operating both responsibly and legally.

Have a Proper Business Plan

Having a plan in place that includes what your business entails and how it will run can save you a lot of grief in the future. Many small businesses fail because they do not have a proper plan in place. When you have questions you can always look to your business plan for reference. This should include what you are trying to sell, which industry you will work in, your target market and how you will market yourself. Also include your opportunities and threats and projected financials for the next year. Entrepreneurs Business Plan Guide has some great tools for entrepreneurs who want to create a business plan.


Check the local zoning bylaws of your neighborhood to ensure that you are able to operate a home based business in your residence. This is usually not an issue if you are working solely by yourself as a freelancer; however if you intend to have members of the public entering your home or other employees this is something to get checked out.

Legalize Your Business

You can register your company as a sole proprietor, partnership or a limited company. Typically you will want to run your home based business as a sole proprietor. If you are operating under your own name there is no need to register the company. However; if you decide to operate the company under a name other than yourself you must register. If you want to run your company as a distinct legal entity you will incorporate your business. There are many advantages for incorporation such as selling shares and tax write offs.

Own Bank Account

Once you have legalized your business you can create a bank account with the business number that you acquired. This is not necessarily needed for tax purposes, however; when you are reporting your earnings at the end of the year it will be way easier if you can keep business and personal separate.

Health Insurance

This is a responsibility that must be taken on by you as a business owner as you are not given sick days or vacation pay once you become self-employed. Finding the proper health insurance covers you and your family for medical costs that can be hard on your bank account when paid out of your own pocket with no reimbursement.

Running a business from home can be the perfect opportunity for many individuals. A proper business plan and legal actions is the start to a successfully run home based business. Next is finding the perfect working environment and that perfect chair!