Legal issues of home businesses
When it comes to starting your own home business, you will encounter different legal issues. Here is a quick guide to help you with some of the legal issues you will encounter with your home business:
Business Type
One of the biggest decisions you will make is determining your business type. Do you want to exist as a sole proprietorship or do you want to set yourself up as a partnership or limited liability corporation (LLC). If you don't have a lot of money, you should become a sole proprietorship for a little while. Sole proprietorships don't require any money to get started and you simply file a Schedule C with your Form 1040. If you declare an LLC or partnership, your tax returns will become a little more complicated. This is when you need to consider hiring a good CPA to help you with your home business.
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Business License
Another important part of establishing a home business is obtaining a business license. Some states don't require business licenses to operate a home business, but it is a good idea to get one if you see your business growing substantially in the new few years. Since you will have a Schedule C and other forms to file, you will need to have a business license to go along with them so it's a good idea to pay the $50-$100 to obtain one.
Sales Tax Agencies
To get your business up and running, you need to get set up with your state's sales tax agencies. There are different sales taxes for your city, county, and state. Some states like Oregon don't actually have a sales tax so you don't need to worry about it if you live there. Always check your state regulations so you can get set up with sales tax agencies if you need to.
Choose a Business Name
One of the most important things you need to worry about when you set up a home business if your business name. The name you choose must be different from other company names, even if you only add "and associates" at the end of it. Check trademark or service mark laws to find out what names are already in use and which ones are protected. Try not to use a company name that is already in use because it will create difficulties for you when you try to design your web site and start building your company image. State and Federal web sites will provide a listing of all the company names that are currently in use so you can create a unique one and so you don't copy one that is already in use.
Zoning Regulations
Home business owners need to worry about zoning regulations and land restrictions when they are trying to get their business up and running. If you cannot operate your particular business from home, you will need to rent some space in a commercial area. You can also run into some problems with your neighbors. If they don't approve of your home business being run from their neighborhood, they have the right to refuse their agreement and the city can use this against you to make you stop working from home. Normally this happens when the home business poses some sort of threat to the neighborhood. For example, if you live in a quiet area and an investor wants to buy a home to turn it into a half-way home, it will decrease your property value and the rate of crime will increase. This reason can force you to vote no against this type of home business being run on your street.
