Starting a Home Based Business: Stay at Home Mom Upgrades Volunteer Work into New Start-Up Business

The following is a guest post from reader Leslie, who shares her story of returning to the workforce by starting her own business in Florida. You can see more of her work at on Facebook and soon at LALGraphicDesigns.com (currently under construction).

Background

As a thirty-five year old mother of three, for the past decade I have been fully employed as a stay at home mom. When my first child was born I put my career aspirations and four year college degree aside to focus on raising our children. Before motherhood, I used to work as a graphic artist doing on-air graphics for a local TV station and a national satellite TV provider. Now that all the kids are all in school, with encouragement from friends and family, I recently started my own home based graphic art and design business. This is the story – or at least the first chapter – in a story which just began to be written about my home based business.

After “retiring” to run our household, I kept my artistic and computer skills fresh over the past several years by volunteering and providing free graphic arts services for community organizations, schools, friends and family. Samples of school T-shirt and business logo designs are copied in the margins. Although I committed my energies to raising our children, I had always wanted to run my own business. As set forth below, my contacts through our local parent teacher associations and charities have developed into business clients.

Formation and Formalities


Understanding that a good rule of thumb for a home base business is to keep it simple, I decided to establish a limited liability company (LLC) with pass-through taxation as an S Corporation. This was accomplished in less than a month by doing the following:

  1. mailing an application and articles of incorporation to the State of Florida Division of Corporations to establish the business;
  2. applying on-line for a tax id number with the IRS;
  3. filing a Form 2553 with the IRS to elect pass-through taxation as an S Corporation;
  4. opening a free business checking account with the new tax id number and articles of incorporation. [Note that I am not required to collect sales tax since I am not selling tangible personal property, only a service. Any designs or logos that I prepare will be delivered electronically by email. We carefully researched and confirmed this conclusion with our state sales tax office.]

Satisfying the federal and state requirements was relatively painless. Applying for the home business in our city in south Florida was slightly more time consuming and expensive. The State of Florida first year incorporation fee was only $125. There is no fee to apply for the federal tax id number or to file the Form 2553 with the IRS, apart from the income tax due next year.

Our city requires all home based business to apply for a certificate of use with the building department. The certificate will not be issued until the home is inspected by a city fire marshal. For example, the home based business may not exceed 25% of the total floor area of the home. This was not a problem since the business is based in my office/study. My only equipment is my desk, computer, scanner and related audio visual accessories and supplies.

Our city’s requirements for home based businesses are set forth in the city code and can be accessed at the City of Weston website. The city restrictions are focused on preserving the residential nature of the neighborhood and include: prohibitions on signage visible from the street; restrictions on noise and parking; and the requirement that only residents of the home may work for the business.

The inspector was available within a week to perform the home inspection. All went relatively smoothly, apart from the fact that the inspector reserves the right to show up between 8 a.m. and 4 p.m., with a $162 reinspection fee if you miss the appointment. I will avoid making any direct comparisons to my cable company. A successful inspection results in the issuance of a certificate of use. The certificate of use is necessary in order to submit a “business tax application” with the city. For a home based business, the annual city tax is $157.50. The one time cost of the fire inspection was $100. Our county also imposes an annual tax of $45. When all is said and done, the total start-up cost/taxes paid to the state, city and county was $427.50.

My other start up expenses will be a print advertising budget and computer software upgrades for the latest versions of Adobe Illustrator, Photoshop and After Effects.

Networking and Business Model

South Florida is ground zero in the housing downturn. In this difficult environment, my goal is to provide affordable, high quality graphic design services to businesses that are interested in creating an effective corporate identity and branding strategy. I will also have a secondary focus on schools and charities that unfortunately are increasingly required to engage in round the clock fund-raising. Because my operating costs are negligible, I am prepared to work for an economical fee in order to get my name out in the community. Another selling point for the new business is that I have a flexible schedule and can provide a quick response time if needed. Since the business is ultimately a service oriented occupation, I recognize that 100% customer satisfaction is essential.

Working closely with our neighborhood schools and family members who are teachers, I have discovered that the objectives of a school or charity’s fund-raising can be different from the objectives of a for-profit business. As a general rule, a business uses advertising and graphic design to attract customers. A business will give away for free promotional items such as pens, mugs and almost any other kind of functional object that can display a logo or advertisement. By contrast, a school or charity will raise funds by selling ever more elaborate and creative items such as t-shirts, clothing, backpacks, water bottles, key chains, magnets and any kind of novelty item upon which a motto, image or mascot can be emblazoned. For-profit business, schools and charities all need attractive banners, fliers, brochures, mailers and other advertisements to sell/promote their product, service, events or activities. I have networked with a prominent national educational supplier, publisher and printer to provide extremely cost competitive apparel and promotional items for clients at whole-sale prices.

One initial challenge is to convert the charities, school and related organizations that I have provided free design services for into paying customers. Hopefully, as the market turns around, this will become possible. Charity is of course valuable in its own right. I am learning that as a side benefit, it also provides meaningful exposure and access to businesses and members of the community who will also become customers.

In addition to my experience and bachelor’s degree in graphic arts and illustration, I can partner with my sister who is a successful fine artist with her own company. Between the two of us, we can cover the spectrum from commercial art to fine art and web design.

Family Dynamics

Making money is the goal of any business. Admittedly, as a stay at home mom, I have competing objectives. Ideally, my plan is to work primarily during school hours and after the kids have gone to sleep at night. This can create as yet unexplored personal dynamics within the family as “Mommy” re-enters the labor market. Thankfully, prior to starting the business, I have never had to sacrifice as a stay at home mom. I can only hope that this balancing act will not present too many challenges for the family. So far, the children are excited about Mom’s new business cards and seeing her advertisements, designs and shirts. I am also thankful that my husband and family are available to provide support and encouragement.

Comments

  1. What a great story! Good luck Leslie and I do hope your return to My Money Blog to post updates!

  2. chew on it says:

    Very inspiring story. My wife is kinda following the same path by volunteering in local schools. Instead of kids, our visa status is what’s holding us back from starting up a home-based business now.
    I can definitely see the benefits of volunteering by honing those essential skills and creating the network of possible clients when one finally need it.
    Good luck, Leslie in your future undertakings.

  3. Very inspiring story. Enjoyed reading it.

  4. This is the entreprenueurial spirit in action!!

    Way to go!!

    Wish you all the luck in the world!

  5. Congratulations, I wish you all the best. My only caution would be over the hope that the organizations you volunteer for will one day decide to start paying you. In my experience, this will most likely not be the case. You must be explicit in your intentions to provide free services until such date and then in turn they will agree to start paying. Otherwise, they will keep you producing free graphic design work as long as you let them. Please make sure to have a plan b on hand for getting your business off the ground with paying customers.

  6. A very nice story about a stay-at-home working mom with lot of information for others to start one.

    Congratulations first of all. It is not easy to juggle between 3 kids and business taking different hats on different times. You seems to have taken the chance and hope it goes well for you. BTW, why did you choose S Corp instead of LLC.

    All the best.

    Vijai

  7. Guest poster’s response and thanks:

    Thanks all for your good wishes and encouragement.

    Jenna – I would be happy to provide updates (good and bad), assuming that Jonathan agreed that it would not detract from the overall purpose of his blog. I might consider putting a mini-blog on the lalgraphicdesigns.com website, which is currently under construction. Does anyone know whether there are successful examples of businesses that blog in real time about their customers/business?

    Chew – I wish you and your wife success as well. I can only imagine the added complications that one’s visa status might present for an entrepreneur. How about a blog about the immigration/visa process ? I would hope that your volunteer work would be beneficial in connection with getting a visa.

    Zero & David – Thanks for the positive feedback.

    Frank – Agreed. The primary and underlying reason to volunteer is the inherent vaule of volunteer work itself. A side benefit, however, is the ability to network with other like minded individuals who might present unexpected business opportunities. For example, other volunteers on a board of directors might need your services for their own separate companies. If they see you are capable and hard working, your name might be the first number that comes up in their mental rolodex. Additionally, volunteer work allows one to refine and grow one’s skill set.

    Vijaianand – Thanks. I don’t disagree that the juggling of three kids with work may be the hardest part. I selected an LLC because in my state, it avoided the need to comply with the full range of corporate formalities. I don’t have to hold shareholder meetings or keep minutes. I selected the sub S tax status for income tax purposes since it avoided the need to pay corporate income tax on top of regular personal income tax. I seem to recall that Jonathan did at least one post about different corporate structures. Check with your accountant about the specific pros and cons.

  8. Best of luck in your endeavors. I have two recommendations i’d like to make:

    1. Subscribe to Inc. magazine. I think it’s hands down the best monthly resource available for entrepreneurs. You’ll find so many solutions to problems or issues that you’re facing or might soon deal with, and it may help you avoid many pitfalls that can snag budding business owners.

    2. As you find yourself overburdened with orders to complete, make your way over to your local art college. You may find some eager young students to become your apprentice, and who knows, they may end up being your first employees!

    Bon chance!

  9. Great post, I also congratule you and the commentors have done well at contributing. Being a medical billing business owner that takes on volunteers from time to time found what Frank said above to be the most stricking. Why?

    Becuase out of the 40+ people that have volunteered ONLY 2 of them have come to me with a proposal from the very beginning stating that at the end of a certian time they would expect either to hire them as a salaried employee or continue to use their services as paid consultants on projects where I need their expertise.

    If more people would do that with prosective employers there Would Not be an false expectations on either side.

    Jennifer

  10. I also put my nursing degree on hold while I had four children. Three are in school and one is still home. I work from home only a couple of hours a week selling medical equipment. I have definatley noticed that the more time I work the more the house falls apart and the kids feel I don’t pay attention to them when they get home because I am now doing housework that I didn’t get done while they were at school etc. I just want to encourage you to be careful to remember to give yourself a limit of hours so that you can work and still be an enjoyable wife and mother. I have found that because they are in school all day my time with them is so limited and I don’t want it to be
    all business. Hope you find a good balance!

  11. My Brother- in-Law sent me this link as encouragement and inspiration to start my own business… I’m so glad he did. I’m a single mom, divorced I used to be a Art Director/Designer of sorts. I never stopped doing projects here and there but I’m at the point where I’ve been thinking of actually doing it full time and creating and actual business. It’s great to have the family support and people who believe in your talents. Your story was very encouraging, I’m soo glad you decided to share it. Good luck! Keep at it. oh and wish me luck as well :)

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