Starting a Small Business in Oakland County

Home-Based Business

Operating a Business at Home

There are many unique problems and opportunities in deciding to operate a business at home. It may start as a part-time business while maintaining a current position to become full time soon. It may also be part of a change in careers or making a hobby into a business.

An opportunity exists because expenses are low and it will be possible to verify the market needs before going into the business full time. However, problems such as distractions and time management are very real. Keep the following in mind when beginning a business at home.

• Select an office with the greatest isolation.
• Keep personal business out of real business.
• Have the family appreciate your privacy.
• Install a separate phone line. An answering service or machine will present a professional image. A rented mailbox may provide a desirable alternative to your street address to protect privacy.

Is a Home-based Site Workable?

Often a start-up business can save money by beginning at home if it does not need customer "traffic." Careful planning is required to research legal and tax issues, use of the available space, and to establish time management discipline.

Check the advantages and disadvantages of working at home and think carefully about other possible obstacles.

Pros/Cons

• Lower start-up costs/Household interference
• Lifestyle flexibility/Security concerns
• Lower overhead/Limited space
• No commuting/Isolation
• Tax benefits/Zoning

Is a Home-Based Business Permitted?

Every community covers the uses of a home in the zoning ordinance usually under the definition of "Home." The general restrictions are parking, traffic, sound or employees outside of the family. Visit your zoning office and discuss your proposal. If an apartment is involved, read your lease. Ultimately a neighbor's complaint would be the occasion for review. Tell them of your plans and enlist their support.

Licenses

The requirements of the County Health Department and State Department of Agriculture make it almost impossible to do catering or packaging food for resale. Other types of licensing may be required. Call 517-373-9808.

Insurance

Coverage and limit changes may be required to your current policies. Describe your business to your agent and discuss:

• Business equipment
• Inventory protection
• Employee bonds
• Personal liability for visitors
• Product liability
• Health insurance (also contact localChamber of Commerce/trade association)
• Property and Personal

Taxes and Deductions for Home-Based Businesses

It is possible to obtain a deduction for a room(s) set aside for business use only. This could be a proration of utilities, building maintenance and house payments, based on percentage of floor space used. The rules were changed in 1992 and you need to file a Form 8829, explained in Publication 587. All other expenses will be reported on Schedule "C" (with your 1040) as in any business. An accurate mileage record permits $.30 per mile.

Resources Directed to Home-Based Businesses
(Write for sample copies.)

Cottage Connections
National Association for the Cottage Industry, P.O. Box 14850, Chicago, Illinois, USA, 60614
Phone: 312-472-8116
Sixteen-page newsletter with many resources described for home-based businesses.

Craft Marketing News
The Front Room Publishers, P.O. Box 1541, Clifton, New Jersey, USA, 07015-1541
Listing of resources to help market crafts.

The Craft Report
700 Orong Street, P.O. Box 1992, Wilmington, Delaware, USA, 19899-9962

Keyboard Connection
Nancy Malvin, P.O. Box 338, Glen Carbon, Illinois, USA, 62034
Phone: 618-667-4666
Newsletter and start-up package for secretarial home-based business.