When you’re starting a company, you need to stretch every dollar as far as possible, which is why so many small businesses begin in their owners’ spare bedrooms, basements and garages.
You might find that operating from home is still a good idea even after you’re more established. It works for Michelle Hovick, an independent sales director for Mary Kay Cosmetics.
“If I need to toss in a load of laundry, I can take five minutes to do that,” said Hovick, who is also the secretary of the Small & Home Business Connection, a local group for home-based entrepreneurs. “The downside is that I can take five minutes when I should be working.”
How can you maximize the benefits of having a home-based business while avoiding the pitfalls? Try the following strategies.
FIRST, MAKE SURE YOU’RE ALLOWED TO BE THERE Depending on what you do and where you live, your home-based business could be affected by zoning regulations, state laws or rules established by your homeowners association, especially if customers and employees come to your house or you’re doing anything louder than typing. If you rent, your landlord might have questions, too. Investigate whether you need business insurance.
Check with the appropriate authorities—your city or county clerk’s office is a good place to start. A good attorney can help, too.
SET (AND FOLLOW) RULES FOR YOURSELF Nowadays, everyone’s guilty of bringing work home with them. The temptation is especially strong for home-based entrepreneurs. It’s all too easy to duck back into your office and write just one more email after dinner.
Hovick actually works in a former dining room. When she moved into the house, she paid to have doors installed in her home office. That way, she can physically “close the door” on the workday. “I’m closing the door, I’m done for the day.”
Home-based entrepreneurs also need to make sure they don’t get distracted when they’re working. Hovick will block out time for making sales calls, and she will go to a room in her house without a computer, so she’s less likely to get off track.
TAKE ADVANTAGE OF THE HOME OFFICE TAX DEDUCTION This is one of the most powerful reasons to work from home. “I get to write off part of my house payment, part of my utilities and part of my HOA (homeowners association) dues,” Hovick said.
There are two ways to calculate your deduction. Generally speaking, the original method is based on the percentage of your home that is used for business purposes. A couple of years ago, the Internal Revenue Service introduced a second, simplified method. Business owners can deduct $5 for every square foot used for the business, up to 300 square feet.
Read more about the deduction at the IRS website, 1.usa.gov/18v4jL9. Hovick strongly recommends consulting with a professional accountant.
REMEMBER TO GET OUT OF THE HOUSE Most home-based entrepreneurs don’t have any employees, and it’s rare for customers to visit. It’s easy to feel isolated.
Selling Mary Kay is a naturally social business, but Hovick makes a point of regularly calling another sales director—her “power partner,” as they say in Mary Kay. They ask each other how many calls they made that day and hold each other accountable.
Working from home could be a smart choice for your small business, too, if you have the discipline.
“We all know the things we need to do,” Hovick said. “But do we all do the things we need to do?”
