Legal Regulations: Running a Home Based Business

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.

Perry’nMicki

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.

Rodan + Fields ~ A Fast-Growing Mobile Income Opportunity

by Guest Blogger Fawn Volkert

There I sat, frustrated with the reality of my career and the inability to impact the world in the way I know that I was meant to. I wanted the opportunity to do more good and realized that even while sitting on 300 vacation hours for nearly 5 years, that no matter how hard I worked that I had hit my head squarely on the ceiling of limitations! Either I’d grow my career by title and fame or stop and reassess alternate income streams to support my mission work. In the midst of prayer, I found Rodan + Fields. Or I guess it found me, over lunch with friends.

Rodan + Fields IS a network-marketing distribution business! For that reason, I wanted to say ‘no’ to this opportunity. I thought I knew something about multi-level marketing and direct sales, as I’ve participated in a good handful already. So, I asked the questions you are all asking now!

What is Rodan + Fields selling?

We are selling dermatological-grade solutions to everyday skincare problems. Rodan + Fields anti-aging skincare line was created by the Doctors of Proativ ®. The products are based on the Stanford-trained dermatologists philosophy of Multi-Med Therapy® and to offer clinically proven results in your own home. The company also offers a 60-day money back guarantee on all products.

Is there a startup fee?

Yes, this is a business and not a job. Therefore, you must purchase your business tools and products. The startup packages are valued much higher than priced and are the only time that you will be offered product at 50% off. There are various startup packages to consider, each greatly impacting the growth-potential of your business. Pricing and content information can be found here

What’s my monthly minimum purchase requirements?

While there is an optional $24.95 online office subscription fee, there are no monthly minimum purchase requirements for consultants. Now, in order to unlock my commissions with Rodan + Fields monthly, I must fill my Sales Volume (SV) ‘bucket’ with 100 points (20 of which come from my online office subscription). The remainder of the bucket is filled by my personal and retail purchases. Essentially, one retail sale a month could fill the bucket. However, I’m a firm believer in investing in my business and because I love the product, I’m usually buying something for personal use anyhow! My monthly SV easily exceeds 100 points each month and reaching it has never been an issue.

What’s the earning potential?

These are those things I typically learn as I go and so I wasn’t concerned. I wanted personal testimony and got that. My lunch companions were funding mission trips and others were building orphanages. I knew that their success wasn’t achieved magically and that I’d have to work my business! Well working my business is absolutely paying off and I too have steadily grown my mission along with my business! In the chance that you are not a ‘learn as you go’ kind of person, you can read about more of the competitive compensation plan here. But in short, consultants earn retail commission as well as bonus residual commissions by securing loyal customers and building a successful team.

How saturated is this opportunity?

My lunch companions were about 4 people away from the founding consultant and as it turns out, this product is marketable to anyone with skin! There is roughly one dermatologist for every 30,000 people in the U.S., and Rodan + Fields has real solutions that provide visible results for the most common skin concerns.

Do I have to have parties or carry inventory?

No and no! Consultants receive websites with online ordering and Rodan + Fields manages the processing of orders!

I knew by the end of my lunch date that THIS was in fact the opportunity I was looking for. The greatest perk is that the product is absolutely amazing and I FINALLY love the skin I’m in. Rodan + Fields has been life changing!

So why should you join my team now? Because my team is #TeamBold. We link arms and encourage success with one another, we share and train together (virtually) and are growing rapidly, simply due to character! There is still a ground-level opportunity as we begin to launch Rodan + Fields into other countries. But mostly it’s time for you to claim your financial and time freedom; the opportunity to travel the world and run your business at the same time!

To learn more about this business email me Fawnv74@gmail.com or visit my website https://fvolkert.myrandf.biz/.

BIO: Fawn Volkert is passionate about her life as a mother and wife and feels drawn to work with vulnerable populations. For her, serving as encouragement to the hurting and broken, is an opportunity to give what she has been so blessed to receive. Fawn has earned a Bachelor’s Degree in Human Services and a Master’s Degree in Nonprofit Management in Philanthropy. Along with various leadership roles, She served as an Independent Consultant to new nonprofit organizations. Find Fawn on LinkedIn or http://about.me/FawnVolkert

How to Spot a Cash Scam

Money in hand in the form of many large bills

Whether you’re a workcamper, a vendor, or offer a service, if your business involves cash, you’re likely run into someone who’ll try to pull a cash scam on you.

Common tactics are easy to spot. I’m going to share a couple of scenarios to give an idea how they develop. And you’re invited to add your experiences to the comments section. Let’s help each other protect our transactions.

Cash Scam: Razzle-Dazzle 1

Back when we owned apartments our tenants usually paid their rent in cash. Most were honest people and never raised any suspicions. But one couple never quite met that standard. Everything they did seemed to be “one-off.”

A couple of weeks before rents were due I read about a common cash scam. The scammer comes in to pay cash for something, and pulls out all his cash. As you watch, he first counts out what he owes to you. Next, he counts out what he owes for each of his other bills (utilities, food, etc.) As you can see, he has enough to pay for everything.

So, here’s where the cash scam comes in. The scammer takes back of his money and again counts out amounts starting, now, with utilities and all of his other bills. With that money on the table he hands you the remainder, which you just saw, should be what he owes you. He hopes you won’t notice that he counted out an extra bill or two. And that reduces the amount remaining, which he hands you. If you don’t count it out again, immediately, you’ll be shorted and, later, may not know how it happened.

You might think this is silly, but it’s the razzle-dazzle surrounding the transaction that distracts you, leaving you to assume that he handed you the correct amount of money.

When rents came due I almost burst out laughing when our “one-off” tenant came in, sat down, started counting out money to pay the rent, then the utilities, etc., talking all the time. Then he put on his, “Oh, I lost count, let me do this again,” routine. As he started counting in the reverse, starting with the utilities first, I just told him to simply count out what he owed for rent and take care of his other bills privately. Apparently he’d just read the same article.

Cash-Scam Razzle Dazzle 2

Perry tells me of another scam. Three employees of a neighboring business came in because one, the woman, wanted to cash her paycheck. The clerk had cashed their checks many times before, so this wasn’t unusual.

The woman asked to cash her check. The clerk noticed that the check wasn’t signed and gave it back to her to sign. As she was signing the check, the clerk began counting out the cash to give her.

Meanwhile, her two companions were talking to her about paying them back some amount she apparently owed them. There was some commotion about the denominations they wanted.

So, after the clerk had already counted out the right amount of cash, the woman asked for different denominations than what the clerk was handing her. So, he put some of the cash back and drew other bills out.

The three changed their minds a few times, and the clerk exchanged bills each time the three decided they wanted different denominations.

Although the clerk did a final and correct count of the amount he handed the woman, the distraction was enough for him to forget to get the check back from her. She walked away with both her check and the cash.

Most of you aren’t going to cash paychecks. But, it could work the same if the customer asked to write the check for a few dollars over the sale amount.

The Common Denominator

You can see the common tactic with these cash scams is confusion, or razzle-dazzle. To ensure you don’t get caught up in these schemes, ask the customer to resolve unrelated issues privately, then come back to pay for their purchase when they have it resolved. Or, just ask if they want to purchase/pay what they owe, and ask that they put all the other conversation aside until the transaction is completed.

If they persist, tell them that it’s beginning to look like they’re pulling an age-old scam. Ask them to leave and turn to another customer or task. You might lose that sale, but, chances are, they never intended to purchase anything, anyway.

If you’ve had some razzle-dazzle experiences, please tell us how you spotted or avoided them. Scroll down to the comments section and tell us about the scams people have tried to pull on you.

Keep up with us – Join our Facebook groups:

RVers Health Care Talk page https://www.facebook.com/groups/487704674621036/
Health Facts Review page https://www.facebook.com/groups/690692274286152/
RVers Shoestring Startups™ page https://www.facebook.com/groups/542040012545258/
or visit us at http://www.adhocgroup.net

Which Tax Status Should Entrepreneurs Choose?

tax-guy-flipped-right The deadline for filing taxes is approaching quickly, bringing with it one task most of us don’t look forward to ~ preparing our annual tax returns. Since there is always the chance that we’ve overlooked some essential planning, I thought this might be a good time to talk about one of those important items ~ your tax status as the IRS sees you.

When Setting Up Your Home-Based or RV Business…

Make sure you know whether you’re a Remote Employee or Self-Employed Contractor according to IRS Tax Rules. Determining this seems simple enough, but sometimes the lines seem fuzzier than they should be. So, read the IRS regulations defining Employee and Contractor Tax Status, here. This page, also, has links to several forms that you can use to get an IRS determination, in case your situation isn’t clearly described.

Why Is Tax Status Such a Big Deal?

One of the scams we entrepreneurs must constantly watch for is the client who expects us to work as though we were his employee, but under the guise of contractor status, and without providing the benefits required of employers. Don’t rely on clients to look out for your rights. Take the initiative to protect them yourself.

Many employers want to hire self-employed contractors to gain the advantages of

avoiding labor laws required for employees
not having to provide employee benefits, especially health insurance
better business insurance coverage and keeping rates lower
reducing overhead costs of office space, utilities, equipment, and supplies
avoiding deducting and paying Federal or State taxes on your behalf

Yet, many still try to control how you do the work as if you were an employee. When this happens (and it is more common than you’d like to think) it crosses the lines. Not only is it illegal, but you are being abused. Personally, I would sever ties with this kind of client if it becomes clear that he’s taking advantage of me.

Know your rights. You can learn them from the above-linked page on the IRS website. Tax status criteria are intended to prevent employers from gaming the system, but it depends upon us to enforce them.

Your tax status also determines

which records you have to keep
how you report your income and expenses on tax returns (whether you need to file a Schedule C)
the labor laws that affect you.

Finding this out at the end of the year could mean going back and trying to recover all your business receipts and records that you didn’t think you’d need. There’s reason to be concerned if you receive a 1099 when you expected a W2, or vice versa. If you didn’t pay your income taxes on a quarterly basis, because you thought you were an employee, you could be hit with fines and penalties. If you were treated as an employee, you might have a claim against the employer.

The page linked above has additional links that state the criteria to help you decide, such as whether or not the employer/client has any control over HOW, WHERE or WHEN you do you work. Knowing this in advance should help you in creating a contract or work agreement that specifies clearly what your tax status is before you do any work.

Employee vs. Contractor Obligations

If your client/employer asks you to fill out a W4 form, the employer plans to treat you as an employee (make sure they pay half your FICA tax.) If you haven’t filled out a W4, plan to treat every dollar that client pays you as Schedule C income (self employment, contractor.)

As a remote employee, the employer has much control over how, when, and where you do your work. He will also deduct your income taxes and pay them through his ordinary employee payroll tax system. He has to abide by all the labor law obligations of any employer.

If you are told by your client/employer that you’ll be sent a 1099 you will be treated by them as a self-employed contractor (be prepared to pay all of your FICA tax, yourself.)

As a self-employed contractor, the employer is actually your client. As such, he has little to say about HOW, WHEN or WHERE you do the work beyond what he wants you to accomplish for him and by what deadline. You work according to an agreement you make with your client that defines what you are to produce and by when. It’s smart to get this in writing. People have a way of forgetting these details. Outside of that, you decide how to fulfill your agreement.

Your client will NOT deduct or pay any payroll taxes. You will be responsible for filing and paying quarterly income taxes. Labor laws are not applicable in a contractor/client relationship.

This seems pretty straightforward, but there are some important things to know before you commit. Scroll down that same page to the “Common Law Rules.” These will help you determine if the employer is classifying you in the right tax status.

Deductible Expenses

Knowing what your tax status is will help you to track tax deductions, receipts, payments and other documents consistently from the start. You will probably have tax-deductible expenses if you work from your home or RV as an employee, but fewer than if you worked from a fixed location.

I’m not a tax professional and am speaking primarily from personal experience. So, to be sure that you make the right decisions consult a tax preparer, accountant or attorney, and read the related IRS publications found also on the IRS.gov site. If you do your own taxes with a program like TurboTax or H&R Block, the software should help simplify things.

Income and Expense Reporting

As an entrepreneur, with tax status of contractor, you are responsible for your quarterly tax payments. You will have only your records to go by until you receive a 1099 in February of the following year, if your client(s) sends one at all. As I recall, they don’t have to send a 1099 if they paid you less than $600 during the year.

If you run more than one business, you’ll have a lot of bookkeeping to do. You’ll have to allocate the depreciation of your business equipment and expenses proportionally, according to each business. You’ll deduct the proportioned expenses from each respective revenue source on a separate Schedule C (sole proprietor unless you have another business format.) So, be ready to track the amount of depreciation, time (or other valid measure) each piece of equipment, or portion of supplies is used by each business, similarly to the way you would track the use of your vehicle for business expense purposes.

Principal Business or Professional Activity Codes

If your tax status is independent contractor, you will report self-employment income in your personal tax return on Schedule C, on Line B with a code and a category that you choose from the Principal Business or Professional Activity Code list (PDF download link.) If you are a remote employee, with employee tax status, you won’t use these codes. You’ll file your income as regular employee income without the Schedule C.

The Principal Business or Professional Activity Code is a six-digit code that classifies your specific income niche. You, also, can find these codes on the IRS page for Form 1120.

Look up the type of work you do, by classification, and pick the six-digit code that most closely describes what you do. If you do several things, you might find several codes that would work for everything you do. Pick one, and use it consistently from year to year. Use this code on your Schedule C, Line B where you’ll report related income and expenses. If you actually change the kind of work you do, you will have to use another code.

If necessary, file two (or more) Schedule C forms if you do both kinds of work in the same year. For example, if you are a writer, but also do workcamping, these would be two different categories. If you do RV repairs, and also sell crafts on Etsy or EBay, these would be two different categories. But if you sell crafts on Etsy and EBay and at fairs, this would probably be one category with one code (and one Schedule C,) even with different venues. It’s best to get a professional opinion if you are unsure.

As an aside, the Principal Business Activity Code list might also be useful in deciding what kind of work you can do from home or RV, if you’re still looking for RVer income ideas. If you want more ideas about work from home or RVer income ideas visit our Work From Home Ideas You an Adapt to Your RV Lifestyle page that you can download as a PDF file. http://adhocgroup.net/WFH/Work-From-Home-Ideas.pdf

Wishing y’all great RVing adventures