Considerations for Running a Home-Based Business
August 8, 2024 | Christina M. Bezas | |For many, the allure of a home-based business is rooted in the freedom it offers, allowing business owners to create their own schedules and travel more freely.
Navigating the journey of starting and running a successful home-based business – from the legal intricacies and other important considerations – requires thoughtful planning and deliberate execution.
Before starting a business from your home, consider the four following topics:
1. Zoning Laws
An important legal consideration when deciding whether to start and run a home-based business is zoning laws. Generally, zoning laws govern how land or property may be used and set forth any applicable restrictions or limitations on permissible use. For instance, local zoning laws may restrict or limit business activities in a residential area and could impact whether a home-based business complies with those zoning laws. It is important to consult with a legal professional to ensure that your home-based business operates in accordance with all relevant laws and regulations.
2. Business Structure
Your business’s legal structure may impact a number of things, such as (i) how much you pay in taxes and what types of tax returns must be filed, (ii) the complexity of bringing in additional owners, and (iii) potential personal liability. Carefully consider the aspects of the various business structures (i.e., sole proprietorship, limited liability company, S corporation, etc.) when deciding what is most appropriate for you. A legal professional can help you assess which business structure is most suitable for your home-based business.
3. Tax Planning
It is important to be aware of any tax implications of operating a home-based business. Consulting with the appropriate tax professionals from the start allows you to ensure that your home-based business operates in compliance with the relevant tax laws. It is also important to routinely consult with a tax professional in order to optimize your financial strategies and minimize tax liabilities.
4. Insurance Coverage
Your homeowners’ insurance policies may not cover business-related losses or liabilities, and you may need to obtain additional insurance coverage specifically for your home-based business. Consult with the appropriate professional if you are unsure about the scope of your coverage or are considering adjusting your coverage.
This article appeared in the August 2024 issue of Stroll Lloyd Harbor.