After years of the 9-to-5 grind, you're finally ready to turn in your letter of resignation and start your own business. Entrepreneurship is an excellent feeling. And if you have a great business idea and space in your house, you might be ready to take a leap and set up your own home business.
Running a business from home provides one of the greatest freedoms. You can say goodbye to the daily commute, set your own schedule and control your income - what more can you ask for?
If you're preparing to start your home business, your biggest concerns at the moment might be acquiring your business license and purchasing supplies and equipment. However, these aren't the only issues to think about when setting up shop at home.
Here are three commonly overlooked aspects of running a home business.
1. Check your local zoning laws
You own your home, therefore, you might feel that you can do whatever you please in your house. Unfortunately, your local zoning laws may say otherwise.
Many people run businesses from home. And truthfully speaking, you can probably set up your home business with little hassle from your local government. This is likely the case if you're a freelancer or running a consulting business.
Be aware, however, that local zoning laws may prohibit certain types of businesses. For example, if you're providing medical services, such as physical therapy or chiropractic care, or if you have a hair salon, local laws might bar you from operating these businesses in your home or neighborhood. Also, there might be restrictions regarding hiring employees and receiving customers in your home.
Check with your local zoning department to determine which businesses are permitted in the home. If you live in an apartment or rent your home, speak with your landlord to see if you're allowed to operate a business on the property.
2. Make sure you understand home office deduction rules
As someone who runs a business from home, you may diligently keep your receipts throughout the year, and revel at the fact that you can deduct some of your household expenses on your tax return. But before you get excited, there is a catch.
Individuals who run a home business are eligible for a home-office deduction, and they can usually deduct a percentage of other costs, such as their electricity and water. However, to claim these deductions, you must have a dedicated space in your house for business, and this space must be used exclusively for business.
In other words, if you run a home business and conduct your work from the living room or your dining room table, you cannot take these deductions.
3. You might pay more for homeowner's insurance
If you own a home and run a business from this property, expect your homeowner's insurance premiums to jump. Although an average policy covers up to $2,500 for business equipment, "it usually doesn't cover business-related liability if a customer or supplier is injured on your property," according to the Insurance Information Institute.
Home business owners typically need a policy with broader coverage -- one that offers additional property and liability coverage. Of course, this doesn't apply to all home businesses. Check with your insurance carrier to see if your business requires additional coverage.
Entrepreneurship can take your career to the next level; and the fact that you're able to run your business from home is a major bonus. Just make sure that you understand the rules, and you acquire adequate coverage.
Image Credit [Flickr]