If you’d like as little hassle as possible starting a business, starting at home makes sense. Even so, there are important steps to take.
You’ll need a business plan, a financial plan, a plan to find dependable employees and even a plan to find the most favorable business credit cards and additional cards for your employees. As challenging as it may be for new entrepreneurs starting with their small home businesses to gain mastery of these areas, it’s often the legal requirements of entrepreneurship that trip new entrepreneurs up the most. Here is a quick rundown of the ideas to keep in mind. These tips should help make sure that your new home business is in full legal compliance.
Know what business category to pick
When it comes to legal compliance, sole proprietorships are the easiest for first-timers in businesses. Tax compliance is one example of the ease of compliance seen for these businesses. Filing income tax for such a business only requires a Schedule C together with a regular Form 1040. Setting up a partnership or a limited liability company means being stuck spending hundreds of dollars each year on twice as many tax returns.
Find an occupation license
Licensing laws vary from state to state, and can vary from one business area to another. If you have a business to do with food preparation or childcare in mind, for example, you are likely to need to comply with tough licensing rules. If you aren’t aware of the licensing requirements in your state, you only need to look up the information you need on the government’s Career One-Stop website.
Set your business up to pay sales tax
Whether you are selling a service or a physical product, there usually are sales taxes to pay a government authority somewhere — a county, city or state. It’s money you add to every sale, collect from customers, and pass to the government.
Every state has a sales tax structure of some form. While the states of New Hampshire, Oregon, Delaware, Montana, and Alaska do not have a statewide sales tax, many of their local counties do. If you are unsure if your business is liable to pay sales tax to a government authority, you should look up information on GovEngine, which is a government site, or Lexis Nexis, a private entity.
In the event that you should find that your business owes sales tax, you need to apply to the government agency that deals with sales tax, for a permit that allows your business to sell to customers. It’s called a seller’s permit in some states, a resale license or a certificate of authority in others.
Once your business possesses such a permit, you won’t need to pay sales taxes on purchases that you make for your business It can be an important source of savings.
Register the name of your business
You need to make sure that the name that you use for your business isn’t already in use. Doing so could invite litigation. If you do have a unique name, you still need to make sure no one else takes it. All you need to do is to search for online resources such as Swithboard, The Ultimates, TrademarksEtc.com or the United States Patent and Trademark Office. If you’re really serious, you should simply use an attorney with a trademarks and patents specialization.
Clear your business with every local authority
From rules that your local condo association and homeowners’ association may have about home businesses, to zoning requirements by local governments, it’s important to get the green light from every authority that may have a say in where you physically locate your business.
There are plenty of financial and legal details involved in establishing even the simplest kind of home business. Putting in the work needed right at the start helps you avoid unexpected challenges along the way.