1. What form of business do you have? The first thing you need to figure out is what form of business set up do you want. There are three different kinds:
   • Sole Proprietorship- a business owned by only one person, and probably the easiest entity to set up. This form of business is being used by more than 75% of businesses today. You are the only person responsible for your business. You make all the decisions; receive all profits, and are also liable for all debt or legal action taken against your business. Along with being responsible for all debt and legal action, the amount of investment capital is limited.
   • Partnership- your business is owned by two or more people upon which is agreed the sharing of profits. This form is also easy to start and paper work is usually minimal. All the tax structures are the same, and naturally your profits and losses are shared between the partners. It's usually recommended that an agreement be made between the partners stating each person's rights, amount of capital each receives, joining or leaving the business, etc. One bad thing about partnerships is that you are now not only liable for your own debts; you are also liable for your partner. Sometimes these forms of business can end up pretty ugly if things go sour.
   • Corporation- this form of business is different than the previous two. This form of business is regarded and given the same rights and responsibilities as a person. A corporation can do all the same things an individual could do in commercial activity. It can own property, or sell it; sue or be sued. There is however some key advantages to corporations. You are not personally responsible for incurred debt, and you can transfer ownership from one person to the next.
   When deciding upon what form of business you want to go into, be sure to check into everything thoroughly
2. Once you have decided upon a name you will need to register it. This is how the public finds out that you are in business. Details on registering your name vary from state to state, so with your local state office for more information. This is where you might also want to apply for your own trademark, patents, or copyrights.
3. Get a business License. Contact your city clerks' office to find out what type of business license you need. Some cities require a general license, and others do not so be sure to get the right business license.
4. Filing Income Tax. If you are in a sole proprietorship business you will be responsible for filing and paying your own income tax. You will also want to be sure to make tax payments quarterly and self employment taxes if your income exceeds $400. This is a requirement as the money is put into Social Security and Medicare. Visit the IRS online for detailed requirements.
5. Zoning Regulations. Make sure you check with your local city and county offices about regulations for operating a home business. There's probably nothing worse than getting everything ready and running, and then having to shut down because of a zone violation.
6. Permits. Depending on your type of business you may be required to attain a health pr occupational permit.

The small business administration is a great resource for learning more about the intricate details of making your home business a legal business. Remember you also have the option of consulting with a professional such as a lawyer or accountant for additional needed information.