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If you plan to run a business out of your home, you are part of a growing trend. About 50% of all businesses in the United States are actually home-based, and that number shows no sign of decreasing any time soon. To ensure that your empire is on the right side of the law, read on to learn more about the 4 steps you need to take right now to keep your business legal.
1. Pay attention to zoning ordinances.
Zoning laws ensure that your neighbors are never inconvenienced or harmed by the business you wish to operate out of your home. Before you even dream about running a business from your home, check with your local zoning commission, since some types of home occupations are not allowed in residential areas. Some areas of concern include noise, odors, traffic, hazardous material storage, and more.
2. Choose a good name for your business.
This task should be among the first, but can also be the most fun. You will need to order business cards and other supplies, in addition to applying for licenses and certificates, so this task needs to be prioritized. Most states have an online database to search by business name to ensure that no other companies are using your initial choice.
3. Get licensed for your city and state.
Depending on your location, you may need to acquire a home-based business license. Not only does the city, county and state take an interest in your income for tax revenue purposes, but being licensed helps ensure that you are complying with zoning ordinances and fire safety laws. Fortunately, holding a license or tax certificate means never having to pay sales tax on supplies, equipment and business inventory.
4. Choose a proper business form.
You must file taxes on your income, so you must choose a form of business for filing purposes. You could go the simplest route and just use your Social Security number as a tax identification number, which means filing as a sole proprietor. You don't need to file any special forms to use this identifier; you just check the correct box on your Schedule C when you (or your accountant) files your taxes.
If you want to protect your business more, many small businesses incorporate as a Limited Liability Corporation (LLC), which is the simplest incorporation form. See an attorney about the form of business that is right for you, since there is a myriad of various corporation and partnership types available.
Do yourself a favor and consult with a business attorney (such as Philip L. Burnett, Attorney At Law) not only to get your business started off on the right foot but to serve as an ongoing source of support and advice.
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