I Had No Idea My Home Business Was Illegal

Written by admin on April 12th, 2011

I was reading an article in one of my home business magazines the other day and they were talking about how many people are starting full and part-time home based businesses. They said that over 72% Americans are engaged in some sort of home business opportunity.

That number seemed awfully high to me at first, but then I got to thinking about all the different type of business opportunities are available to people. Working at home does not just mean owning an internet based business. It can be a bookkeeper, day care provider, home inspector; home decorator, the list is endless when you start to really think about it.

However, when you setup your home business there are a few things many people never even think about but should consider before embarking on this new business journey.

Below are just a few items you should consider before starting your home based business opportunity.

1. This is a business. Separate your personal finances from the business. You should create a legal entity for your business. This action is two fold. It shows the IRS this is a real business not a hobby, and in the event of any legal action it’s less likely to impact your personal assets.

You will want to file incorporation documents and open a business bank account. If all this is foreign to you contact a local CPA or Attorney to assist you with this process. It will cost you a bit to get this completed but can save you a great deal in the long run.

2. Check with your city or state authorities for any business or operating licenses you may need for your business. This is most prevalent in the areas of day care, lawn services, and accounting, but not limited to just these.

There are many reasons for these requirements, safety, sales tax, employment taxes are just of few. If these licenses are not completed and you are found in violation, you could be subject to fines or worse, you may be required to shut down. So make sure you check with your local government before opening your doors for business.

3. One little known consideration is your home owners association. If you live in a community that is governed by a home owners association even operating a business from you home could be in violation of the conveyance. For example, you may be restricted on signage which may be important to your operations. Or there may be restriction on vehicles such as large truck to carry lawn service equipment.

Be sure you read and understand the conveyance of your community or check with your home owner’s association management company before starting your home business. This will save you costs in fines and stress in arguments.

Make sure you do your research not only on the potential business opportunity but on all your city, state and neighborhood laws. Not knowing the law is not an excuse.

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