If you’ve ever thought about starting a home-based business, you know what an attractive idea it is. Plenty of profitable companies start out this way, but it’s not as simple as just having a great product or service.
Even if you’re only using your home (or maybe even the garage) to launch the company, you’ll have to think about permits, property laws and the potential impact on your taxes. And depending on your business plans, there can be a lot more to consider.
Here are four details you must know about if you’re planning to use your home for your business.
1: Can you legally use your home for business purposes?
Before you even start working on your new business plan, you need to find out whether or not you can use your home for this purpose. It’s easy to think that, as the homeowner, you can do what you like with the property, but there are other factors that can get in your way. Your city or county might have rules regarding home-based businesses, and if you’re a part of a homeowners association there might be regulations specifically banning this function. If you’re a renter, it gets even murkier and you’ll have to look carefully at the lease or speak with the landlord or management company in addition to the local zoning board. There could be exceptions if your business won’t have a visible impact on the neighborhood, but there’s a chance your dreams could be crushed by this first step.
2: Have you acquired the necessary paperwork?
Once you know you can get going with your home business, you may need to get certain permits. This will depend on what exactly your business does: a meal-delivery service requires different licenses than a tax consulting company, but it’s easy enough to get started. Take a look at your state’s basic requirements here and then talk with your local government about a general business license. The local zoning office can answer questions about a Home Occupation Permit, and then you can dive into what’s needed based on your new business’s industry. Most, if not all, of these will cost money, so be ready to pay before you get started.
3: What are the tax implications?
One of the major benefits of a home business – aside from working from your couch – is you can deduct work-related expenses when you file your taxes. This applies to business supplies and services, as well as a portion of your utilities and internet service so long as it’s equal to the amount of said services you’re using for the business. The IRS has made it somewhat simpler to calculate these sorts of deductions, but you’ll still need to flex your organization skills if you want to benefit from your new setup as much as you’re allowed.
4: What will the neighbors think?
Even if you’ve gotten the necessary permits and you’re operating within the laws, a neighbor could be the downfall of your home-based business. Again, if you’re a part of an HOA your neighbors could have even more of a say, but there could be a problem if your new business brings small crowds of clients and visitors to the area on a regular basis or makes a decent amount of noise. If you know the neighbors well and have their assurance that they support your new endeavor, consider getting their support in writing in case this becomes an issue later.
Here’s something to keep in mind:
There’s plenty to admire about running your own business from home, but it also takes plenty of work to make it happen. These issues may not seem like much to the dedicated entrepreneur, but every obstacle challenges your new business. Do your research to make sure paperwork or permit costs won’t derail your home business plans and then put all of your effort into making it a success. You should always try to get the most value from your home as possible and, as long as you’re prepared, this is a great way to do it.
Mrs. Glink:
First and foremost, thank you so much for your timeliness. Your message came as I beginning working towards my business in the beauty industry.
Thank you so much!
Vanessa,
You’re very welcome. Glad to be of service. Wishing you much success in your new business.
Ilyce Glink