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The Costs of Starting and Running A Home-Based Business

Running a home-based business is an ideal set-up for many people — and for good reason. Not only do you get to be your own boss, but you also enjoy limitless earning potential and you won’t have to suffer through the stress of the daily commute like everyone else. However, a home-based business is still a business at the end of the day, and with that comes expenses that you have to shoulder when starting and running this enterprise.

Familiarizing yourself with all the necessary costs will help you reduce them and avoid wasting what you’ve worked hard to receive. Here are some costs associated with starting and running a home-based business that you need to know.

Home Office Space

You might not need to rent an office space, but you’ll need to ensure that your home office is optimized for your line of work. Working from your dining room table or bedroom desk will save you some money, but at some point, it just makes more sense to have a designated home office so you can draw a clear boundary between your work and personal life.

If you have a spare bedroom, it could just be a case of rearranging some furniture to create the ideal work set-up. Otherwise, you might need to transform your basement, attic, or garage into an office space. These costs may include furniture, light fixtures, basement door or garage door repair, and an HVAC unit installation.

Licenses & Permits

You’ll need to acquire the proper licenses and permits in order to legally start and run your home-based business. These costs vary depending on your industry and where you live. Don’t forget to also factor in renewal fees when budgeting for them.

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Equipment, Maintenance, and Upgrades

Depending on the nature of your business, equipment costs might be the biggest expense that you’ll have to shoulder. Computers are a standard requirement for most businesses, but there’s also certain equipment that’s unique to your profession that you’ll have to budget for. For example, if you’re opening a home salon, you’ll need to invest in things like a backwash unit, styling chairs, styling tools, mirrors, among many other things. Then there’s also the cost of maintaining and repairing equipment, and upgrading it when the time comes.

Inventory and Office Materials

Regardless of your profession, you’ll need to acquire inventory to sell as well as purchase office materials to help you do your job efficiently. Calculating your inventory and material expenses can be quite difficult seeing as a lack of inventory means you won’t be able to serve your clients properly, while too much of it could result in damage or wastage.


Budgeting for your business’ utilities — such as electricity and internet usage — can be quite difficult, since you’re essentially paying the same utilities that your entire household uses. Before you start your business, it’s a good idea to figure out how much you spend on these things on average, so that you can easily see the difference in amount once you start working from home. This will help you budget for it accordingly.

These are the most important costs you need to take note of if you’re thinking of starting and running your own home-based business. Being mindful of your spending ensures that you can keep these expenditures reasonable and maximize your profit margin.

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