It's a dream for some and a reality for others -- running your own business from home. For many, it's often tricky knowing how to start. There are many technical, legal and familial issues that can crop up, especially for those who are self-employed with no employees.

Businesses with no paid employees grew 2.3 percent between 1999 and 2000 from 16.2 million to 16.5 million, according to the U.S. Census Bureau.

"These very small businesses make up 70 percent of all businesses," said Census Bureau analyst Jerry Roth. "They may be run by one or more individuals, can range from home-based businesses to mom-and-pop stores to construction contractors."

For the millions working from or at home, office set-up, tax laws and accounting, and striking a balance between work and family are among the key issues they encounter when starting out - and beyond. There are three key categories you must consider when taking the first steps to creating a successful home office.

Get Tech(nology) Hands down, a computer is a necessity. Whether it's for communicating with clients via e-mail, researching, writing, creating presentations, accounting and recordkeeping, a computer is a must-have.

A complete on-the-road/work-at-home station starts at about $1,700. With a desktop computer, spend more on RAM (most common type of memory found in computers). A 256MB (amount of storage space) will give you a fast computer with the ability to run multiple programs concurrently (about $800).

If you need to buy an office program, Amanda C. Kooser, author of "Complete Guide to Outfitting Your Home Office" recommends Microsoft Office XP (about $400). The less expensive Sun Microsystems' StarOffice productivity suite, which includes word processing, database, presentation and drawing applications is about $80.

A 15-inch LCD (liquid crystal display) flat-panel display starts at about $400, and 17-inchers run about $600. If money is tight, there are sub-$150 CRT (cathode-ray tube) monitors that will do the job but take up more desk space.

Unless you need a color printer, a personal laser printer can be purchased for about $200. If you buy an inkjet printer, remember to factor in the cost of inkjet cartridges (about $30 each).

All in-one machines offer some combination of fax, scanner, copier and printer capabilities and start at about $150 for inkjet and $300 for laser. (If you choose one with a scanner, consider a flatbed model, which offers more convenient scanning for odd-sized items).

Of course, part of the technology puzzle is Internet service. If you're doing business, you'll definitely want to ditch your snail-paced dial-up service and opt for a DSL (digital subscriber lines) or broadband high-speed provider.

Before you decide on an Internet provider, Kooser recommends checking DSL Reports to see what's available in your area, as well as service reviews.

Broadband allows several channels (TV, Internet, telephone) to be carried over one wire. Robyn Aber, author of " Why You Need Broadband", says broadband connections are critical for the following:

• Sending/receiving email with large attachments
• Conducting research
• Purchasing and travel assistance
• Connecting with customers, suppliers or other company locations
• Distance training and computer meetings via videoconferencing
• Collaborating on electronic documents

Although dial-ups run about $20 per month, when you factor in the capabilities of DSL and cable, their approximately $40-per-month price tag is a bargain in comparison.

Tax time

If you've never been the organized type, now's the time things have to change. Not only are you responsible for your work product, but you'll have to account for it all with the Internal Revenue Service - money coming in, money going out, office expenses, client meals and entertainment, transportation costs to meet with clients or go to jobs, day care, and the list goes on.

Your record-keeping system should include a summary of your business transactions, the IRS says. You must show your gross income, as well as your deductions and credits. Everything you spend in support of your office can be deducted. Even part of your mortgage, insurance, and utility bills can be deducted.

Purchases, sales, payroll, and other transactions will generate supporting documents such as invoices and receipts, which in turn support your tax return. Keep them in an orderly fashion and in a safe place.

You'll also need to put money aside for self-employment tax - a social security and Medicare tax for those of us who work for ourselves. The self-employment tax rate is 15.3 percent and applies to up to about $80,000 of your earnings. You can deduct half of this tax in figuring your adjustable gross income.

Tax software aimed at the small-business owner can be a lifesaver. You should also keep tabs on the IRS web site for changes in the tax laws and general information on taxes for the self-employed.

Workplace in the family

If you are married and/or have children, one of the most difficult parts of working at home can be knowing when to quit. Many at-home workers find work time and family time often meld together. Errands are run during the day, you take your kids to and from school, you may work in the evenings and weekends. With more flexibility and your home office being at, well, home, you need to try to separate work and family as much as possible.

Robert Imbriale, author of "Three Keys to Achieving Balance Between Your Home Office and Your Family," told homebusinessmag.com, "Remember that above all else, your business is your business, and your family is your family...get in the habit of turning off your computer at a reasonable hour and use that time to be with your family, relax and enjoy your life."

And Lyve Alexis Pleshette, author of "Proven Principles in Creating a Home Office," recommends to visitors of www.powerhomebiz.com to use a separate room as your home office, as it structurally separates your business from the rest of the house and you can close the door.

Another common mistake is thinking that you can work while your kids are at home. Watching your 2-year-old rifle through your filing cabinet and stringing paper clips together or trying to make a business call with an irritable, teething 6-month-old in the background only lasts so long.

You need to treat your work at home like any other job, meaning you'll want to have childcare for your children on a regular basis. If you're working part-time, you may want to consider a teen or college student who can play with your kids a few hours a day, or you may want to find a provider who can care for your child two or three designated days each week.

It can be challenging to work from home, but once your systems are in place, you're keeping good records, and you're striking a balance between your work life and your family life, you'll find that your home office is a great place to work.

Published: November 12, 2002

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