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You may have been dreaming of having a home based business for years. The command of schedule! The absence of office politics! The freedom to work in pajamas! Sounds pretty good, right? It can be, but it's important to make yourself aware of certain hurdles.

Some Personal Considerations

Some people think that a home office is a more relaxed atmosphere, and while it might be, it might require longer hours to attain your business goals.

You'll first want to consider the work environment. If the kids still live at home, be prepared for constant interruptions. Or maybe housekeeping chores tend to interfere; you might be tempted to run a load of laundry or vacuum the carpets instead of carrying out a necessary work-related task.

Also, while office politics are something you've managed to circumvent, now you are very much alone. Isolation and feelings of loneliness must be dealt with on some level, depending on your personal style.

Jane Orend, founder of Working Lifestyles Research and Training, Inc. and author of "Making Working From Home Work," said that while her home based business allows her to be more involved with family matters, extra discipline is required to create her work schedule – a schedule that includes getting out of the office every once in a while.

"Don't forget to get out into the community to interact with peers and network with others in your industry," Orend said. "Working from home doesn't mean always at home."

The Tax Implications

First, it's important to realize that running a home-based business is not a hobby. Just ask the IRS. The IRS distinguishes between a hobby, wherein you do not expect to make a profit, and an enterprise, designed to make a profit. (To determine the classification your home based business idea falls under, click here.)

Your home-based business will also require that you become acquainted with Tax Form 1040, Schedule C: Profit or Loss from Business.

You'll also want to consider that the income you receive as a consultant is considered self-employment income, which means that the net profits are not only subject to income tax but self-employment (SE) tax as well. This also applies to profits made on a home demonstration enterprise, like clothing samples or imports from India. (For more information about self-employment tax, click here.)

And don't forget those pesky quarterly tax payments: While employers generally take tax deductions from each paycheck (resulting in a refund come tax time) home based businesses with significant outside income have to pay quarterly estimates.

Then again, self-employment taxes and quarterly estimates shouldn't scare you away from fulfilling your dream. Think of them as the price you have to pay in gaining that extra freedom.