How to Start a Home Based Business on a Budget

(Psst: The FTC wants me to remind you that this website contains affiliate links. That means if you make a purchase from a link you click on, I might receive a small commission. This does not increase the price you’ll pay for that item nor does it decrease the awesomeness of the item. ~ Daisy)

So you want to start a home-based business without breaking the bank, but you aren’t sure how to go about it. The good news is, starting a home-based business on a budget is entirely possible.

There are many decisions to make and a number of items are required. Some of these items could be expensive by themselves; all of them together even more so. We’re Frugalites! We hate to spend money, let alone lots of it. But sometimes we do what we must do because it can take money to make money. This article will give some ideas about how to acquire the items you need to run your business without breaking the bank.

Research building your home-based business on a budget.

I’m assuming that you’ve done your research at this point. You know what kind of business you want to be in, you’ve done some market research to be sure your idea is viable, and who your competitors and customers are. If not, these things are mandatory. Before starting my freelance publishing business, I spent a good six months researching. I hung out on discussion boards, learning about everything from dedicated software packages to accounting & taxation to how I might find & approach prospective customers.

Since I had no direct publishing experience I had to sell my college degree. I had researched and completed a book indexing course, discovered the professional organizations, and learned that freelancing is an incredibly competitive business. I had also learned how I might find contact information for my prospective clients and how I might approach them. I prepared a resume and contact email, and scheduled two hours per day for sending emails. All of this cost time but very little, if any, money.


My needs were pretty basic at first. I needed a computer and an internet connection. Since I already had both, these weren’t exactly new expenses. If you’re reading this article, chances are that you have both, and free is good. Use what you have before buying. What to do however, if you don’t have a computer suitable to running your business?

There are a number of ways to acquire a computer

I believe in good equipment, especially if my livelihood depends on it, but that doesn’t mean break the bank. Used machines are best purchased from a reputable retailer unless you’re very confident in your fix-it skills. Big box stores, including Amazon and eBay, carry many machines both new and used. The Apple refurbished store is also a great source but of course, Macs are more expensive. They’ll pry mine out of my cold, dead hand, but a Windows machine can serve well.

I started my business on one, in fact. At one point I needed a Windows machine to run certain utilities and found a refurbished machine for $135 on Amazon. Once set up, the total cost was $300. I made thousands of dollars on that machine! How’s that for return on investment?


Your internet connection will depend in part upon what’s available, but I suggest not to be cheap here either. Whether I was downloading PDF files for indexing or uploading pictures for my eBay sales, dial up was slower than molasses in January! Since time is our one true asset, I suggest using good internet. I have broadband, which isn’t cheap monthly, but the time it saves well makes up for the out of pocket cost. If dialup is all that’s available in your situation, adapt and work with it.

How about office furniture?

Desks and chairs should be ergonomic if at all possible; your back and wrists will thank you! These can all be acquired very cheaply, anywhere from Office Max to Goodwill to eBay. I bought my first chair on eBay, in fact. Other things were purchased locally. I enjoy supporting small businesses in my community, and it’s often cheaper. Many of today’s corporations, for example Microsoft, started in a garage using what they had available, including furniture. If you already have something that suits the need, go for it. You can always upgrade later.

Software: accounting at least!

You’ll have to keep track of sales and other tax-related items. Some use a spreadsheet successfully and bonus! Most computers come with one natively. Otherwise, it’s possible to buy older versions of many of the most popular packages. One note of caution: I do not purchase software on eBay! I’ve had too many bad experiences. Pirated software is rampant there and difficult to detect. While we’re on the subject, I also refuse to deal with any eBay seller who’s positive feedback percentage is less than 99%. Life is easier this way.

What else does your home-based business require?

For mine, very little. I didn’t even need business cards. But if you do, it’s likely worthwhile to research some options. Remember, your business card is a form of advertising. All advertising should contain three elements: who you are, what you do, and how to get in touch with you. Images are very powerful but should be kept simple, partly because printing gets expensive the more colors, text, etc. Can you print good business cards out on your computer? I have a stand-alone printer/scanner/copier/fax for these things. These things are very cheap new but can be purchased used in some cases.

Websites are the new business card, and they’re neither terribly expensive nor difficult to construct. They’ll be a bit more expensive if you’re using features like a shopping cart, but look around! If you’re at all technically savvy, a good website that offers an automated builder can run less than $200 per year, and mine included a domain name and email to boot.

And yes, it’s usually a qualified tax write-off

Don’t be lured into the cheapest, Unix-based package unless you’re familiar with Unix however. Remember, time is our one true asset. Don’t spend it gritting your teeth trying to figure out a WYSIWYG. Spend a few extra bucks for the website builder.

Speaking of taxes, the IRS prefers that business transactions are kept separate from personal affairs, but there are cheap ways to do this. My bank gave my very small business a free checking account, and yours might also. Be sure to read the conditions carefully however! My free account will cost once I go over a certain number of transactions per month. Other than clearly business expenses, I use my personal checking account. Also free. Since my legal structure is sole proprietor, paperwork is minimal.

Do you really need an accountant?

Those are expensive and can be very detrimental if they’re dishonest. I do my own taxes, painful but much cheaper and much more trustworthy. Software helps and usually counts as a write off; granted it would be more fun to keep my entire dollar, but getting $0.38 back is something at least. Since I don’t depreciate anything, I do use the home office deduction, which in my case allows me to write off a portion of just about everything home-related. It wouldn’t hurt to check your personal situation with a qualified tax advisor however. Everyone’s situation is different and the IRS isn’t helpful.

Does your home-based business require reference books?

I found mine in used book stores, thrift bins, and my local library’s used book sale. The most common way to find contact information for my prospective clients is a book titled The Literary Marketplace. I checked out last year’s edition from my local library. Will you need packing materials to ship items? Look around your home and improvise, using what you have. I’ve seen some crazy cheap ways to do things on this board, and I have faith in you!

Be cautious when getting things online

At this point we’ve discussed sourcing the needs of your home office from three different places: locally, Amazon, and eBay. The latter two especially require caution. Neither one does much to vet their sellers and it’s very easy to get ripped off if you’re not careful. For example, I can buy seeds on Amazon to grow the brightest, metallic blue Venus flytraps I ever saw! The only problem is, the listing is a scam. There’s no such thing as a blue flytrap. As I mentioned before, pirated software runs rampant on eBay.

It’s worthwhile to check things out a bit no matter who you’re buying from online. However, keep the same healthy skepticism you’d keep when buying dishes out of the back of some guy’s van in a parking lot. (I really did that once, got a good deal and used them for years but I knew very well it wasn’t Corning!)

Ready to open your home-based business on a budget?

It’s very possible to start a home-based business using the equipment you currently have. If you need to buy something, it’s fairly straightforward to find a good deal. But there are certain guidelines that I’ve found useful, as given in this article to start your home-based business on a budget.

Have you already started a home-based business on a budget? Share your helpful and frugal tips with other readers. Have any of you wanted to open a business but were deterred by expenses? Let’s talk about it in the comments section.

Good luck and good business!

How to Start a Home Based Business on a Budget

8 thoughts on “How to Start a Home Based Business on a Budget”

  1. Some random observations

    If you want to take the home office deduction (to keep the IRS at bay), you must use whatever space you’ve set aside for your business to be used ONLY for business along with the equipment there. You can lose that deduction if you mix personal with business use. Converting a spare bedroom, for example, is one easy way to achieve that mandatory separation of purpose.

    For the moment, your location matters as to what internet speed may be available to you. The more rural you are, generally the slower that connection … for now. But that’s about to change. Elon Musk is putting up a global network of satellites to be able to deliver super high speed internet signal world-wide that even AT&T, Verizon, et al., can’t compete with. Called StarLink, it’s currently in beta testing and will eventually give you the freedom to get ultra high speed internet not only in any rural location you choose, but also anywhere else in the world. That would even open up amazing possibilities for digital nomads. It appears that the global shortage of semiconductor chips is slowing the StarLink rollout somewhat.

    When setting up your website, your privacy is very much at risk. This age has sadly become one in which anyone nursing a grudge against you (whether political or otherwise) can (if you don’t take precautions) do a quickie WHOIS or HostGator lookup to learn your name, phone number, and home address. Not good. It’s much safer to look up how to register a proxy owner. It’s a a sort of parallel to what real estate investors have been doing for decades by using land trusts to hold title to their homes and their investment properties. That puts up a firewall against frivolous lawsuits from the greedy.

    Your data on your computer is also at risk. You must learn how to regularly back up your data. I have had computers trashed by faulty Microsoft updates, by computer repair shops that allowed malware onto my PC while in for modification, and even by simple PC equipment failure. Whether you learn to do very regular backups with a cloud service or learn to do DIY backups to an external hard drive, the consequences of doing neither can be deadly for your business data.


    1. This is why I suggest that anyone interested in the home office deduction check with a local tax professional. The IRS is no help and there are all of these persnickety details to sort out.

      StarLink is in beta testing. It’ll be awhile before that can be made practical use of. Until then, use the best internet connection your market offers.

      I never had a problem with my website being hacked or use of WHOIS, since not that many people know about it. Besides, as a freelancer, I WANT to be found. Granted that was before the days of flash mobs. Proxy servers are nice but the domain name is still registered and WHOIS can still be applied.

      Do your own modifications and upgrades. But yeah, I back up weekly to external sources. NOT the cloud. It’s so annoying that Intuit, for one, isn’t even selling a desktop version of Quickbooks anymore. It’s subscription service or use something else. Twenty years worth of company data isn’t easily migrated into Something Else. Boo!

  2. when i began my sewing business it was an effort to stay home with my kids when they were little. at first i did craft shows. then i added seasonal work at a fabric store. that brought me in contact with potential customers (costumes for school plays and dance recitals, tutoring for scouts and 4-h projects) and gave me an employee discount for supplies. a local grocery store let me post cards advertising alterations and repair work and sewing lessons i offered. then i thot of a great idea! most churches have women’s groups. most women’s groups have projects that cost money to complete–new church roof fund or supplies for thanxgiving baskets or xmas stockings, or other charitables. i offered to donate 20% of the price of any repair job they sent me for their projects. ladies from 3 different churches sent me their alterations and repairs and referred their friends as well! i cleared as much as i would have working in an office.

    1. Wow that’s incredible! I for one greatly appreciate a good seamstress, as I’m the furthest thing from it. And working from home is great, isn’t it? I especially enjoy not having to dig a car out to go to work when it’s early in the morning and frozen solid. Oy! And the lock downs didn’t change my life that much. I make a pretty decent living too, although a 401(k) match and company-provided health insurance would be nice. Oh well. At least I get to pick my own computer etc.!

  3. When I had a home-based business back in the late 90s, I made sure to have a space and equipment that was solely for use by my business. I had a separate computer, separate phone/fax line, and even my spare bedroom devoted solely to business. I did share my cable internet with the other part of the condo.

    Even if you can’t get the tax break for separate work space, it is worth your time to get your own computer and software dedicated to that business. You may not be able to split your internet service, but you can get a dedicated cell phone. Have separate media accounts (web, fakebook, twitter, instagram), too.

    One reason to do this is to separate your work life from your real life.

    1. Absolutely! There has to be a time when you close the business and rest. No one can work 7/24/365. Business hours are for business. After hours are for life.

  4. Another word of caution is depending on your business, be it sole proprietor or S-corp, determine if you need business insurance. A sole proprietor is at risk of losing everything in a lawsuit. And also for any business debts – filing personal bankruptcy *may* be required.
    If you’re business requires tools/vehicle, be sure to know the IRS rules (and aforementioned insurance). Homeowners and P&C insurance policies can be full of “gotchas”. I suspect most food delivery drivers don’t realize their insurance doesn’t cover them while delivering food.
    As with anything in life, the devil is in the details. And don’t forget quarterly estimates for state/federal taxes (which includes self-employment taxes, aka social security/Medicare). You don’t want a lien on your home or other property due to failure to pay taxes.

  5. All good things to think about! Thanks for mentioning. Indeed, if your chosen business has a liability factor, then you might want to consider a structure other than sole proprietor, ie LLC. This is another reason to consult a tax professional. Every situation is different and there are several devils in those details!

Leave a Comment

Your email address will not be published. Required fields are marked *

New From The Frugalite


Related Posts

Malcare WordPress Security