Launching a home-based business requires the same preparation needed to start any new business.
The actual requirements for a home-based business depend on the type of business you are interested in forming. Here are some points to keep in mind as you start down the path to self-employment.
- Funding. Figure out the start-up costs associated with your business idea and determine how you are going to meet your financing needs. Microbusinesses and most home-based businesses cost between $2,000 and $10,000 to start. If you do not have that kind of cash on hand, you will have to apply for funding, open a line of credit, or seek outside investors.
- Registering your business. Establishing a corporation or a limited liability company in the state where the business is located is essential if you will be hiring employees and also provides protection for your personal assets and a structure for business operations.
- Licenses and permits. Once your business entity is established, you will have to obtain business licenses and permits from the city where you live. You should also confirm that your business can operate out of your home in accordance with your property owner association and existing zoning. Your city may prohibit certain types of home businesses or require you to apply for a zoning variance that allows you to operate from home.
- Tax implications. Qualifying businesses can take advantage of home office deductions for expenses such as rent, utilities, repairs, maintenance, and cleaning. You do not have to own a home to qualify; renters may qualify, too. But to get the home office deductions, the space you use for business has to meet IRS requirements. This is something you will want to discuss with your CPA.
Starting a home-based business is challenging yet rewarding. In order to navigate the challenges, first time owners should work with a legal professional to ensure that they take all of the steps needed to operate their business legally—and successfully—from home.
From establishing a business to understanding licensing and taxation issues, the experienced business attorneys at Davis Law Group can help with every aspect of forming and running a business. Contact us today to schedule a no charge consultation so we can assist in making your dream come true.