How To Start a Business From Home

Key elements include a name, plan, and structure

Young entrepreneur/business owner at home processing orders

Halfpoint Images / Getty Images

At a time when remote work and work flexibility has become the norm, starting a business from the comfort of home has never seemed more ideal. After all, working from home saves time and money, and adds convenience to your workday. Plus, with the significant increase in e-commerce since 2020 and the reemergence of retail industries such as dropshipping, where you don’t have to manage any physical products, launching a remote business can offer plenty of potential for growth.

However, starting a business (virtual or otherwise) requires a fair amount of planning, funding, and time commitment. To help you navigate this process, we’ll discuss the key steps to start a business from your home, including how to find a suitable business idea; the steps to plan your business operations; how to name your company; and how to register your business. We’ll also answer some frequently asked questions about home businesses.

Decide on a Business Idea

Having a strong business idea can make or break your chances of success. That’s why it’s crucial to come up with a solid business idea that gets you excited and suits your strengths.

Here are some steps to help you find a timely, relevant, and suitable product or service idea for your new home-based business.

Lean on Your Past Experiences

When coming up with a fresh business idea, looking back at your life can help. Some questions to you may want to answer include:

  • What motivated you to choose your career path so far?
  • What did you dislike about your last job?
  • What excited or fascinated you in school?

This self-assessment can help you understand where your strengths and interests lie. Once you start brainstorming your passions, you will begin to notice a theme. Maybe you have always liked music, or maybe sports is more your thing. Lean on these experiences to choose a business idea.

Create a Skill List

If you are having trouble identifying your interests, consider creating a skill list instead. A skill list, as the name suggests, is a list of all the things you are good or even proficient at.


Don’t restrict yourself to school-taught skills. Dig deeper into your experiences to identify both the hard and soft skills you excel at.

Having a skill list can help you narrow down your ideas. For example, if you identified math as your passion during your self-assessment and notice (through your skill list) that you are good at managing money and talking to people, one potential business option could be starting a financial consultancy.

Talk to Your Family and Friends

People are at all different levels of self-awareness, so identifying past interests and skills can be challenging. To get a different perspective and help you move forward, it can be beneficial to talk to your family members and close friends. They may be able to point out the talents and skill set you hadn’t considered before.

Refine the Idea

Once you have narrowed down a few strong business ideas, it’s time to see if these are actually viable in the market. Launching and operating a remote business calls for different ways of strategizing and testing your ideas.

Whether you intend to sell a product or service, here are several questions you should ask yourself when you’re at the idea refinement stage:

  • Is there a market for this idea?
  • Are people willing to pay for this product or service?
  • How much competition is there in the market?
  • Can I find customers online?
  • Does this idea have enough demand for me to make a profit?
  • Can I make more money on this idea than what I’m investing?
  • What will be my key expenses?
  • Will this business cost more than running a brick-and-mortar company?
  • Is this business complex enough to require a staff, or can Imanage this venture solo?
  • Can I do this full-time?
  • Is this idea legally valid or is it infringing on copyrights, patents, or trademarks?
  • What are the legal permissions and documents I need to run this business?
  • Will I need any special licenses to operate from home?
  • What tax documents will I need?

Answering these questions will help you refine your idea enough to understand if your home-based business idea is viable and has the potential for success.

Come Up With a Business Name

After refining your business idea, it’s time to decide on a business name.

Naming your company can be tricky. You want something unique, but not too difficult to remember or pronounce. For example, Amazon is a unique, memorable name, while Louis Vuitton might be tricky to pronounce for people outside the fashion industry.

Here are some tips to come up with a memorable name:

  • Find something short and easy to pronounce.
  • Look for words that define your business (for example, Dunkin’ Donuts).
  • Don’t pick a common word; make it memorable.
  • Avoid using your own name, especially if it’s common (John, Jack, Kate, etc.)


Make sure you register your business name with your local department of business affairs. This will help manage your taxes and solve copyright issues.

Create a Business Plan

Planning your business can be a long, complicated process, but this time investment can be beneficial in the long run. Creating a business plan before launching your home-based company can provide an effective roadmap for growth. Having a business plan helps you find funding, set marketing goals, and track spending and revenue. It can also simplify your operations and help you find weak spots in your launch process.

Here are a few key questions to consider when creating a business plan:

  • How can you set up an operations base at home? Will you have a dedicated space for work?
  • What will your taxes look like? For example, will you take a home-office deduction?
  • How will you fund this business? Will you rely on your savings or seek external funding? If so, what methods of funding should you seek?
  • What will you do if you run out of money? Will you have an emergency fund?
  • If you’re handling business operations yourself, how will you manage your time?

These questions will help you define how you will run your business and how to plan for potential setbacks.

Choose a Business Structure

Once you start making money, defining your business structure will become important. Will you operate as a sole proprietorship business or will you register yourself as a limited liability company (LLC)?

A sole proprietorship typically requires less formal documentation, a simpler taxation system, and you’re entitled to all the profits. An LLC, on the other hand, requires more paperwork, but can be eligible for more funding options, and perhaps most importantly, you are not personally liable for business debts and liabilities—the LLC is.

The structure you choose will depend on your current and anticipated business goals and your plan to scale or eventually sell the company. For instance, if you want to scale your company rapidly and need significant funding, it may be better to opt for an LLC model so you can receive small-business loans.

Register the Business

When you have finalized your business plan and decided on a company structure, you can typically register your business by simply registering your business name with a state or local government office. Many states require you to register with the secretary of state's office, and some may require you to get a federal tax ID for government records. According to the U.S. Small Business Administration, in most cases, the total cost to register your business will be less than $300, but fees vary depending on your state and business structure.


If you want to trademark your business, brand, or product name, you will also need to file a request with the United States Patent and Trademark Office.

Frequently Asked Questions (FAQs)

What’s the best home business to start with low startup costs?

Consultancy-based home businesses are ideal if you have a smaller budget and are looking for a company with low startup costs. These can be managed alone and require little external funding to start the business.

Another option is to provide digital services like writing, social media marketing, virtual assistance, graphic design, or website development.

What’s the easiest home business to start?

Home businesses that can be managed alone are often the easiest to start. Some of these include:

  • Dropshipping shop
  • Content writing
  • Teaching/coaching
  • YouTube/Patreon courses

How do you advertise a home-based business?

You can market your home-based business through three popular (and perhaps free) ways:

  • Announce your business on your social media channels to reach followers and potential customers.
  • Offer referral discounts to existing customers so they can bring you new customers.
  • Attend virtual networking and marketing events to meet like-minded people and build a community around your products and services.

Key Takeaways

  • Find a timely, relevant, and viable business idea to make your home-based business profitable.
  • Outline your business plan so you can arrange funding and manage day-to-day operations.
  • Decide on a business structure to legally register your company.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. United States Census Bureau. "Census Bureau Provides Data on Fast-Growing Retail E-Commerce Sales." Accessed June 28, 2021.

  2. U.S. Small Business Administration. "Register Your Business."

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