Most people launch home-based businesses because they’re easy, convenient, and low-cost. However, it’s important that you don’t confuse these benefits with the seriousness of running a company. Regardless of whether you run your business out of a basement or a high-rise office building, cutting corners will come back to bite you.
How to Take Your Home Business Seriously
You might attach the word “home” to the front of it, but the IRS and other governing bodies don’t really care. All they see is a business. If you don’t treat it with the seriousness that’s expected of a business, you’ll end up confronting a litany of legal and financial consequence that result from shortcuts.
Here are a few specific steps you can take to avoid cutting corners and instead position your business for future growth and success:
- Choose the Right Business Structure
First and foremost, select the right business structure. This will serve as the backbone of your company and will ensure you have proper financial and legal protection.
When it comes to structures or legal entities, home business owners have a variety of options – including sole proprietorships, partnerships, LLCs, S corporations, and C corporations. Every business is different, but LLCs are by far the most common among home business owners. They’re easy to set up, inexpensive to maintain, and provide adequate protection.
The biggest key with your business structure is to do the proper research and register it in the right manner. As long as you do your due diligence, you should be fine.
- Keep Finances Separated
If you want to avoid financial and legal troubles, keep your business money and personal money separate. Using your business account as your personal piggy bank will do nothing but hurt you in the long run.
The problem with taking money out of your business account for personal expenses is that you erase some of the security mechanisms that exist to protect you from legal consequences. If, for example, your home business is structured as an LLC, spending business money on personal expenses pierces the corporate veil. This puts your “limited liability” to the side and opens you up to serious vulnerabilities.
- Hire the Right People
Home business owners are always looking for ways to cut costs, lower expenses, and bolster profits – especially in the early stages. The only problem is that, in pursuit of cost cutting, these same business owners commonly neglect the need for hiring people with expertise.
Don’t let your temptation to save a few bucks today put you at a disadvantage tomorrow. Whether it’s hiring a full-time employee, a contractor, or an outsource service partner, you need people to help you with things like bookkeeping and taxes. Hire the right people and you’ll avoid expensive complications down the road.
- Secure the Right Insurance Policies
It’s easy to assume that insurance is a waste of money, but your small size doesn’t absolve you (or your business) from legal consequences. It’s tough to pay for insurance that you might not ever need, but it’s the right thing to do.
Meet with an insurance agent and discuss which polices are right for your business. Some common policies for home businesses include: commercial general liability, commercial property insurance, errors and omissions, workers’ compensation, and homeowners’ policy endorsement.
- Protect Your Files
The last thing you can afford is for a natural disaster, computer virus, or cyber attack to destroy all of your files and data. Unfortunately, most home business owners are just one problem away from losing everything.
It’s imperative that you have some sort of file backup solution in place to keep your business up and running in the event of a worst-case scenario. You can view this as another form of insurance. It’ll cost you a little money each month, but it’s worth it in the end.
- Focus on Quality
At the end of the day, quality is everything. You can invest in snazzy branding and clever marketing, but it’ll all fall flat if you don’t provide a quality product or service that meets the needs or wants of a specific audience.
In the early stages, the bulk of your investment should be in the product. Once you’ve gotten the quality to an exceptional level, you can proceed to other things like branding and marketing.
Take the Extra Step
Anyone can start a business. Almost anyone can enjoy moderate success in business. However, only a few will ever build thriving businesses. If you want to propel your venture to the next level, you have to be willing to take the extra step.
The irony of taking the proverbial extra step is that it really isn’t that difficult. We operate in a business world where most of your peers are cutting corners. By simply not cutting corners, you’re already putting yourself in a better position than the majority. If, on top of that, you’re willing to put forth additional effort, you’ll soar past the rest.