Posted by Marcel Sim in Home-Based Business
The thriving American cottage industry includes the smallest businesses of all, ones that can fit into a spare room, basement or garage. But even a business small enough to fit on a kitchen table has to keep impeccable records, function efficiently within its allotted space, and keep its overhead as low as possible. If you are a work-at-home entrepreneur, you get to make the rules, but if you want your business to expand, there are a few resources you will need in order to run a legitimate business.
Licenses, Certificates and Tax I. D. numbers
If you plan to cash checks or other remissions made out to your business, you will need a D.B.A. (Doing Business As) certificate. For tax withholdings purposes, a Federal I.D. number is required for all businesses with payroll. Entrepreneurs may also need state and city business licenses or I.D. numbers, in order to comply with tax requirements. If your business is selling a product that involves another product in its manufacture or shipping, you will need a Resale number to avoid paying sales tax on the auxiliary product. You can find out how to obtain all of these certificates on line or by phoning the entities involved in their issue. If you have a personal accountant, they can also give you information about what you’ll need in this area.
Computers and Internet Access
You will need a fast running computer (the newer the better, for speed and efficiency) and a high speed internet provider in order to communicate with your vendors and customers, manage your inventory, and keep accurate records of your sales. A good computer will be a lifesaver when it comes to organization and documentation. Whether you have a desktop or laptop, this will be where you keep all your records and important papers—the days of having a messy desk or bursting file cabinet are over. A scanner, printer and label writer are also indispensable to the at home entrepreneur, and can often be included as business expenses.
Organizing your Books
As mentioned above, everything is done digitally now. Luckily, there are plenty of software programs available to help you stay digitally organized and accurate. Your electronic records now take up a lot less space in your tiny home office and are instantly accessible to you. You will need a bookkeeping program like Excel to keep track of your sales and taxes collected. You will need a database such as Filemaker Pro, to store customer information, such as street and email addresses, credit card numbers, buying history and notes. You will want to have files devoted to vendors you deal with, places you advertise with, records of your correspondence, in short, everything relevant to your business, at your fingertips at all times. Do not attempt to do your bookkeeping in reverse—do it as you go, and you will save yourself a headache later down the road.
If you are an entrepreneur creating your own product from home, you likely have machinery, equipment, and supplies that you rely on. If you are relying on a specific machine to reproduce the product you are selling, you may also want to keep a backup machine on hand, in case the first one fails. This could mean the difference between next day shipping and two week later service. If you require large machinery to produce, store, or move your inventory around, the professionals of Arpac who specialize in warehouse equipment in Calgary suggest that you rent this equipment for the time being until you have more money or your own warehouse.
Office and Warehousing Space
You will have to set aside space for creating your product as well as desk space to manage the related paperwork. Storing data should be a no brainer, whatever can be electronically stored should be carefully entered in your computers and backed up in several places. Storing inventory is the biggest challenge when space is at a premium. Inexpensive, hard plastic shelving can turn garages and extra rooms into neat, well-organized mini warehouses. Some warehouses will allow you to rent a portion of their space for a lower price which is a great option as your business expands—you might not need an entire warehouse to store your inventory, but eventually your product is going to overrun your home.
Materials and Supplies
If you plan to ship a product directly to your customers, a Costco or Sam’s Club Small Business account will offer the best prices on all the packing supplies, shipping envelopes and heavy duty storage shelving you will need for your stock. If you are acting as your own supply chain, other helpful shipping equipment may include a shrink wrap machine and postage meter. Remember the Resale number, so you don’t have to pay sales tax on these supplies.
Once you have jumped through all the hoops and received the proper licensing, you are well on your way to creating a successful home business. Some entrepreneurs are content with running their business out of their garage forever, but if you want to expand your business and one day run a legitimate operation, you need to be professional and legitimate from the start. Sure, it can be tough to act professional when your office is your basement or the guest bedroom, but everyone has to start somewhere, right?