The current economy has many people considering their employment options. With it being so difficult to find a job, and with technology making it easier than ever to start a business, many are deciding that a home business is the way to go, especially as it can provide some income diversity. It seems natural to want to be your own boss in a time like this. Additionally, you assume that the costs associated with starting a home business are going to be fairly low. Unfortunately, this is not always the case. Before you start a home business, it is a good idea to consider the costs — including those that have little to do with money.

Financial Costs of Starting a Home Business

At first blush, the financial costs of starting a home business seem like they would be quite low. After all, you already have the office space. Before you celebrate too much, though, consider these possible costs:

  • You might need to upgrade your Internet service to something faster (and more expensive) now that you will be using it more.
  • There might be costs associated with upgrading to a newer computer, more able to handle the strains you will place on it. Additionally, some businesses require new software, and you may need to purchase bookkeeping or other accounting software.
  • Purchasing office supplies might be necessary. You might also need to buy equipment, such as a multifunction printer.
  • If you are selling products, you may need to buy inventory, or you may need to buy supplies to create your products.
  • Another phone line might be necessary, or a new cell phone.
  • You will no longer have a subsidized health insurance plan. You will be paying the entire cost of your health insurance.
  • No more employer contributions to your retirement plan.
  • You will have to pay your entire Social Security tax, now that your employer is no longer paying half. You will have to consider tax strategies in greater depth.
  • If you plan to advertise, you will need to pay for marketing materials, ad space and business cards.

There might be other financial costs as well. It is important to consider these, and make sure that you have enough money to help cover these costs.

Personal Costs of Starting a Home Business

On top of the straight up financial costs, there are also personal costs associated with starting a home business. One of the biggest costs for me with my home business is that it’s hard to “turn off” my work mode. There is always something that can be done, and without the physical removal from the proximity of my office, it is hard not to just run in and check my email one last time.

There are other personal costs that might surprise you as well. Some of these include:

  • No calling in sick. You may still have to get things done for your business.
  • You have to be careful about vacation — sometimes you even have to bring your business with you on vacation.
  • Longer hours, especially during the start-up phase. You may get to choose when your hours are, but you often have to work more to get your home business going.
  • Difficulty finding personal time as the business starts to consume you.

If you are not careful, these personal costs can begin weighing on your other relationships. You might find that you don’t have as much time with your children as you would like, or that you are beginning to see strain in your relationship with your spouse. It is important to realize that these emotional costs can have a toll as well.

Before you begin your journey as an entrepreneur, make sure you consider as many of the emotional and financial costs as possible, and plan how you can reduce their impact on your family.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.