“Grain by grain, a loaf; stone upon stone, a palace.” George Bernard Shaw If you are thinking about opening a home based business, here are a few suggestions that may save you financial and personal pain. (I am not giving legal advice in this column—please consult with your attorney as to the proper steps for you to take.) No doubt, the new small business trend is to begin by using your home instead of leasing or buying commercial space. It is cheaper, no additional rent, no commuting costs, and it is convenient. But there are risks and personal challenges. 1. Personal Risk: Incorporate Incorporate your business. Just because your office is in your home, don’t get tempted by the shortcut of opening a proprietorship. When you mix your personal monies with your business, you are risking all you own. Establish a corporation-your attorney can do it for you- and keep a separate set of business records from your personal expenses. Establish separate bank accounts in the name of your business. A must! All of your business transactions should be in the name of your business. No exceptions. Never pay any business expenses or bills with you personal funds--if you mix your personal finances with your business you may be creating tax problems and you may be invalidating your limited liability protection of your corporation. You never want to place your home, personal savings, or any personal assets within reach of your business creditors. When entrepreneurs operate a home based business- creditors with claims will search for ways to grab anything you own--the smart way to protect your family possessions is incorporating. 2. Personal liability Insurance: A Must Don’t overlook liability insurance. As long as your business is in your home, should an accident occur- such as a delivery person slipping on ice--you are at risk. It is your property and you are responsible. Buy an adequate personal liability policy. See you agent and explain you are working from home and you want protection- we all know this is a lawsuit happy society. 3. Business Liability Insurance: Another Must. And don’t overlook business liability insurance. Beyond the possibility of accidents, it is easy to become a co-defendant in a product liability lawsuit. If you are selling merchandise and a product liability lawsuit is filed against the manufacturer, most plaintiff attorneys will try to include anyone associated with the product such as the retailer, the distributor, and the sales agent as co defendants. Regardless of your degree of responsibility you will be required to defend your business- you will bless the day you took out business liability insurance. 4. Self Discipline: Not Easy Here is the toughest challenge for most owners of a new home based business. Self discipline. Working at home is a plus for some, for others, it can be troublesome. It requires self-discipline and a supportive family. For example, if you are working at home and feel like sleeping in late, go ahead, you can always “stay “late to make up the time. If you are having a difficult day, tired of working the telephone looking for customers, it can be tempting to take a nap or watch a PGA match. Working at home can tempt you to procrastinate. It can be distracting. It is easy to take the afternoon off and work on that home project you started over the weekend; after all, if you get a call, you have your cell phone. The world will not know you have paintbrush in your hand and not your computer mouse. With a home office, you are a sitting target to take the kids to soccer practice. Somehow, when all the other dads are away at the office, your activities at home may not seem like real work. Easing into your desk chair with a cup of coffee in your old robe to start the morning round of phone calls may feel good, but not business like. Enough mornings of “day off” dress mentality will take the shine off your feelings of professionalism and slowly lead you to less work time more play time. Mid morning, snacks and more time with the sports page along with CNN or the financial channel will soak up the hours better spent on building your business. So if you are thinking of cleaning out your garage for a warehouse and shipping department, along with using the spare bedroom as your executive suite, be sure you incorporate, call your insurance broker for liability coverage, and master the art of self-discipline. Success in a new business is tough enough without adding obstacles to survival. Copyright 2004 Dr. Paul E Adams, Professor Emeritus Business Administration Ramapo College of New Jersey Author “ Fail Proof Your Business: Beat the Odds and be Successful.” Available Amazon.Com. If you have questions or comments- contact me: drfailproof@earthlink.net