Small businesses are the economic backbone of many regions, creating countless employment opportunities. Whether you plan to stay solo or hire a team, launching a business is simpler and more rewarding than you might think.

So, where should you begin? And how do you know if you have a good business idea? In this article, we'll cover everything you need to know about how to start a small business at home, including planning, marketing, and understanding legal requirements for home businesses.

Why Start a Home Business in 2025?

Small businesses have been on the rise for the past five years, and this trend shows no sign of stopping. In the United States alone, small businesses have created 70% of net new jobs since 2019.

Since mid-2024 in particular, the U.S. Department of the Treasury has noted numerous signs of small business growth. In fact, over 70% of small business leaders expect revenue growth throughout 2025.

While not all small businesses are home-based, operating out of the home is an attractive option for many entrepreneurs. Between technological advances and increased connectivity, the average home already has many of the necessary elements for running a business.

Choose the Right Business Idea

The first step toward starting a company is choosing the right home-based business idea for your unique interests and needs. Start with a brainstorming session. Consider:

• Skills and Expertise: Which industries do you know best? In which niches have you already had success? Let your prior work experience, academic credentials, and interests guide you.
• Competitive Landscape: Have other entrepreneurs already started successful businesses in the niche you're considering? How can you differentiate your offerings?
• Market Demand: Are potential customers actively seeking the product or service you plan to sell? If you're planning a local business, is there demand in your area?
• Revenue Potential: Does the business have the potential to generate the revenue you need to earn? Add up likely revenue, and subtract likely expenses to get an answer.

Consider some trending business ideas for 2025 to jumpstart your thinking. For service-based business ideas, think about becoming a coach, digital marketer, or personal assistant. For product-based business ideas, think about selling homemade designs, reselling popular items, or developing a wellness product line.

Plan Your Home Business

The idea of a business plan might sound daunting. But when you write a business plan, you can clarify your concept, develop a roadmap, and identify potential problems.

A typical business plan includes these sections:

• Executive Summary: Create a simple summary of your business plan. Sum up what the business does, what makes it unique, and how it will grow.
• Company Description: Go into detail about the problems your business solves and the customers your business helps.
• Market Research: Share what you've learned about your target market. Detail how you'll differentiate your business.
• Organization and Management: Explain the legal structure you'll use for your business. For example, you might form a limited liability company (LLC) or a sole proprietorship.
• Product or Service Line: Describe what you plan to sell to customers, and include images if possible. Detail your pricing structure.
• Marketing and Sales Strategy: Explain how you'll sell products or services. Discuss the channels and strategies you'll use.
• Financial Projections: Calculate your anticipated income for the first year. Then, project your growth and finances for the first five years.

Know Legal and Regulatory Requirements

The most important small business startup tip to follow is understanding the legal and regulatory requirements for your business. While requirements vary between countries, states, and cities, the guidelines below offer a good starting point.

In many areas, small businesses that don't create pollution can operate from home as long as the space is primarily residential. Check your local zoning laws for additional restrictions.

Depending on the type of business you plan to start, you may need a license or permit from your city or state. For example, some business types require a professional certification or a health and safety permit.

The legal structure you choose (e.g., sole proprietorship or LLC) determines how you'll pay taxes. For assistance with taxes, consider consulting with a legal service or a tax professional.

Market Your Home Business

Once you've handled the logistics, the next item on your starting a business from home checklist should be marketing your company. For local businesses, it often makes sense to advertise in local newspapers.

But for many home-based businesses, developing an online presence should be the top priority. The more you invest in digital marketing, the better you can reach your target audience via the channels they use. For example:

• Social Media Marketing: Reach potential customers on Facebook, Instagram, X, and other social media platforms. Create engaging content that speaks to customers' problems and promotes your offerings.
• Email Marketing: Build an email list and attract subscribers. Send regular newsletters to share company updates and seasonal specials. Drive sales with limited-time offers.
• Content Marketing: Develop written, video, or audio content that addresses customer needs and discusses your solutions. Use search engine optimization (SEO) to improve visibility and attract website traffic.

Manage Business Operations from Home

When you work and live in the same space, it's more important than ever to create a healthy work-life balance. Business coach Gary Wilbers recommends not bringing work home with you. While that's easier said than done for home-based business owners, creating a dedicated space for work can help with the separation. 

Working longer hours can be counterproductive, as it can decrease efficiency. Gary advises, "it’s important to strike a balance between working enough to get the job done, and not working so much that you start to see a decline in your performance."

Choosing the right business tools can help improve productivity and streamline business processes. For example: customer relationship management tools help small business owners track and nurture leads.

Project management tools are ideal for service-based businesses that need to manage client deliverables. And ecommerce tools are essential for product-based businesses that sell products online.

Next Steps to Start a Small Business at Home

Have a great home business idea? Use the guidelines above to plan and register your business and start marketing your products or services.

Make sure you have the right tools for the job. Explore legal services that can help you take the first step toward starting your home business.

About Anna Sonnenberg: SaaS Expert

Anna Sonnenberg is a seasoned B2B SaaS writer and small business owner. Specializing in martech, sales automation, and productivity software, Anna turns complex topics into clear, actionable insights. As a fellow entrepreneur, she's dedicated to helping you harness the right tools to grow your business.