Four Important Steps to Starting a Home-based Business

Homebased businesses steer fairly clear of cumbersome laws and complicated regulations that accompany larger businesses, but there are still some important legal considerations.  Below is a checklist of legal issues regarding homebusiness.


1. Choose Your Form of Business


Sole proprietors. A sole proprietorship is a one-person business. You don't have to register with your state in order to exist; you are a sole proprietor if you simply conduct business. Starting up isn't that complicated. However, you need to check with local registration, permit, and licensing laws. There are also income tax obligations (filing a Schedule C with your Form 1040). Remember, as a sole proprietor you are personally responsible for paying any debt you accrue.


LLCs or Corporation. If you want to limit your personal liability or if you have a business partner, you might want to consider incorporating or forming a limited liability company. Corporations usually are more expensive to form, but it's best to incorporate from the beginning if you want to grow into a large business.


There are plenty of online resources, including DIY forms, that can help you get started.


2. Get Your Business License

If you're required to file a Schedule C or other tax form for reporting your business income, you'll likely be required to get a business license. You can likely apply and pay for the license on your city or county's website.


3. Choose a Business Name and Protect It 

Before you use a business name (even if it's your own name), you must find out of the name is already in use or if it's protected by a trademark or service mark. Not doing so could result in costly legal disputes. You also want to choose a name that's different so you don't confuse customers or separate yourself as different from the competition. You can search for business names at and


4. Know the Details


Zoning and Homeowner and Condominium Restrictions. Most cities and counties have zoning restrictions, and many homeowner and condominium associations restrict the use of property for any activity that generates income. income-producing activity. To get around it, check to see if you can get a conditional use permit.


Contracts and Written Agreements. Familiarize yourself with the art of the contract and written agreements. You will likely develop written contracts for clients and written agreements if you work with partners or subcontractors. 


eCommece Business. If you are doing an ecommerce site, it is important to know the important legal issues regarding website development.


Licensing Content. Be sure to know the procedures and rules about content licensing so you can avoid licensing related problems.


Remember, always consult an attorney if there are any risks or uncertainties or encounter any legal problems.



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