A
lot of people in many advanced countries are now coming home to work. Home-based offices are
becoming the wave of the future. Tens of thousands of workers are opting
for this way of life, a life in which they can make their own hours, commute to work in seconds, make their own choices to become their own bosses. For many the home office is becoming the location for a
full-time job and the primary source of income. For others it is a
part-time venture. Many start on a part-time basis and grow their
business into a full-time operation. Current figures available
indicate that the percentage of self-employed working from home jumped
by almost 6% to approximately 90 million worldwide.
While working at home has an almost irresistible appeal to many, and many have some big misconceptions of what it is like, here is some very useful information that can help you get started successfully.
Legalities of Working at Home
Zoning
Before setting up your new business it would be advisable to check on the legal status of your business.
You need to check zoning laws for your community which may dictate if you can legally operate a business from home.
We realize that many businesses never check on zoning for their home-based business and chances that they ever get into difficulties with the law are probably pretty slim.
If there are no changes in structure and you do not have customers and or employees enter your home, regulations will tend to be far more easy.
Laws and regulations change from community to community, but the following 5 factors will generally be regulated items:
1. Separate business and private entrances.
2. Square footage of the home which is taken up by commercial space.
3. Employees working in the home.
4. Certain occupations such as jewelry or clothing
5. Storage of commercial goods, especially any hazardous materials.
Here is an important suggestion: keep relations with your neighbors on a friendly basis. Your neighbors will soon become aware that you are working at home. Some may even be envious, and yes, unfortunately zoning authorities will generally become aware of home office zoning infractions through a "friendly neighbor".
Business License
Most cities or counties require businesses to be licensed.
Some home-operated businesses, however, are not required to have a business license.
Check with your local City or County Clerks Office to obtain regulations for your locality.
D.B.A. Registration
If you are using your own name as your business name it will not need to be registered, but if you use any other name, or even your abbreviated name, almost all localities require that you register the name.
This is called a fictitious name registration or D.B.A. "Doing Business As" registration. If your name is:
Randy M Jones and your name your business Raymond John or Raymond M John Enterprise you will not have to register it, but if you call it: RMJ Enterprises you will generally have to register the name.
Most states have a name search bureau which is a part of the state government.
You will generally be able to call this office to see if a given name has already been registered to someone else in the state.
This is important to do, or it could be costly later. If you give your business a name which is already registered to another company, the other company may demand, and even take legal action to make sure you comply, that you cease to use the name.
Your Company as a Legal Entity
Businesses are most commonly set-up as one of the following entities:
The Sole Proprietorship
Incorporation
Partnership
Most new businesses choose the Sole Proprietorship. It is the least complicated.
It requires no paperwork.
The proprietor you, or you and your spouse as the owner, or owners, are taxed for all net profit from your business.
You add the income of the business to other income, or deduct the business loss from other income.
Your tax adviser can give you specific information.
The disadvantage of the Sole Proprietorship is that as the owner you can be held fully liable in a lawsuit. An incorporation, on the other hand, will give you some protection. In this case the "INC" rather than you is the legal business entity. If you are starting a business that tends to have liability exposure the corporation may be the way to go. In this and other legal questions, only your attorney can give you competent legal advice. Partnerships are generally chosen when unrelated individuals own a business. A partnership should be set up by an attorney, or all kinds of problems can develop later.
Have a wonderful day.
While working at home has an almost irresistible appeal to many, and many have some big misconceptions of what it is like, here is some very useful information that can help you get started successfully.
Legalities of Working at Home
Zoning
Before setting up your new business it would be advisable to check on the legal status of your business.
You need to check zoning laws for your community which may dictate if you can legally operate a business from home.
We realize that many businesses never check on zoning for their home-based business and chances that they ever get into difficulties with the law are probably pretty slim.
If there are no changes in structure and you do not have customers and or employees enter your home, regulations will tend to be far more easy.
Laws and regulations change from community to community, but the following 5 factors will generally be regulated items:
1. Separate business and private entrances.
2. Square footage of the home which is taken up by commercial space.
3. Employees working in the home.
4. Certain occupations such as jewelry or clothing
5. Storage of commercial goods, especially any hazardous materials.
Here is an important suggestion: keep relations with your neighbors on a friendly basis. Your neighbors will soon become aware that you are working at home. Some may even be envious, and yes, unfortunately zoning authorities will generally become aware of home office zoning infractions through a "friendly neighbor".
Business License
Most cities or counties require businesses to be licensed.
Some home-operated businesses, however, are not required to have a business license.
Check with your local City or County Clerks Office to obtain regulations for your locality.
D.B.A. Registration
If you are using your own name as your business name it will not need to be registered, but if you use any other name, or even your abbreviated name, almost all localities require that you register the name.
This is called a fictitious name registration or D.B.A. "Doing Business As" registration. If your name is:
Randy M Jones and your name your business Raymond John or Raymond M John Enterprise you will not have to register it, but if you call it: RMJ Enterprises you will generally have to register the name.
Most states have a name search bureau which is a part of the state government.
You will generally be able to call this office to see if a given name has already been registered to someone else in the state.
This is important to do, or it could be costly later. If you give your business a name which is already registered to another company, the other company may demand, and even take legal action to make sure you comply, that you cease to use the name.
Your Company as a Legal Entity
Businesses are most commonly set-up as one of the following entities:
The Sole Proprietorship
Incorporation
Partnership
Most new businesses choose the Sole Proprietorship. It is the least complicated.
It requires no paperwork.
The proprietor you, or you and your spouse as the owner, or owners, are taxed for all net profit from your business.
You add the income of the business to other income, or deduct the business loss from other income.
Your tax adviser can give you specific information.
The disadvantage of the Sole Proprietorship is that as the owner you can be held fully liable in a lawsuit. An incorporation, on the other hand, will give you some protection. In this case the "INC" rather than you is the legal business entity. If you are starting a business that tends to have liability exposure the corporation may be the way to go. In this and other legal questions, only your attorney can give you competent legal advice. Partnerships are generally chosen when unrelated individuals own a business. A partnership should be set up by an attorney, or all kinds of problems can develop later.
Have a wonderful day.