How To Set Up Shop At Home

Home office how-tos


It's easy to see why the number of home-based businesses is growing. Faster computers, e-mail and other technological advances are making it easier for home-based businesses to meet the rising demand for new services and products. However, setting up a successful home-based business can be challenging. To improve your chances for success, the Arizona Society of CPAs recommends that you consider the following factors.

Choosing the right business

If you're thinking about setting up a home-based business, consider whether the type of business you have in mind lends itself to operating out of a home. Businesses such as writing, desktop publishing, accounting, and computer programming typically can operate efficiently from a home, as can service businesses, such as housecleaning and home repair, where most of the work is done at the customers' locations. Businesses that are likely to result in heavy customer traffic require special consideration and may not be appropriate for home operation.

Equipment and furnishings

For many home businesses, a computer is the most important piece of equipment.

While your business needs should dictate the type and speed of the computer you buy, it's wise to select a system that can be upgraded to grow along with your business. Similarly, the software you purchase is best determined by your business needs. At the very least, make sure you have a good word processing program and an application for performing spreadsheet analyses.

Multi-function computer systems that combine a printer, fax, and copier save money and space, but on the other hand, if one component goes, the entire system is likely to be out of service. Acquiring a good telephone system, along with separate fax and modem connections is vital for all business start-ups.

If you want your home business to run seamlessly, one of the most important components is your phone connection. There are various services offered by phone companies to provide you with the most efficient connections for voice, data or a combination of both.

More and more phone companies are offering Digital Subscriber Line, the latest technology that allows quick and continuous transmission of both data and voice. The major benefit is that you can speak on the phone, receive a fax, and surf the net all at the same time. The bottom line is you want to make sure your clients can reach you and send information at any time.

Finding reliable suppliers

Set up relationships with competent vendors whom you can trust to support your business, and be sure to build a computer support network before you need it. A reliable computer repair service, a consultant for technical advice and assistance, and some computer-savvy colleagues you can call for quick troubleshooting will help ensure the integrity of your business' computer system.

It's also a good idea to find reliable associates with whom you can establish cooperative working relationships. When you're sick, experiencing a work overload, or faced with a family emergency, a trusted colleague is a valuable asset. Keep in mind, too, that colleagues with businesses that complement your own can provide you with a marketing advantage.

For example, if you're a writer and you team up with a graphic designer, you can offer clients more value-added services and position yourself as a one-stop-shop. Your clients can go to you for multiple services, which is a win-win for everyone.

Insuring your business

Sufficient insurance is vital to your home-based business. Don't rely on your homeowner's policy to protect your business. At the very least, you'll want a rider to cover your computer and related business equipment. But such riders usually don't cover the loss of business data, injuries that occur to customers on your property and libel suits.

To truly protect your business, CPAs recommend that you purchase what is called a "business owners policy." These policies are designed to meet the needs of small businesses, and typically include coverage for property, equipment, and general liability. Some insurance companies also are beginning to offer home business policies that are available to home-based businesses that have minimal products and professional liability exposure.

Business deductions

Finally, keep in mind that you may qualify for a home-office deduction if you use a dedicated space in your home regularly and exclusively for business. Consult with a CPA to learn more about how to qualify for the deduction.

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