609_3687663This is a sponsored post from Hiscox.

If you’re thinking about starting a home-based small business here are some quick tips to get you started. It’s a big step and you likely have many items on your to-do list.  Put the following three items at the top of that to-do list and you can make the transition a lot easier.

Make it Official

It may seem obvious, but one of the very first things a small business owner needs to do is registering your business name, establishing an EIN or tax ID number for the business, and securing any necessary licenses or permits.  Requirements vary by state and county and there are federal considerations when it comes to taxation.  Be sure to consult with a knowledgeable tax professional to ensure you’re operating by the book and creating the right type of corporate entity for your circumstances.

Define Your Space and Time

There’s a reason businesses have offices: a place where people get together to work free of the distractions of home is definitely crucial to actually getting work done.  At home, there’s always laundry to do, a DVR calling your name or family stopping by because they know you’re there.  This is an issue you must address and meet head-on as an entrepreneur working from home.

Guard against these distractions as much as you can by establishing an office and office hours.  If you have the ability to dedicate a room to your business, do that.  If not, put your clothes in an armoire and repurpose a closet into an office or use a room divider to section off a corner of your dining room or living area.  Then create a schedule in which you spend set hours on set days in your office.  This could mean finding daycare or a nanny for your kids or stressing to friends that office hours are off limits.  You can help yourself stay in the office mindset by not answering personal emails or checking personal social media accounts during your set work hours.

Get Insured

If your business involves driving around $10,000 in merchandise or if someone could get hurt using a product you sell or a service you offer, you’re at risk of a significant loss.  Even something like the USPS mail carrier tripping at your doorstep while delivering a business package can result in a lawsuit and liability.

To prevent against this type of loss you should research small business insurance.  But if you’re like 60% of home-based businesses, you’re uninsured,and don’t have liability coverage.  Whether this is because you mistakenly believe that a homeowners’ or renters’ policy has you covered or because it’s not a priority, the result is the same: no help when you most need it.

Home-based entrepreneurs get little coverage from homeowner’s policies, which typically don’t cover business liability, cybercrime loss or damage, business interruption protection or business records loss or damage.  That means as the owner of a home-based small business you’ll need to consider doing one of three things:

  • Get a rider or endorsement to an existing homeowner’s or renter’s insurance policy. However, since endorsements are usually only available for home-based companies with annual sales of $5,000 or less, it’s not a viable option for many entrepreneurs.
  • Purchase an in-home business policy.  These are issued by home insurers and specialty firms and generally cover up to three employees and $10,000 in business equipment losses or bodily injury liability.
  • If you need more than $10,000 in coverage, arrange for a business owner’s policy.  This broader  policy covers much more than a homeowner’s policy rider or an in-home business policy, such as loss of critical records, liability for customer injuries, damage to or loss of business equipment and other assets and loss of income due to business interruption.

You’ll also want to consider having professional liability insurance, which protects your business if you are sued for negligence, even if you haven’t made a mistake.  For anyone who provides a professional service or regularly gives advice to clients, a liability policy is critical.

Make sure you start your home-based business off on the right foot by following these three tips and protecting your new investment.

The contents of this article and the linked materials do not offer legal, business, or insurance advice related to the needs of any specific individual business. Hiscox Small Business Insurance is underwritten by Chicago-based Hiscox Insurance Company Inc., which is rated ‘A’ (Excellent) by A.M. Best Company. Additional information can be found at Why Choose Hiscox

Hunter Hoffmann is Head of US Communications at Hiscox insurance and is responsible for media relations, social media, internal communications and executive messaging. Hunter lives in New York City with his wife and two sons Walker and Otis. In his spare time, he moonlights as Chief Marketing Officer and deliveryman for Juniors Fresh, a fresh baby and toddler food delivery service and cafe in New York City founded by his wife, Michelle. His passions in life are food, family and the NY Yankees.

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