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Best Tips to Keep Your Home-Based Business Legal

Starting a home-based business is a monumental endeavor and a rewarding experience for anyone. As a homeowner, you get to live your...

Avatar Written by Lori Wade
· 3 min read >
legal business

Starting a home-based business is a monumental endeavor and a rewarding experience for anyone. As a homeowner, you get to live your dream with flexible working hours, low overhead, and no commute time. However, failure to keep your business legal can have profoundly negative consequences on your finances and personal life. 

If you aspire to take your business to the next level, you have to meet regulatory requirements to stay out of trouble. So as you contemplate the small business opportunity, you can consider keeping everything about your business legal. If you truly believe that it is your time to reclaim your dream, then here is a complete Hans Jakobi guide to keeping things legal.

Register your Business name

This process is designed to allow your state and local government to know your operating business name. You will likely register your business as a ‘Doing Business As’, which does not require you to seek trademark protection. This allows you to use the name you want for branding without having to incorporate it. Using a Doing business as the name makes the name of the business the default name of the legal owner of the business. However, if you decide to add something to the name of the company, you will be forced to register the name as a DBA name. 

If you are running a sole proprietor business, then you do not need to register your DBA name. The same applies to an LLC or corporation, where your chosen name is automatically registered with the state. The only valid reason for getting your business name trademarked is if you intend to operate nationally. A DBA name will not offer you the same kind of protection as a trademark would. But first, you need to conduct an extensive search to ensure your chosen name is available.

The Business Structure

The business structure you settle for when starting your own business will determine the tax obligations and forms you have to comply with when filing your tax returns. Most home-based businesses start the journey as sole proprietors. As a sole proprietor, you can operate using your personal social security number. However, you can still apply for a Tax ID if you feel the need to. The LLC structure was initially designed to protect the owner of a business from any liabilities that arise from doing business. It is the most popular structure to start an online business because of the simplicity of creating one.

The S corporations are considered unique entities. The owners of the business are protected from the liabilities of the business. This structure has only one level of tax. For savvy home-based business owners, the best business structure is C Corporation. In this case, you are the majority shareholder as the only owner of the business. However, the C Corporation structure is one of the most complex arrangements. 

Obtain a Tax ID

As mentioned, sole proprietors can use their social security numbers, but it is best to obtain a tax ID number of your business. This Tax ID number will allow the IRS to identify your business. The best way to get a Tax ID is by applying online through the IRS website. Once you complete the short application process, you will get your Tax ID number immediately. This is a good reason why you should consider getting a Tax ID just as you are thinking about home-based business opportunities. Besides, you would not want your social security number floating around out there. 

You can also download the SS-4 form from the IRS website to fill it and send it via fax for review. If everything is in order, the IRS will send you a fax containing a Tax ID for your business. Regardless of the business structure, you will need to provide the same kind of information. You have to provide the business name, type of business, and the address where you will be conducting your online business opportunities. 

Get a registered agent

When you are running a home-based business, you might not want to provide your address as part of the public record. As such, you will need to get a registered agent who will be in charge of accepting the delivery of legal documents and ensure you receive them on time. If you conduct business in a state where you do not live, you will need to have a registered agent to serve your legal notices and correspondence. The state where you offer your services needs to know who to contact with regards to your business.

Licenses and permits

Anyone thinking about how to start a home-based business also needs to consider the licenses and permits they need to obtain. The licenses, permits, and zoning requirements vary from state to state. The first thing you need to do before launching your business is to find out what kind of permits you will need from your local and state government. You may need a business permit for the kind of operation you will be conducting. Some services, like child care, financial advisors, or legal services, require you to obtain an occupational license from your state. 

Conclusion

Will you be starting a home-based business this year? If yes, then hopefully you have benefitted from the guide above. Taking the time to start a small business is both exciting and challenging. Before you can get started on your business plan, you need to know all the legal requirements for running a home-based business. You can find out more information and requirements on your state, city, and county website to remain complaint.

Written by Lori Wade
Lori Wade is a journalist from Louisville. She is a content writer who has experience in small editions, Lori is now engaged in news and conceptual articles on the topic of business. If you are interested in an entrepreneur or lifestyle, you can find her on LinkedIn. Profile

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