When starting a business, there will be many who want to restrict their spending, especially during the initial period. One of the many things forsaken is workspace, as many feel there is no reason as to why they can’t run a business from their home address.
However, some may be confused as to whether running a business from home, and there can be several factors that come into play when determining as to whether you’re able to operate a business from home or not.
The State You Will Be Running the Business In
A lot of the laws surrounding business can be similar regardless of what part of the USA you’re situated, but this doesn’t mean it should be assumed they’re the same.
Before opening any form of business whether its an online store, or private investigator services, you need to check that you’re allows to do so within state law. There can be varying laws, but some will often look at aspects that could interfere with noise pollution and disturbance to neighbors.
The Type of Business You’re Looking to Run
In spite of the fact that some businesses will require the use of certain machinery and involve stocking inventory, other businesses may be operated using a laptop. It can be easy to assume that every business will need its own headquarters, but if you’re an affiliate marketer or freelance writer, then there shouldn’t be any issue in running a business from the home.
The problems arise when the business is too large to be ran from a home premises, as the noise could affect neighbors and present some health and safety concerns.
Does Your Tenancy Agreement Allow You to Run a Home-Based Business?
Not everyone will have access to business premises during the early stage of a business, which is why the home can seem like the perfect compromise. However, if you’re renting accommodation, then there are some check you need to make.
If you’re unsure as to whether your tenancy agreement allows for the running of a business from the home address, then it can be worthwhile checking with the landlord. If the details have never been discussed with the landlord, then it’s a safe bet that the tenancy agreement won’t include any details that relate to business use.
Those looking to move into new premises and wish to use part of the home for a business should ensure that they’re able to get such agreements included within the tenancy agreement so there are no misunderstandings further down the line.
Double-Check Your Business Insurance Requirements
Regardless of the type of business you’re looking to run, you shouldn’t assume your business is automatically covered just because it’s based at home. To better understand whether you require business insurance or not, then you should look at some of the situations that can arise within the home in relation to the business.
For example, those running a mail-order business will need to receive deliveries, which will normally be carried out by a courier. Should the courier fall over due to nearby hazards or faults, then those without the right insurance could find themselves in some legal trouble.
The type of business you run will often dictate what insurance you need in place. You should never assume that your home insurance will cover items that relate to the business and should be treated as two separate entities.
Setting Up a Home-Based Business
Just because a business is operated from home doesn’t mean it doesn’t have the same expectations as those with business premises.
When setting up your home business, you will need to ensure that you’re filing your taxes and ensuring that you’re getting the right tax relief of any purchases made for the business.
It can also be worthwhile to inquire whether you’re able to take a home-office deduction, which could allow for the deduction of tax against mortgage payments, repairs and utilities.
If you’re a sole trader, then the will be no requirement to pay taxes in relation to a company. However, you will need to file a Form 1040 and Schedule C, and ensure that all expenses are itemized.
Should you have any difficulty in doing this, then you should employ the services of a tax professional.
Should I Seek Legal Advice?
If you’re new to operating a business, it can be useful to seek legal advice regardless. When it comes to running a business from home, the complexities can vary. Some may find that the legal framework is easy to manage, while others may find the ordeal overwhelming.
Those who are finding it difficult to ascertain what actions need to be carried out when planning to run a business from their home are advised to seek legal advice to ensure that there are no nasty surprises in the future.
Many people fall foul of the guidelines in place, simply because of making assumptions. The general rule is if you’re not 100 percent clear on the what actions need to be taken, then you should seek professional legal advice.
It may seem like another cost initially but will be more cost-effective than taking a risk when running a business from your home address.