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Operating A Home-Based Business

Written by Arica Ureña on May 1, 2020.

Operating a home-based business comes with perks. When you think of operating a home-based business, what is the first perk that immediately comes to mind? Did having the ability to create a work schedule convenient to your individual needs come to mind? If so, you wouldn't be alone. Having the ability to set your own schedule often entices entrepreneurs to start a business from home. Although flexibility is typically the most commonly thought of, there are also financial perks that may be a deciding factor when it comes to deciding whether to start a business from the comfort of your home or to acquire a brick and mortar location.

Lower Start Up Costs – Starting small and scaling to fit your needs overtime is typically the best business model because the amount of financial risk associated with the business is reduced. During the startup phase of business ownership, there will, however, be some expenses that can’t be avoided such as registering your business with the state, obtaining a business license and/or professional license, and structuring your business (i.e., LLC, Partnership, or Corporation). If your business is located in a commercial location, you may incur additional start-up expenses such as zoning and building permits as well as the cost for inspections.

Reduced Operating Costs – Unlike operating a business from a traditional brick-and-mortar, the cost to operate a home-based business is significantly lower. By choosing to work from home, entrepreneurs can eliminate additional expenses a brick and mortar business would ultimately incur such as rent, electricity and insurance.

Income Tax Deductions – Since a home is the hub of the business, benefits from income tax deductions may be received. According to the Internal Revenue Service, entrepreneurs who operate a business from their home may qualify for deductible expenses such as rent, mortgage, repairs, insurance, travel, transportation and utilities. For a full list of qualifications and deductions, please visit

Elimination of Childcare Expenses – Another reason entrepreneurs choose to start a home-based business is having the option to operate a business and raise their children simultaneously. Next to paying a mortgage or rent, childcare is typically the next largest expense families incur. However, by choosing to keep children at home versus daycare, a major expense can either be eliminated or reduced, if you choose part-time care.

Decreased Vehicle Expenses – Most home-based entrepreneurs report a decrease in the amount of gas required to operate their vehicle since a work commute has practically been eliminated. In addition to a decrease in the amount of gas consumed, the number of miles a vehicle travels may also be reduced depending on the type of business being operated. It’s advised to check with your car’s insurance company to see if you qualify for a decrease on your insurance rate if the number of miles driven annually is significantly reduced.

Believe it or not, some of the most well-known international brands began as home-based businesses. Take Amazon for example – Amazon is a multi-billion dollar business established in, founder and CEO, Jeff Bezos' garage. It's hard to believe a business of that magnitude today began in a garage selling books. By establishing your home as ground zero for the operation of a business, you can significantly reduce operating costs which, in turn, will provide more capital to use in other areas such as equipment, inventory and automotive services.

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