You may have heard that some famous American companies started in garages. It’s fun to hear these stories, and some would-be entrepreneurs find it inspiring as well. If you have an idea for a company, and you hear about Amazon or Apple starting in a garage or basement, that might be the impetus for you to chase your dream.
Many prominent companies started in garages, but that doesn’t mean it’s easy. If you’re really thinking about pursuing this kind of business model, then you will have some practical considerations to consider. We’ll talk about some of those right now, and we’ll also discuss what kinds of companies might do best starting in a garage.
Do You Need Permission from the Government Where You Live?
Let’s say for the sake of argument that you already have an idea for a company you can potentially start in your garage. You will first need to clean enough space in the garage to accommodate your idea.
That might involve moving your car to the driveway instead. Perhaps you must move some boxes or other junk out of the way so you will have enough physical space to set up shop.
After you do that, you will need to look into whether you have to notify anyone you’re starting a business in the garage. Usually, you will go to the website of the town, city, or village where you reside.
Often, if you have a house with a residential zoning designation, you can’t legally set up and operate a business there. If you do, then you must at least notify the local authorities.
However, the rules and laws regarding this kind of thing change depending on where you live. Once you determine the legality of what you’re doing, then you can move forward knowing you’re obeying all applicable statutes.
How Can You Report Your Growth to the IRS?
You will also want to think about how you can document your growth and sales. This matters because if you start to make some money, you must legally report it to the IRS.
Maybe you feel like you don’t really need to do that. You might just operate quietly in the garage for a while, make a profit, and not attract any extra attention.
If that’s your attitude, you may get away with it for a while. In time, though, the IRS will certainly notice you’re making money.
If that happens, and you tried to hide it, then you may end up paying a steep penalty. You might have to pay back taxes, and you may even face jail time in particularly egregious circumstances.
How Many Employees Do You Need?
You must determine how many workers you need. Maybe you start out with just yourself and one or two other people. Perhaps you all had this idea together, and you’re pursuing this dream as a unit.
In time, though, you will probably need more workers. You might require them at the same time you realize you’ve gotten too big for the garage, and you need to find larger quarters for your burgeoning company.
How Can You Pay Your Workers?
You’ll need to think about how you can pay your workers as well. If you took out a business loan to open the company in your garage, then you might pay a couple of new workers out of that loan when you reach a point where you feel you need them.
You may also have some money saved up that you’re putting into this business. Maybe you waited for years to reach this point, and you’ve put every cent you have into it.
Perhaps you can pay some new workers out of your savings for a while. Just remember, though, that sooner or later, you will likely need to turn a profit to keep paying those employees.
You Need to Avoid Annoying Your Neighbors
You must avoid making too much noise with your garage-based business, or it might irritate the neighbors. You also don’t want to have a business model that produces any pollution, or your neighbors might feel furious about that as well.
What Kinds of Businesses Do Best Starting in Garages?
Often, you’ll do best with small, garage-based businesses that produce physical products. You might sell them on Etsy.
You can also run a business that involves you calling people out of the garage. No matter your business model, though, a time usually comes when you need more room.