How to start a home-based business
If you are planning to start a home business, you need to consider many factors before opening your doors to customers. Starting a home-based business offers lucrative opportunities that require familiarization with different types of business and tax regulations. To better choose a home-based business and start it, you should follow the tips below.
What kind of business?
- In general, the type of business that can most easily be managed at home is a service company such as a cleaning company, school support, consulting or any other company that does not require large stocks.
- You may also be restricted by the province’s zoning laws or agreements, as well as by the regulations of your homeowner’s association. Zoning laws may restrict the management of a business in a residential area and your association’s by-laws may contain comparable restrictions.
- You can also invest in a franchise that is, in many cases, managed at home. A franchise offers you the advantages of well-established brand systems and procedures. On the other hand, it restricts your freedom of action and requires the signing of a franchise agreement according to which you must pay the franchisor monthly royalties.
Starting a home-based business is not much different from starting any other business.
- Different points need to be considered before starting a home business.
- You may encounter difficulties if you choose a name already used by someone else. You must, therefore, seek advice from the government agency that grants business licenses and permits in the province.
Each province has different requirements for licenses and permits. Start by checking the local government websites.
The options that are essentially available to you for a business category are:
- Sole Proprietor, with you as the sole owner of the business;
- Partnership, according to which you share the company with another person;
- Incorporation allowing you to have a company with shareholders. Incorporation can limit your personal responsibilities but is more expensive to manage because of the reporting requirements.
- Limited Liability Company owned by one or more other members.
If you run a home-based business, remember that you can deduct a portion of the costs incurred to operate your business tax return:
- Car (gasoline, rental fees, purchase, etc.)
- Office supplies (printer, chair, computer, etc.)
- Interest on the mortgage or your rent
- Current services (water, electricity, internet, telephone, etc.)
It’s important to think about the type of business, plan licensing requirements, and be aware of the tax benefits of a home-based business before embarking on the adventure.