10 Tips to Starting a Home Business

You will need to pay estimated federal taxes on business income each quarter, instead of once a year on April 15. Depending on the location of your business, you may be required to pay state and local income and business taxes, too. Go to the IRS Self-Employed Individual Tax Center to learn how to pay the federal taxes. You may also want to consult with your accountant.

4. Set aside a precise place for work

You should be able to take a tax deduction for 100 percent of costs directly related to your home office, such as the purchase of a work computer or printer toner.

The other kind of tax-deductible home office expenses are “indirect” ones that are prorated, based on the size of your home and office. These are things like your mortgage or rent, insurance and utility bills. Many people with home offices skip the tax break because they’re concerned the write-offs will trigger a tax audit. That’s unlikely.

In general, to get the deduction, the area must be used for work exclusively and on a regular basis, either as your main place of business or a location to meet with clients or to do paperwork, such as billing and ordering supplies. That means your kids can’t play games on your work computer when you’re away, and your spouse can’t set up the new elliptical machine in the home office space.

To get the deduction, you must file Form 8829, "Expenses for Business Use of Your Home." For full details, go to IRS Publication 587.

Generally speaking, if the square footage of your home office equals 10 percent of your home's total, you can claim 10 percent of its expenses. The IRS also has a “simplified option” rule, which allows you to deduct $5 per square foot of your home office on your return, with a maximum write-off of $1,500 (based on a maximum of 300 square feet). It’s a good idea to take a picture of the space so that you have a record, in case the IRS does scrutinize your return.

5. Establish a work schedule

It’s easy to get drawn into work filling every waking hour. You must be disciplined, manage your time well and be a self-starter. Set daily work hours and do your best to adhere to them. That’s easier said than done, but burnout will do nothing to boost your business.

6. Find a mentor

Working solo can be isolating. Sometimes you’ll need a professional to tap for some advice. Look for a mentor among your industry connections. This relationship can take time to build, but it’s worth it.

Another option is to find a virtual colleague. PivotPlanet, an online mentoring service, lets you connect with its expert advisers via one-on-one video and phone conferences. It’s designed to help shape a relationship that can evolve over a series of sessions at regular intervals or on an as-needed basis. These meetings are billed hourly at rates of $40 to $125.

7. Don’t overlook the human touch

Working at home can prevent you from developing workplace relationships and doing face-to-face networking for new clients. Push yourself to get out of the house regularly for lunch or meet with prospective clients or colleagues for coffee. And go to industry conferences. At the very least, make it a point from time to time to make a phone call instead of zapping off an email or text.

8. Network electronically

Get active in LinkedIn groups that relate to your industry and clients. Make posts and comment on posts by others. This will display your expertise and give you a feeling of being connected to a community. Check out this post on ways to improve your LinkedIn profile.

9. Spread the word

Learning how to promote yourself is a lynchpin for success. In addition to having a LinkedIn page, consider having Facebook, Instagram, Pinterest and Twitter pages for your business. Check out competitors to see which networks they use professionally. Photographers, for example, often showcase their work on Instagram, while Pinterest is popular with people selling consumer goods such as jewelry and glassware.

10. Ramp up your tech skills

When you work for yourself, there’s no tech support person to call when things go haywire. Consider taking a computer class at a community college or, if you’re a Mac user, at an Apple store in your neighborhood. If you need to give presentations, you should become conversant with web-based meeting programs such as GoToMeeting, Cisco WebEx, Join.Me, TeamViewer, Zoom or Google+ Hangouts.

All of these tips will help you create a home-based business that has legs. But the biggest ingredient to your success will be your own drive and determination. The dreamy idea of working from home can be a nightmare if you don’t pay attention to the details.

Kerry Hannon, AARP jobs expert, is the author of What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties, and Beyond and Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy … and Pays the Bills. Follow her on Twitter @kerryhannon.

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