In today's dismal economic situation, lay-offs and joblessness have become a reality for most people. They would go into the office and suddenly find that they have lost their only means of income. It could be that their positions have become redundant, unnecessary, or they have been cut in an effort for the company to save costs.
That is why small home-based businesses are taking off right now. Without a steady employment, people are looking at and relying on their own talents to earn money. A lot of home-based business owners, however, may not be aware that they need to go through processes to make it all above board and legal.
These are the important things you need to do to make your home-based business legal.
1. Decide on your business type. Even small businesses can be set up as a corporation or a partnership, but by far sole proprietorships is the easiest to establish. Take note, however, that it is also the riskiest because your personal assets and your business assets are deemed to be one and the same. This means that whatever liabilities your business has, you will also be personally liable for them.
Partnerships and corporations have limited liability, but they are much more complicated to start.
2. Decide on your business name. Your business name should be catchy and easy to remember and, as much as possible, reflect your business. Many well thought-of business names have propelled businesses to succeed, while bad names have caused the downfall of some. However, you should also register your business name if it is different from your own legal name.
Another thing to remember about business names is that they should not infringe on any trademark. That means that you cannot get Coke, McDonald's, or any other existing brand and label as your business name.
3. Get your business licenses. There are different licensing requirements according to your state or locality. Some businesses may also need a federal license. What is more, depending on the type of business you are planning to get into, there might be other licenses that might be required of you. For example, getting into the food business, you will need to be inspected by your state's board of health. If you are planning on reselling pharmaceuticals or food supplements, there are also certain restrictions on what you could do or not do as set out by the Food and Drugs Administration.
Some business types and occupations may also need a special license. This includes child care occupations, engineering, housekeeping, barbers, hairdressers and others.
To be sure that you are adequately licensed, be sure to check with your local or state clerk and get the requirements.
4. Pay your taxes. You will be required to file annual income tax returns for your business. You will also have to pay sales taxes if you are in retail, and because you are basically self-employed, you will have to shell out for self-employment tax for any income more than $400.
5. Check your local laws. The county or city you live in might have laws that can affect your business. Zoning laws was established to make sure that property is used appropriately. Checking your zoning laws will help you know if your business is allowed to operate in your area or not.
6. Consult professionals. Admittedly, the entire process involved in creating a business can be a little overwhelming and daunting to any aspiring businessman, especially first timers. However, do not worry, you can always hire the services of professionals like lawyers and accountants to help you out. If you do not have the budget for professional services, you can also get free advice from the Service Corps of Retired Executives, which pairs you up with a seasoned professional who can help you for free. You can also check the Small Business Administration to help you with the legal ins and outs of starting a business. The Internet is a really good source of information, too. There are online forums where you can ask the more experienced business owners for advice.
Setting up a home business can be an exciting opportunity for a lot of people. Ensuring that you are operating legally can help save you from a lot of trouble that may only lead to financial losses, imprisonment or even shutting down your business. Besides, keeping it legal helps you achieve peace of mind and help you to focus on growing your business.