Home-based businesses are quickly becoming the fastest growing form of business start-ups. Growing your company out of your home allows for flexibility that is difficult when renting or buying office and warehouse space. Although working at home requires self-discipline, the benefits can be substantial - especially in the start-up years. (We provide six tips for creating a winning business in a losing economy. Check out Starting A Small Business In Tough Economic Times.)

TUTORIAL: Starting A Small Business

1. More Work Time, Less Commute Time
According to a recent Gallup poll, Americans spend an average of almost 50 minutes a day commuting to and from their offices. One of the best benefits of working in a home office is that commuting involves no more than a few steps to the spare room or the basement. That leaves more time for revenue-producing activities.

2. The Ability to Scale Up or Scale Down Quickly
When you rent or own office space, the size of your business is fixed to the size of the space. In the event where downsizing makes sense, you may not be able to do so quickly if you are signed to a long-term lease. Working from your home allows you to hire more people or fewer people, or simply work longer or shorter hours to right-size your business operations.

3. Deduction of Home Costs on Income Taxes
The tax benefits of operating a home office can be lucrative. If your situation qualifies, you can deduct a portion of your home's expenses, such as mortgage interest, property taxes, utilities and repairs and maintenance, against your business income. To qualify, your home office must be your principal place of business and you can only deduct the proportionate amounts of the total expense which are directly related to your business. Although you cannot create a loss with your home office expenses, you can carry them forward to future tax years if you do not have enough business income to use them up in the current year. (Running your own business has both personal and financial perks. Check out 10 Tax Benefits For The Self-Employed.)

4. Flexibility of Working Hours
Being able to work at night or first thing in the morning is a great boon for those entrepreneurs who are juggling children or other obligations. Mobile phones, faxes and email allow you to interact with your customers and suppliers at any time of the day or night. You can more easily accommodate customers in different time zones and kids' school schedules.

5. Reduction in Overhead Costs
Working from a home-based office keeps your overhead costs low as you are not renting office space or phones or paying for office utilities. The zero commute also saves money on gas and wear and tear on your car. The reduction in fixed costs allows you to be more flexible in your pricing decisions than competitors who must cover those types of costs. You can choose to either give more favorable quotes or keep the same pricing as your competition and have a healthier bottom line.

6. Allows You to Test Out Business Ideas
More than 50% of all new businesses fail. If you have had to put money out for office space and other fixed costs right off the bat, a start-up failure can be costly. Working from a home office allows you to test out a new business without a lot of overhead. This way, you can determine its viability before investing a lot of money.

The Bottom Line
Starting a business from your home allows you many freedoms and flexibilities to grow your business at your own pace. It also saves money on many fronts, which helps during the often-lean start up years. (Your work environment can make or break your career as an entrepreneur. See Creating A Home Business Work Space.)

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