November 24, 2017
November 24, 2017
Running a business out of your home feels like a dream for many people. And why not? You get to take advantage of low overhead costs, and you don’t have to worry about a commute.
But before you jump into a home business, you need to make sure it’s the right move for you. Here are some of the things you need to know about running a business out of your home:
If you are renting a home or an apartment, you might need to check your lease agreement before you start your home business. Double-check to make sure your business won’t violate the terms of your lease.
Depending on where you live, there might be regulations regarding home-based businesses. You might have restrictions on signage, or there might be limits to the number of employees that can work at your home. On top of that, there might even be regulations about how many clients can visit you each month.
Check with your local planning office to find out what you need to know about the zoning laws that apply to a business run out of your home.
Not all home insurance policies automatically cover home business activities. This applies to renter’s insurance as well. You might need to attach a separate rider to your policy to cover your home office and cover liability if clients come to your home and experience an injury.
Look through your insurance policy to see what’s covered. If you have questions, you can call your insurance agent to verify your coverage needs.
Even if you run your business out of the home, you might need to register your business in your state. Depending on the type of business organization you have, registration might be required. On top of that, you might need to file an annual report. Not all types of home businesses need to be reported and registered, but it’s a good idea to check into it before you get too far along.
Before you get too excited about claiming your home office space on your taxes, it’s important to realize that qualifying your space comes with restrictions. First of all, to claim your home office, you have to use it only for business purposes. If you’re using half the space as a storage room, you can only count the area that is exclusively used for business. You also need to make sure you accurately claim other costs. You might only be able to claim 60% of your internet usage if a big chunk of your internet use is personal in addition to business.
Make sure you keep business and personal separate as you work out the home office tax deduction.
Finally, think through whether or not you want your address to be public. When running a business out of your home, you might not think about the fact that your address could be public. Perhaps you can keep it off your website, but what happens if the public record gets out there in official listings?
Think about how public you want to be with your address. It might make sense to get a P.O. box as your business address. In some cases, though, you might be required to have a physical address for your registered agent. If that’s the case, and you don’t want your home address public, you can choose to use a registered agent. There are companies and attorneys that provide registered agents for just these situations.
Once you have figured out the details and understand what is required of a home-based business, you can decide if it is the right move for you.
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