Some Overlooked Home Business Considerations
In 1998 there were around 4 million people who worked from home in the U.S. As of 2002 the number had risen to around 11 million. If the past is any indication the number is dramatically higher now.
Since the vast majority of Home Businesses are run by one or two people. There are some things you should know if you intend to run a Business from Home.
~~ Sole Proprietorship
If you run any business from home as a sole proprietorship, you and the business are one entity. If someone sues the business, they sue you and can put a lien on your personal property. You run the risk of losing your house and everything in it.
You are better off if you incorporate the business in some manner (the most common is an S corporation), or form a Limited Liability Company (LLC). Either way will put a "Corporate Shield" between you and your company. The business liabilities will be kept separate from the personal.
Something else you should consider is Zoning Codes. All municipalities, townships, and small towns have some type of ordinance covering residential and commercial properties.
Most will allow home businesses with certain restrictions. Some you may or may not be allowed to have a sign. Others may allow only a certain number of vehicles to a property, or it may be considered commercial.
Be sure to check with your local zoning authority to find out what is considered commercial in your area.
Does your homeowners insurance cover your business if something happens? Some do, some don't, be sure to check with your insurance agent. In most cases it is better to get a separate policy specifically for the business.
Since tax time has just ended, it is time to think of deductions for next year. You have to meet at least 3 criteria.
1. The area for your business must be exclusively for that purpose. You can't just set up on the dining room table.
2. You must use the area on a consistent basis, not just once in a while to send bills to customers.
3. You must be able to show that your "office" is your principal place of business, or you meet customers there, or you have a separate structure for business purposes.
You needn't prove all three, but be able to show proof if you are audited.
When you start a Home Business, be sure to consider this list. They are some of the easiest things to overlook when Working at Home.
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