I just received a question about legal regulations for running a home based business from a new entrepreneur. This article answers that question in a general way, that most of you can use. I’ve included things for full time RVers to consider, as well.
I’ve had home based businesses in several states since 1977. Our bio gives more information about the types of businesses we’ve run, which in turn, is how I came to know this stuff. The regulations are not the same for every business or location. The following points are from what I’ve learned. I do invite comments about what you have learned because legal regulations are always changing, and new entrepreneurs can always use good advice.
Where to Find Legal Regulations for Running a Home Based Business
The most important things I can advise are to check with your
- State licensing
- State Comptroller (re sales tax)
- County licensing
- CITY licensing agencies
- Homeowners Association
- RV Park rules
- Any company affiliation requirements
- Professional licensing or certification
Ask specifically about the legal regulations for all of the areas of businesses you plan to have.
Check with YOUR state’s Comptroller for tax laws. I’ve done jobs like writing gigs, video courses, grant proposals, resumes, and genealogy courses, all done entirely from computer to employer–all non taxable. I usually met with resume clients in a neutral spot (coffee shop) when not working through the Internet. Other work was refilling toner cartridges, selling video courses on DVD and similar delivery work–all taxable. I delivered these by mail. Some writing work is state taxable, some isn’t.
Even if none of the government bodies above have any regulations, your HOA or RV Park might restrict any or all home based businesses.
More than likely HOAs and RV Parks would restrict businesses that require customers/students (traffic and parking) or more than a few people coming to your home. Sometimes they restrict private group meetings because the parking infringes on neighbor’s parking. They will also restrict any window or lawn advertising. I doubt if they can restrict advertising on your car, so there is one option you might consider.
If you don’t live in an HOA or RV Park controlled area, the city or county may have any restrictions about traffic to your home, parking, or signage. When I had businesses in non HOA areas, I had to apply for a local variance wherever I expected customers to come to my home. Otherwise, since there was no impact on neighbors, parking, noise, etc. they usually didn’t have any such requirements, though some did on signage in a residential area. You may still need a city or other license simply to conduct business under a fictitious name/DBA.
If you are working through an established company (selling cosmetics or essential oils,) you also have their requirements to meet, and that may conflict with any of the above.
Make sure you don’t need a professional credential for the work you do. At one time we owned a durable medical equipment business that primarily delivered oxygen. We didn’t need a credential for that (though we did have them.) Later I taught CPR classes, and did need a credential (Instructor Certification) so that the students could get a valid CPR card.
Niche-Specific Regulations for Running a Home Based Business
I’ve taught CPR classes, even at home, and my HOA never complained. I taught them remotely (at client’s sites) and needed only my Instructors Certification training and legal contracts for service and payment agreements. These are niche-specific requirements. Make sure the laws don’t vary from state to state about credentials. I’m hearing that accountants no longer need credentials in some places. I’m not sure if that’s true, so insert another profession of equal responsibility if you can. Tax preparation is another one that may or may not require a credential. But would you trust an un-credentialed accountant over a bookkeeper? That’s something to look into.
More than Just Legal Regulations for Running a Home Based Business
If you can be held liable for anything, (and these days, people make up crazy stuff to sue over) you might want a lawyer to go over the work/payment contract you use, or write one up for you. If you’re mobile, you may need one for each state or a clause for each state.
A lawyer can help you choose the best business structure: Sole Proprietorship; LLC; one of the Corporate statuses, etc. These laws change so the advantages of being one or another may make a big difference to you. LLC is somewhere between Sole Proprietorship and Corporation status, that isolates your business assets from your personal ones in case you are sued. Many writers form as a LLC just for this reason.
Get liability insurance. The more directly your product affects people (skin care, child care, specialty foods, instructions, etc.) the more vulnerable you are. Network and find out what others in your area were required to do to meet legal regulations for running a home based business.
If you’re creating work (videos, articles, books, recordings, etc. download the copyright law, Title 17 here: https://www.copyright.gov/title17/title17.pdf.
If you need to file a trademark download the Trademark law here: Laws & Regulations
Legal Regulations for Running a Home Based Business Remotely
Regulations a very different from town to town, county to county, and state to state. You might even have to meet some requirements of remote areas where you sell or provide service. For example, if you are selling an item that is taxable in your home/domicile state, you will have to collect and pay sales taxes for sales to people who live in that state.
If you are working remotely, or travel to another state to work, you may be liable for income taxes to those states.
If you are traveling and conduct your business in different locations, be sure to find out how these regulations will affect you, well ahead of your arrival. Get your legal requirements in order before you conduct business. This would be important for vendors at fairs, farmer’s markets, and similar events. Some places actually require you to make a permanent address in their state if you are there over 30, 60, or 90 days. That involves registering your vehicles, getting that state’s driver license and other complicated and expensive actions. If you’re not intending to relocate, find out how to do business without changing residences. Check these out before committing to longer-term venues.
Other Thoughts on Legal Regulations for Running a Home Based Business
In Colorado, I needed to register my business with the State (something like $5/year then.) And through that registration I was able to obtain business bank accounts, business memberships to places like Costco and Sams, file as a sole proprietorship within my personal Federal Tax Return, and obtain many business advantages just because of that registration.
In Texas my sales a tax license was no cost but was required. Otherwise, business registration isn’t required by the state or county. Texas has no income tax so this affects all Texas business laws. The city required a registration of my DBA (Doing Business As) name–cost $20. I used my city registration to obtain the same business benefits as in Colorado. If I were using my name, there was no requirement, but that would not provide any official document to show that I’m an established business.
If you’re working under your own name, and don’t need any licenses, consider getting one anyway, just for confirmation that you are a business and entitled to business benefits, memberships, discounts, checking, etc.
And one final, most important thing – ALWAYS KEEP SEPARATE RECORDS. If you don’t and are audited, you open yourself to a personal audit of all of your deductions, not just those for business. Keep accurate records of home deductions with specific percentages allocated to work space, mileage records with notes stating the reason for the trip, and accurate percent of computer use for business.
Depending upon the work you do it can take a lot of planning, but doing it right the first time saves much headache later.
- MAKE A LIST of these things and follow through ASAP
- Join business networks–keep learning
- Call government offices and ask as many questions as you can think of about licenses/requirements/variances.
- You just need to talk to those that govern the requirements.
Best wishes for a successful business.
Ad Hoc Group Work at home
Our Ad Hoc Group business promotes training for legitimate businesses (writing, resumes, graphic design, photography, marketing, and similar skilled work–how to prepare professional work in those niches; how to run those businesses; get clients; get payment; etc.) I’ve used may of these courses to incorporate skills into several of my services successfully.