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Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets

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What No One Ever Tells You About Starting Your Own Business

Home-Based Business for Dummies

Home-Based Business for DummiesTM

By Paul and Sarah Edwards and Peter Economy

If you contemplate starting a home business, you might want to pick up a copy of Home-Based Business for DummiesTM by Paul Edwards, Sarah Edwards, and Peter Economy. The book does a solid job of introducing many aspects of running a business from your home.

So, what is a home-based business? Paul and Sarah Edwards and Peter Economy write: "A home-based business is, not surprisingly, a business based in your home. Whether you do all the work in your home or on customers' or third-party premises; whether you run a franchise, a direct-sales operation, or a business opportunity...; if the center of your operations is based in your home, it's a home based business."

Home-Based Business for DummiesTM goes on to discuss direct selling opportunities, mentioning products offered by Amway Corporation (household products), Longaberger Company (baskets), and Mary Kay Cosmetics.

Appendix A (Promising Home Businesses to Start From Scratch) of Home-Based Business for DummiesTM lists 100 businesses you can start from home (unfortunately, you'll need to consult Best Home Businesses for the 21st Century by Paul and Sarah Edwards to get a complete profile of each business.) These home businesses include:

  • Aromatherapy
  • Business-Plan Writing
  • Feng Shui Consulting
  • Real Estate Appraising
  • Scopist Service
  • Newsletter Publishing

Throughout Home-Based Business for Dummies,TM the authors tell us about real-life entrepreneurs who run home-based businesses. For example, there's an interesting side-box about a home business called Sandy's Finds, owned by a woman who generates $100,000 a year by selling software on

Sandy buys remaindered software that isn't selling from various sources (local CompUSA, software wholesalers, etc.) at a steep discount to its retail price. Sandy then lists the software for sale on Prices are set by the eBay bidders and, occasionally, Sandy's mark-up is 1000%.

In addition to helping people generate ideas for home businesses, Home-Based Business for DummiesTM provides solid advice about a wide range of topics affecting home-based business owners. The topics cover taxes (and reducing them), business structure, legal issues of running a home-based business (including zoning), insurance, and cash flow.

Other issues include dealing with kids, dogs, neighbors, and other complications of operating a business from your home. Some home business owners are especially vulnerable to the IRS Hobby Loss Rule.

Because the expenses of running a home-based business are tax deductible, some hobbyists decide that their passion for photography or other hobby isn't really a hobby. It's a home business! So, they can write off that cool video camera they bought! That saves them tax dollars as they try to pay for their hobby with pretax dollars. Well, the IRS is on to that idea.

To prevent hobbyists from claiming illegitimate tax deductions, Home-Based Business for DummiesTM explains that the IRS may disallow the tax-deductibility of your home business expenses if your business fails to show a profit in at least three of the preceding five years. The authors make a good point. What about larger businesses that are not home-based, such as, which was founded in 1995 and hasn't turned a profit yet? We don't see the IRS declare the billion dollar a hobby!

Home-Based Business for DummiesTM goes on to explain the nine factors which the IRS uses to determine if a business is really a business or just a hobby.

Incidentally, Paul and Sarah Edwards have earned their own DummiesTM icon (readers of other For DummiesTM books will better understand this, but these books have little icons used to illustrate various points. Paul and Sarah have a little icon with their own picture in it). Paul and Sarah Edwards have sold a million home-business books. They also host their own talk show, "Working From Home," on (hosted from their home, of course, with an occasional bark thrown in from their dog for good measure).

One criticism of Home-Based Business for DummiesTM is its list of ten useful websites for home business owners. I agree with them that is a great search engine, but their list is somewhat general and some of the other sites are not that useful to home business owners. However, the book does list useful web sites and other references throughout.

Home-Based Business for Dummies
Home-Based Business for DummiesTM

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