Business owner talking on the phone in home office

How to Start a Stay-At-Home Business

7 min read • May 14, 2020 • Ben Glaser

The corner office used to be the symbol of business success, but numerous trends have made offices both unnecessary and undesired. Maybe you can’t find an affordable home within driving distance of your job. Or maybe you need to be at home for your family but can’t afford not to work. Whatever the reason, working from home is more feasible than ever, and being your own boss is a great way to go.

Develop a Business Idea

The allure of being one’s own boss and having the flexibility of working from home are self-explanatory. But you will need more than desire to start a successful home business for a persuasive and actionable plan. A few questions to ask yourself in the brainstorming process:

Are You Ready to Be a Business Owner?

Entrepreneurs get to be the boss. That position means authority and responsibility. If you’ve handled only the technical or creative aspects of your job before, are you ready to handle the administrative and business sides? How will you respond when you are responsible for decision-making that affects your financial future and that of others? If these are not parts of work that you enjoy, maybe you should focus on finding a job working from home for someone else. Business owners are never really off-the-clock, and there are many advantages to letting someone else handle the back end.

What is Your Idea and Does It Fill a Market Need?

You’re ready to be the boss, but boss of what? Ideally, you are starting a business to fill an unmet need in the market. Have you noticed a lack of accountants or contractors in your area? Do you make crafts that are already proven sellers? Grabbing a franchise or at-home business idea that worked for others might seem like a good idea, but it won’t work if there is no demand.

Is Your Business Idea Appropriate for the Home?

Some businesses require dedicated space, specialized equipment, and/or large numbers of staff in a common space. If that’s your idea, consider starting your business in a traditional office setting or adapting your idea for the home. For example, if you love reselling clothes on eBay but you don’t have the home storage space to start a full-blown consignment shop, you might try being an online personal shopper.

Here are some popular categories for appropriate and successful at-home small businesses:

  • Writer/Editor
  • Bookkeeper
  • Social Media/SEO Manager
  • Graphic Designer
  • Medical Coder
  • Medical Transcriber
  • Computer Programmer
  • Craft Seller
  • Used Goods Seller

Write a Business Plan

Most businesses have roughly the same plan—sell goods and/or services for profit. But a full business plan will require more detail. It will not only help you attract investors and get loans, but it should act as an operating plan for your organization.

We’ve written an easy, step-by-step guide to creating a business plan that will take you from answering a few simple questions to structuring your formal document. Be sure to read the whole thing, but the basic sections of your final business plan will be: 

1. Executive Summary

What you want to do and how you will do it. Be sure to make your business goals SMART—Specific, Measurable, Attainable, Relevant, and Timely.

2. Business Overview 

What is the current state of your business? For brand new businesses, this overview might include available resources like savings, prototypes, and home office equipment.

3. Market Analysis/Industry Analysis

Is your chosen industry booming or struggling? How will that affect your strategy? Market analysis requires market research. Fortunately, you don’t need to pay a consultant big bucks for informative insights—most small businesses can perform effective market research on their own.

4. Competitive Analysis

Who are your direct and indirect competitors? How will your company distinguish itself from them and fill a demand in the industry?

5. Sales and Marketing Plan

How will you generate revenue?

6. Operations and Management Plan

How will your company run? This section is a great place to highlight any human resources you may have. If your company is light on infrastructure but heavy on industry experience, it could count for a lot with investors.

7. Financial Plan

How much will your plan cost, and where can you get the money?

Handle the Tax, Financial, and Legal Filings

Armed with your idea and business plan, you are ready to take tangible steps that make your business a reality. These legal, financial, and governmental hurdles can be intimidating, but Jeff Haden at proved that these administrative steps could be completed in just a few hours.

Name Your Business

What you name your business is extremely important, but more so when you start actually dealing with customers and clients and building a brand identity. It’s also fairly easy to change your business name by filing a “doing business as” (DBA) form (also sometimes called a certificate of assumed name) in your state. So if you want to get the ball rolling, don’t worry about the name right away. 

Decide What Type of Business You Want

There are several common legal setups for small businesses in the US. If you are the sole person involved in your new business, you will likely want either a sole proprietorship or a Limited Liability Company (LLC).

  • Sole Proprietorship is the most basic and least complicated legal form of a small business. It means a person is conducting business as an individual, and the business will be taxed accordingly. Under this form, a person is personally liable for the business.
  • An LLC provides some of the protection of incorporation by separating the liability of the individual person and the business. In addition, the owner can still avoid being taxed as a corporation. LLCs are more administratively complex and must separate personal and business finances.

Get an Employer Identification Number

An Employer Identification Number (EIN) is the federal tax ID. According to the Small Business Administration (SBA), you “need it to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.” An EIN is effectively how your business registers with the federal government.

Register with State, County, and Municipal Authorities

The need to register and license businesses with state and local governments varies greatly depending on your location and type of business. It is less likely necessary for sole proprietorships, but be sure to check in any case. 

Get a Business Bank Account

Even if you are a sole proprietor, there are many good reasons to open a business bank account. It allows you to track expenses more precisely, can help in an audit, and lends a sense of professionalism to your company.

Set Up Your Home Office

Part of your motivation for starting a home business was probably skipping an office. However, that doesn’t mean you should work from your couch every day. Having a designated workspace is key to being productive at home. Preferably, you will have a separate room where you can close a door to block out distractions and mentally separate your work and personal lives. Outfit your space with a supportive chair and good lighting to prevent aches and fatigue.

Choose Your Business Software

As you get your business started, tracking expenses carefully is vital, but you don’t need fancy accounting right away. Haden suggests a simple spreadsheet tracking income and expenditures. Also, many bookkeeping apps are accurate and easy.

And voilà! Ok, it’s not that simple, but as you can see, setting up a stay-at-home business does not have to be intimidating. The hard part lies ahead, though there are plenty of resources to help you through the next stages, too.


Ben Glaser

Ben has almost a decade of experience covering personal finance and business. From 2014–2017, he was blog editor and spokesperson for the shopping website, where he regularly appeared on programs like Good Morning America and Fox and Friends to offer consumer advice. Ben graduated from Harvard with a BA in English and lives in the Hudson Valley of New York.