How I Run My Home-Based Business

One of the more frequently asked questions I get is, “how do you run your business?” People are often curious what tools, tricks, processes I use to do what I do. So if you work from home maybe this will be helpful, or maybe you have some great ideas for me and the other readers that you can share in the comments below. As most self-employed workers know, there are many hats that need to be worn, so the more we can help each other out, the better off we will be.

Running a home-based business

I know full well that being a full-time blogger (read: how I make money blogging) is not the most common profession and my business is a different than many other home-based businesses. But, business is business, and I am sure there are also a lot of similarities as well.

Time Management

Being my own boss

This is one of the biggest challenges of self-employment. As someone who spent most of the last 10 years as an employee, it has been a challenge being the boss of myself and keeping myself accountable. I am tough on myself and that is probably the only reason this has worked.

As funny as it sounds I make mental shifts from boss to employee. So I will spend half a day as “the boss” scheduling out what I will do the rest of the week/month. Then I flip into “employee” mode and work diligently to do it.

I have found that if I don’t set time aside to be “the boss” then I just kind of coast and don’t get nearly as much done as if I have a task list or goal laid out in front of me.

Making sure that the business doesn’t run my life

I decided when I started this biz that it would be my slave and that I would never become a slave to it. For example, I have seen a lot of small business owners create businesses only to find themselves working 80 hours a week because they created something that now runs their life. It is rarely intentional, but it seems that if you don’t intentionally set up a system that keeps you in the driver’s seat then it defaults to eating up all your time.

Tony Robbins once said something that really stuck out to me. He said that we find the answers to the questions that we ask. So many people just ask “how can I make this business successful?”  But I intentionally ask myself how I can make it successful and not allow it to run my life.

As a result of continually asking that question, I don’t even see answers that will ONLY cause the business to be successful. I wait until I find the answer that will answer both questions. When I do, then I act.

Scheduling

I am always looking for better ways to manage my time and be as efficient and effective as possible. What has worked best so far is my determining key important tasks and scheduling them as blocks of time each week. I only schedule about half of my working day each day because there are so many inevitable things that come up that need to be done. But I am diligent to do the scheduled tasks each week. As Steven Covey would say, success comes from doing the important things regularly rather than just always focusing on the urgent. The key here being that often urgent things may not really be that important. And many important things are not very urgent. Which is why so many people never do them!

Business Structure

I started this blog as a hobby back in 2007, I only made about $100 total with it the first 6 months – so a sole proprietorship was the perfect business entity. By the way, if you do nothing, you are automatically a sole proprietor. I didn’t realize this when I started, but if you just start a business and don’t form an LLC, Partnership, etc, then by default the IRS considers you a sole proprietor.

Running the biz as a sole proprietor is the cheapest and simplest – because you don’t have to do anything different. You just mark your business earnings on your tax return along with income from your spouse’s employer, etc.

From what I understand the biggest downside of being a sole proprietor is that you don’t have much legal protection. So if your business get’s sued, they can take your house. That’s no fun.

Forming an LLC

I ran my business as a sole proprietor for about a year and a half until I formed a single-member LLC. There are a few different options when choosing your business entity, but I chose the LLC for a couple reasons.

It was simple to run

As a single-member LLC, no % of ownership needed to be divided up. Really, not much changed from running the sole prop as far as what I needed to do to maintain it. I still get to use a single tax form, instead of one for the business and one for personal.

Legal Protection

I am not a lawyer and don’t fully understand the legal protection that is provided. But after doing a bit of investigating, it became pretty clear that an LLC would be safer than a sole prop.

It proves to the IRS that you mean business

Apparently there are a lot of people who create home-based “businesses” to try to pull the wool over the eyes of the IRS. I remember reading that the likelihood of an audit is decreased by 90% for LLCs vs. sole proprietors.

How I did it

I was a bit freaked out about the process, because I had never done it. I thought it was going to cost me a lot of money – it absolutely doesn’t have to.

I was blessed to have a buddy who is a lawyer who volunteered to meet for an hour and we just filled out the online government forms for Missouri. To find the forms you could probably just Google “Your State + LLC”.

It was really a lot simpler than I thought. I think it cost me about $100-$150 to do it. If you are nervous about doing it yourself, you can get cheap (or free) help by doing it through a site like MyCorporation.com. Bottom line: I know there are probably some advantages to hiring a lawyer who specializes in this, but I just didn’t have the $1000-$1500 laying around that I estimated it would cost.

Tax ID number

I also applied for a Tax ID number (basically the Social Security Number equivalent for a business) because I preferred to keep my SSN out of everything and because it was require by my bank to open a business account. It took about 5 minutes to fill out the form and it cost me about $35. You can probably find this on your state government website.

Trademarks

I am kind of up in the air about trademarks. They are an expensive pain to deal with, but if you have something you want to protect, they are necessary. In my case, I wanted to protect my tagline – “Make it. Save it. Grow it. Give it.” especially when I saw a clear instance of someone infringing on it. So if you have something that you think is worth protecting, it might be worth it. But even if you don’t use a lawyer (which is very difficult to do in trademark law) it is an expensive process.

Day to Day

• I use Gmail to manage all my email. It is great because it works as an email hub allowing you to send and receive email from all your other email accounts. I can access it from anywhere and they give plenty of storage.
• I use Google Calendar to set my schedule and manage my time (as best as I know how).
• I use Evernote as my tool of choice for notetaking, storing ideas, or just about anything else. It is truly an amazing tool. I recommend this: how to use Evernote.
• I use a Motorola DROID as my mobile device. I use it to approve comments, schedule tasks, jot down ideas, take notes, even write quick posts from my phone.
• I have a Mac Mini that I use as my desktop. I upgraded the memory and I think it cost me $700. As a recent Mac convert, I will say this Mac has it’s flaws and is expensive, but they make very well designed stuff that makes my life easier. I appreciate that and am willing to pay a premium for it.
• I also have an Compaq laptop that I tote around when writing at a coffee shop. I am using it as I write this and it gets the job done.

A real business address

Similar to how I preferred to get a Tax ID number instead of using my SSN for the business stuff, I felt the same way about my home address. I do work from home, but the address for my business is

121 Civic Center Dr. Suite 250, Lake St. Louis, MO 63367

I got this by renting a mailbox from the local UPS Store for $11/month. I like it because I don’t have to announce my home address to the whole world and it looks a little more professional.

Software

Quickbooks – I use QuickBooks Pro to keep track of all my business financial stuff. It is $300 software, but I actually got it free when they were offering a $300 rebate. I am still not sure why they did that, but I am not complaining.

Some of this is more specific to what I do, but if you run a blog it might be helpful.

Banking

I do my banking with US Bank. I would prefer to use a credit union, but I couldn’t find one that had a free account. At time when I was shopping for a bank, US Bank was the only one I could find that was free. I have yet to need an actual paper check, so I never bought them. I use my debit card for every purchase.

I also have a Paypal account that is linked to the US Bank account as well. Some of the ad networks I work with only pay using Paypal, so it is a must for me.

Thoughts?

So, this was all I could think of about running my business, so if you have any other advice on how to run a home-based business or have any other questions for me – fire away in the comments below and I will try to get to them all…

Photo by: Amanki