Starting a Small Business from Home

Starting a small business from home has become the goal for Australians who choose to earn their living by being their own boss. Running your own business at home won’t only give you more liberty, it will also save you the cost and time of renting a commercial space.

If you are planning to start a home business, careful deliberation will help to maximise your chance of success. Consider these tips to get you started on the right foot.

Make a plan

Developing a plan is the best way to start. An owner who can anticipate and handle different issues will definitely have success. Although levels of success may vary, thinking through and taking the time to research and plan your operations can always work to your advantage. Some questions to consider before operating from home:

• Is your home the best location for your business?
• Would you be able to manage the type of business you want under local council regulations?
• Where do you see your small business in 1 year?
• Will your home business have a balanced work and family life?
  
  

Find the structure of your small business

You should have decided on the right structure for your business, which determines your tax liabilities, potential personal liability, the volume of required paperwork, and ongoing costs, among other things. Here are the most common business structures in Australia:

• Sole trader – A sole trader is the simplest form of business structure, which is easy and inexpensive to set up. A sole trader is legally responsible for all aspects of the business, from starting and running your business to employing people.
• Partnership – A partnership involves two or more people (up to 20) going into business together to make a profit. In Western Australia, partnerships are governed by the Partnership Act 1895.
• Company – A company can either be a private (proprietary) or public entity. A registered company must have at least one director and a company secretary, unless it is private. A director is responsible for managing the company’s business activities. For an entity to become a company, it must be incorporated under the Corporations Act 2001 and registered with the Australian Securities and Investment Commission (ASIC).
  
  

Register for an Australian Business Number (ABN)

Whichever structure you choose, you should register for an Australian Business Number (ABN). An ABN is a unique 11-digit number that identifies your business for tax purposes. An ABN is a requirement for those who intend to register for GST or PAYG Withholding. Also, the ABN on invoices and receipts issued to customers has to be displayed.

If you are applying for your ABN as a company, make sure to first register for an Australian Company Number (ACN). After you have completed your ACN registration, you may then apply for a new company ABN.

Setting up your home office

When you set up your home office, you might need office equipment, new furniture, and information and communications systems, in which you install an official phone line for transactions. You should also have a system back-up for all your operating systems, files, and system-specific essential data.

Since you’ll be spending most of your time in the office, make sure your workplace is a safe, pleasant, and comfortable environment for you and your customers. Always consider what will impact the health, safety and welfare of those in your workplace.

Build an online presence

Building a positive digital and social media presence is vital. A user-friendly website is your first point of contact with consumers and shows the credibility of your business. A website provides information about your services, generates leads, and helps build your brand.

In a digital age where most people are smartphone users and consumers search products online before buying, having an online presence is important to starting a successful small business from home. Also, you will be delighted to find that it’s very affordable to maintain a website.

Be on top of your finances

How you manage your finances will reflect on all aspects of your business and can make way for potential growth. Aside from having a basic understanding of your finances, getting advice from a professional is an essential part of operating from home and should be considered.

Being on top of your finances will help to improve your cash flow. You should learn how to: 

• determine your business’s financial health by analysing your finances
• know the key financial terms
• improve your home business’s financial position 
• find financial help and solutions.
  

Don’t be afraid to do some assessments on various situations, worst case scenarios, and risks that may occur in starting your small business from home. It’s much easier to think ahead and have a contingency plan than to resolve the unexpected blocks on the road.

If you liked our “Starting a Small Business from Home” and find it useful, check our blogs regularly for more information on how to get out of debt and updates on the best budgeting apps in Australia.