If you’ve made the wonderful decision to start your own work-from-home business, there are several legal issues you need to consider. Legal mistakes can doom your business, especially in the early days.
In most cases, you will need business permits, but these laws vary far and wide between states and communities. You may need articles of incorporation. If you have workers, you may need workers’ compensation insurance. There’s a lot to consider! Here are a few legal things to think about as you start making money from home:
Know What is and isn’t Permitted in Your Community
Before you start working from home, you have to ask yourself whether or not you have the right permissions to do so. If you’re just sitting at a computer all day, there’s a good chance you’re not breaking any neighborhood rules. All the same, not having any permits, licenses or certifications you need for your field of work is one of the easiest ways to get your business shut down early or face serious fines.
Depending on where you live, you might need zoning exceptions to be able to run any kind of business from home, regardless of what it is. Check with your town or city hall, and look up guides for new business owners in your industry to see what is and isn’t required of you.
States also have their own, specific requirements for registering a business, incorporating a business, and filing sales and service taxes. Most counties have a business incubator that can help you navigate regulations so you can set your business up for success, legitimately.
You’re still Responsible for the Workplace
If you invite clients or workers into your home and they end up getting injured, you could be in serious hot water. You could face a premises liability case and you might get sued—just the same as if you were a large business with a fancy office building.
Keeping the home free of health and safety risks is one important step in coping with that threat, but you should also invest in business liability insurance. Consequently, you might simply reconsider whether or not you welcome clients to the home at all. You could save yourself a lot of headache if you visit them instead or find a neutral ground, like a coffee shop, as a meeting place.
You can also rent meeting space at hotels, conference centers, and even county offices. Check your local community centers to learn about low-cost meeting place options.
Related: 5 Things to Know about Working from Home
Don’t Fudge the Numbers
Even a small tax accident can inspire the tax authorities to start raking through finances with a fine-toothed comb. An efficient, organized bookkeeping system is essential. Most home business owners take care of their own taxes, but when your taxes start getting complicated and include multiple expenses and potential tax breaks, you might want to consider hiring an accountant to help you. Accountants don’t just make sure the numbers are all organized. They are also qualified to offer real legal advice on how to deal with your taxes and avoid audits.
Don’t let any of the potential threats put you off your efforts to get your own home business up and running. There’s risk inherent in running any kind of business; you simply have to ensure you’re taking the right precautions to deal with them.
Home Business Legal Requirements Checklist
It’s impossible to create a one-size-fits-all recommendation for your home business’ legal requirements, but here are some things you absolutely must research before you start your business:
- What business licenses do I need? State? County? City?
- Am I violating any home owners’ association rules with my business?
- Do I need to incorporate my business to protect my assets?
- Do I need business insurance?
- Have I registered my business properly with the IRS? (if you aren’t sure, ask an accountant)
- Can I safely meet clients at home, and if not, where can I meet them?
- If I have a virtual assistant, what legal steps do I need to take as an employer?
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