The Pros and Cons of Running a Business at Home


While it might seem great to roll out of bed and work without a commute, running a business at home isn’t totally without its complications.

In decades past, starting a business wouldn’t have been an option for most Americans. Only the wealthy and well-connected would have had the resources to find a physical office, pay employees, or manufacture products.

Today, of course, the internet acts as a democratic medium, leveling the playing field for the rest of us. Anyone can start a profitable online business at home—as long as they have a unique idea and access to a computer!

But while most people who start a business envision sipping coffee in their PJs all day, running a business at home can be a more complicated prospect than it first appears.

Entrepreneurs will both reap the benefits and face the challenges of their virtual work, so it’s not something to jump into without considering both sides with care. If you’re thinking of creating an online business, read on for some pros and cons to keep in mind.

Pro: Lower Startup Costs

Startups are expensive.

Often when you start a business, you need to figure out how to secure a great deal of capital on the front end. This, in turn, can prevent would-be entrepreneurs from making the leap.

However, with an online business, you can typically make do with the resources you have at home for the time being. This might include running to the library to make copies or using your personal cell phone number as your business’s phone number.

One thing you should consider, however, is your computer access. Since you’re running your business online, having a dependable computer and understanding the costs of good internet service is critical to success. If there’s anything you’ll want to splurge on, these things should be at the top of the list!

Pro: Save Overhead

Since you don’t need an office, you won’t be paying for things like rent, utilities, and parking, nor will you need to track these costs as they fluctuate from year to year. These are savings you can invest elsewhere in your business as needed.

Pro: Save on Liability Insurance

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Liability insurance protects a physical business in case an employee or customer has an accident (such as slipping and falling) inside. Without a physical office space, however, this is one cost you won’t have to worry about.

Note that you’ll still need other types of insurance depending on the type of business you start, as you’ll want to cover things like data breaches or product liability. Check with an insurance agent to learn what you’ll need for the type of business you’re starting.

Pro: Save Time

Sick of working a 9 to 5? When you run your own business, you can figure out when you’re most productive and control your schedule accordingly. Get up at 5 AM if you’re an early bird, or work late into the evening if you’re a night owl.

Plus, with a nonexistent commute, there’s no need to leave your house on rainy or snowy mornings. Instead, the only commute is walking from your home office to the kitchen for a cup of coffee.

Other time-saving benefits include small opportunities to use up little pockets of time throughout your day. For example, you can take advantage of downtime while you’re on hold with a client by reading the news, or multitask by folding laundry during a software update.

Pro: Hire a Larger Staff

With the money you’re saving above, you may be able to afford a little more help to grow your small business, and hiring the right employees can help grow your startup quickly.

For example, if you find yourself spending time teaching yourself to craft a marketing strategy instead of taking care of the day-to-day running of your business, it may be time to hire a marketing expert. If keeping track of your finances has grown frustrating and time-consuming, you’ll have the money to work with an accountant.

In addition, if you’re not yet sure whether a new hire is right for you, you can always hire contract workers on a case-by-case basis to tackle your more difficult tasks.

Pro: Hire From a Wider Pool

When you require employees to come into your physical office, your business is limited to the people who live close enough to commute. When you opt for a remote business, on the other hand, you can expand your search outside of your immediate community. The right person with the right skills may live several states away, but with modern technology that’s not a problem.

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As you hire faraway talent, however, you’ll want to keep in mind that payment and taxes can be complex in certain cases. When you hire out-of-state workers, for example, you’ll have to pay employer taxes in your employee’s home state, register with the state tax agency, and more.

Con: Less Control Over Workers

Even if you decide to send your remote workers company-owned devices, you won’t have as much control over them as you would in a physical office where you can walk over and talk to them.

This means it may be harder to make any equipment is properly cared for or that your data security best practices are followed. It can also be more difficult to supervise their work.

With a team you know you can trust, however, it’s not hard to learn how to manage your workers remotely—though it may take a little getting used to.

Con: Marketing Can Be Tricky at First

Having a brick and mortar office is a great advantage for local visibility, and for getting extra “walk-in traffic.” But when you open an internet business, you may need to spend more time learning how to market your business online.

Adding to this complication is the fact that the online business world has grown crowded space in recent years, with companies in every niche vying for their audience’s attention.

Hiring a marketer can be an easy way to combat this, as learning the ins and outs of virtual marketing on your own can eat away at the time you have to run your business.

Con: Loneliness

When you’re closed off from the rest of the world—and even spending the day in your PJs!—it’s easy to feel isolated.

Sure, there are countless ways to connect with employees and peers, from email and texts to video calling software. But it’s different from being able to turn your head to ask for advice, find a brainstorming partner, or joke around the water cooler.

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This may be difficult to get used to at first, but it can help to schedule your socialization. Try working from a coffee shop, for example, or meet an employee or client face to face every now and then.

Con: Difficulty Managing a Work-Life Balance

When you work remotely, it can be difficult to respect boundaries— especially when they’re your own. It’s easy to say you’ll answer “just one more email” when you’re in bed late at night, or to start working in the middle of family mealtimes.

In addition, family and friends may feel free to interrupt you when they find you working in your home office, and they might even take your fixed schedule less seriously once you begin working from home.

As a result, it’s important to be vigilant about separating your work and personal life to avoid burnout. Make sure to have a discussion with the important people in your life about respecting your boundaries, and try to keep everyone on the same page about when you’re working and when you can be interrupted.

Con: Keeping Your Own Records

Any business should have well-organized financial records, but it’s especially important for small businesses.

You’ll be keeping track of your business and personal expenses, it can be difficult to keep the two of them separate.

Sole proprietors who work from home tend to see more frequent audits from the IRC, so if tracking your finances sounds like a difficult prospect, you may want to make use of expense-tracking tools or work with an accountant who can help.

Starting Your Business at Home

Even with all its advantages, making the leap to start a business at home can be terrifying—but the payoff can be well worth it. Weigh the complications and benefits carefully before you make your decision, and don’t be afraid to get advice from other entrepreneurs.

If you’re interested in learning more about the world of online business, be sure to check out our other posts!