Legalities and Tax Advantages in a Home Business
Every year thousands of people think of going into business for themselves. They usually have a service or product in mind, which they want to promote into a lucrative business that can be run from their home. If this is you, then you need to be practical before you actually start!
Check With Your Local Zoning Office
Starting a business in areas zoned ‘Residential Only' can be illegal. Most residential areas have zoning restrictions that prohibit the coming and going of customers, which therefore rules out having a home business. If you sell or even store products, then you are subject to these restrictions. So, it is important to get in contact with your local zoning office to find out how the ordinances in your particular area could have an affect on your business plans. If you work in accordance with the zoning officials, then you can save time, money aggravation — all of which are in short supply when starting a business.
Your area's zoning restrictions could include off street parking for customers, as well as forbid the use of signs. Obtaining zonal approval for your business is usually relatively easy. Simply check the zoning restrictions to see if you will require a city license. You will need a vendor's license if you are planning to sell something and will also be required to collect sales tax.
Licensing can be an involved process and even entail the inspection of your house to ascertain if it meets with the fire and health codes of your locality. If it does not meet these requirements, you will have to bring the facilities you have up to code.
If you want to be eligible for tax deductions, you will have to use that part of your house ‘Regularly and Exclusively' as the principal location for running the business or as a place reserved for meeting customers. There are many people who use the spare bedroom for business purposes from a time slot like 8:00 to 5:00 every day.
They also permit the kids to watch TV in that room in the evening, so in this case they cannot make a claim for some deduction for that room as their office or place of business. Your business needs to be an activity that is undertaken with the intent of making profit. Only then only will you be eligible to take that space as a business deduction.
Follow the outlines above and check with your local zoning office to make sure that you are meeting the requirements for running a business from home. It will save you a lot of headaches in the future!