Make it legal

Before you start, make sure it's legal to run a business from home in your area. Every city, county and state has its own zoning restrictions regarding signage, on-street parking, business hours and hiring employees.

I recommend: Ask zoning questions or find a zoning lawyer at Free Advice. Or go to MegaLaw for links to state, county and municipal zoning law sites. If you live in a condominium or co-op, check your homeowners association for any restrictions regarding home businesses.

Determine if you've got what it takes

Although there are many good reasons to start a business from home, it isn't for everyone. To be successful, you've got to have strong motivation, a healthy dose of self-discipline and top-notch organizational skills.

I recommend: Take this quiz from SCORE to see if starting a home-based business is right for you.

Set up your home office

To help create a physical separation between your work and home life, choose a room that you can dedicate as an office. Every business is different but basics you'll need include a desk, chair, computer, printer, fax machine, copier, Internet service, phone system and filing cabinet.

I recommend: Find equipment and basic furnishings at Staples or design and furnish your office using IKEA's "For Your Business" space-planning tool.

Be prepared to wear all the hats

As a home-based business owner, you won't have the luxury of a big company's administrative staff to assist you with the more mundane tasks associated with running a business, such as ordering supplies, paying bills and mailing packages. Simplify time-consuming tasks so you can focus on more important things.

I recommend: Create online shopping lists for items you regularly order at Office Depot. Just check the items you want, and your order arrives at your doorstep within a day or two. Make bill paying a relatively painless chore with Quick Books. Avoid lines at the post office with Stamps.com, which lets you print postage right from your own computer.

Image is everything

Even though you may be wearing pajamas while you work from home, you never want your business to come across as amateurish or unprofessional.

I recommend: Establish a professional image with a dedicated business phone line, professional-sounding outgoing message, email with your company domain name and a Web site.

Separate your business and personal finances

Even if your new venture isn't a huge moneymaker yet, it's a good idea to keep your business and personal finances separate. Having business and personal checking accounts will make it easier to track business income and expenses when tax time rolls around.

I recommend: Open a business checking account at Wells Fargo.

Decide on your business address

To protect your privacy, you may want to consider using a post-office box for your mailing address. However, you should be aware that some customers are suspicious of doing business with a company that doesn't have a physical address.

I recommend: If you'd rather not use your home's physical address as your mailing address, check into a post office box or a mailbox rental that gives you a real street address rather than a P.O. Box number.