How to start a small business at home

Estimated reading time: 3 minutes

According to the Small Business Administration, around 50% of small businesses are home-based. And since many of us are spending more time at home than ever, this could be the perfect climate to launch your own micro business.

There are a lot of pros to running a business out of your home – or from behind a computer. You’ll have low overhead costs, increased flexibility, and even eligibility for tax breaks. You’ll also get the chance to turn a passion project into a side-hustle, create a new stream of income, and learn new skills.

If you’re thinking of starting a small business at home, follow these steps:

  1. Decide if a home-based model is right for your business.
  2. If it is, set up an office or workspace.
  3. Create business & marketing plans.
  4. Make sure to follow local rules and regulations.

1. Decide if a home-based model is right for you.

If you want to start a business that requires minimal in-person interaction, a home-based business is likely an easy win. Whether you’re launching an ecommerce shop to sell custom t-shirts or offering website design services,  you can effectively run these types of businesses from anywhere with an internet connection.

Are you a makeup artist planning to perform services in your home? Or an accountant who invites clients in during tax season? Though you can conduct these types of businesses from your home, you’ll likely need more than a makeup table or laptop. Think about how comfortable you are with having clients come into your home, and how feasible it is for you to create a dedicated professional space.

If you’re not comfortable with in-home guests, you can still pursue your small business dreams – offer to service clients in their own home or office, or invest in a van or truck to make your business mobile.

2. Set up an office or workspace.

Whenever you’re working from home, it’s important to create a separation between your work and non-work life. Even if it’s just a desk in the corner of your living room, setting aside an area of your house for work is good for your mental health and productivity. You should keep this space decluttered – especially if you’re consulting with clients in your home.

When you’re ready to set up your workspace, Architectural Digest lists these six elements as key for at-home infrastructure:

  1. Power.
    Additional computers and printers will increase your power usage, so make sure your home’s system is compatible.
  2. Internet.
    Make sure that your WiFi signal is strong enough in your workspace, and purchase a new router if needed.
  3. Lighting.
    At home, you’ll likely have softer lighting than in a commercial office – but make sure you’re getting enough light in your work area to prevent eye strain and headaches. Also, test out your computer’s camera to make sure you have enough lighting for Zoom calls or video conferences.
  4. Ventilation.
    Create optimal climate control in your home office with a fan or air conditioning unit.
  5. Circulation.
    “Declutter your workspace and delineate a clear circulation path. Secure cords and wires and remove unnecessary furniture.” Your workspace should be as minimal as possible.
  6. Pleasing visuals.
    Include at least one visually appealing item to make your space more comfortable – maybe a house plant, a family photo, or an art print.

3. Create business & marketing plans.

Creating a business plan can keep you on track for success…and marketing your business will play a major role in that success.

Your business plan should include a summary of your idea, research into your target market and competition, financial plans, and an operational layout. A well-written business plan is great to have on hand – you can present it if you’re applying for a small business loan or looking for investors. It will also be a great reference point for you as you launch your business, and keep you grounded in your mission and goals.

You’ll also need a marketing plan. You’re starting a new business, so you need to tell people that you exist. Digital tools, like websites and social media channels, are low-cost and effective marketing outlets, while traditional marketing methods (like flyers and postcards) can go a long way locally. And don’t be afraid to get creative – consider joining virtual networking groups or community groups, partnering with well-established local businesses, or running a giveaway on your Instagram account.

4. Follow local rules and regulations.

Make sure you’re in compliance with state and local rules specific to home businesses. This could include getting a special license or tax number, setting up a sole proprietorship or LLC, and making sure you’re actually allowed to operate a business out of your home.


As a small business owner, you may be eligible for tax incentives – like a home office deduction. Keep diligent records of your expenses, and consider hiring a CPA to make sure you get the maximum refund.