Thank you for taking time out to read my latest Blog Post.
This blog post forms part of a of a sequence on Starting A Business which I shall be running over the next couple of days.
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If you missed any of my previous blog posts you can read them at starting-your-business
Home Business Operation
If you intend to operate your business from your home, there are special laws that apply in most areas. These laws apply to things like zoning, and depend on whether or not you will be having customers or clients visit your home, traffic, and other factors. Most zoning codes have restrictions for:
- Prohibit changing the exterior of your home for business purposes
- Prohibit or restrict outside signs in residential areas
- Prohibit or restrict commercial vehicles in residential areas
- Prohibit any type of outdoor business activities
- Restrict the number of visitors you’re allowed to have
- Restrict the number of employees or even prohibit you to have any
- Restrict business parking
- Restrict noise and other nuisances
- Prohibit hazardous materials
- Restrict the type of businesses allowed in residential areas
Some areas have very few laws regarding home businesses, while others are much stricter. Check with your local planning and zoning office to find out which laws may apply to your business. Home-based businesses can also write off certain expenses on their taxes. It is best to consult a tax professional to be certain of the deductions you are allowed to take, because the last thing you want is the hassle of an IRS audit because you claimed something you should not have. Additionally, tax laws change often, so it iss a good idea to use a tax professional every year if at all possible, because they will stay informed about changes to the IRS code from year to year.
A lot of people don’t understand the benefits of incorporating, or even if they should. Additionally, there are different types of corporations and even LLCs, which aren’t true corporations. Incorporating or forming an LLC is potentially quite costly. The license alone can cost $100 or more in some areas, and if you need professional help to fill out the forms, that costs even more
Not every business needs to for one of these entities, but if you do, it’s important to choose the right one.
An LLC, or Limited Liability Company, is the simplest type of business entity for form (other than a sole-proprietorship or partnership). It offers very little liability protection, but there are certain tax benefits that you may want to consider.
Corporations offer a lot more liability protection, meaning it’s more likely the company would get sued instead of you personally if something goes wrong, for example. There also greater tax benefits, credit benefits, and other benefits. The drawback is that corporations require a lot more recordkeeping, corporate formalities such as required meetings of the board of directors, ownership restrictions and much more.
There are also two different types of corporations to consider: the C-Corp and the S-Corp. The S-Corp is more for smaller companies and the C-Corp is for larger companies that may want to issue stock someday.
The SBA has an article on choosing a business entity. This article may help you decide which is right for your business, or even if you need one at all.
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