Every year, several thousand people develop an interest in "going into business." Many of these people have an idea, a product or a service they hope to promote into an in come producing business which they can operate from their own homes.
If you are one of these people, here are some practical thoughts to consider b fore hanging out the "Open-for-Business" sign.
In areas zoned "Residential Only," your proposed business could be illegal. In many areas, zoning restrictions rule out home businesses involving the coming and going of many customers, clients or employees. Many businesses that sell or even store any thing for sale on the premises also fall into this category.
Be sure to check with your local zoning office to see how the ordinances in your particular area may affect your business plans. You may need a special permit to operate your business from your home; and you may find that making small changes in your plan will put you into the position of meeting zoning standards.
Many communities grant home occupation permits for businesses that involve typing, sewing and teaching, but turn thumbs down on requests from photographers, interior decorators and home-improve ment businesses to be run from the home. And often, even if you are permitted to use your home for a given business, there will be restrictions that you may need to take into consideration. By all means, work with your zoning people, and save yourself time, trouble and dollars.
One of the requirements imposed might be off-street parking for your customers or patrons. And, signs are generally forbidden in residential districts. If you teach, there is almost always a limit on the number of students you may have at any one time.
Obtaining zoning approval for your business, then, could be as simple as filling out an application, or it could involve a public hearing. The important points the zoning officials will consider will center around how your business will affect the neighborhood.
Will it increase the traffic noticeably on your street? Will there be a substantial in crease in noise? And how will your neighbors feel about this business alongside their homes?
To repeat, check into the zoning restrictions, and then check again to determine if you will need a city license. If you're selling something, you may need a vendor's license, and be required to collect sales taxes on your transactions. The sales tax requirement would result in the need for careful record keeping.
Licensing can be an involved process, and depending upon the type of business, it could even involve the inspection of your home to determine if it meets with local health and building and fire codes. Should this be the case, you will need t o bring your facilities up to the local standards. Usually this will involve some simple repairs or adjustments that you can either do personally, or hire out to a handyman at a nominal cost.
Still more items to consider: Will your homeowner's insurance cover the property and liability involved in your new business? This must definitely be resolved, so be sure to talk it over with your insurance agent.
Tax deductions, which were once one of the beauties of engaging in a home business, are not what they once were. To be eligible for business related deductions today, you must use that part of your home claimed exclusively and regularly as either the
principal location of your business, or the place reserved to meet patients, clients or customers.
An interesting case in point: If you use your den or a spare bedroom as the principal place of business, working there from 8:00 to 5:00 every day, but permit your children to watch TV in that room during the evening hours, the IRS dictates that you cannot claim a deduction for that room as your office or place of business.
There are, however, a couple of exceptions we will note to the "exclusive use" rule. One is the storage of inventory in your home, where your home is the location of your trade or business, and approval for your business, then, could be as sour trade or
business is the selling of products at retail or wholesale. According to the IRS, such storage space must be used on a regular basis, and be a separately identifiable space.
Another exception applies to day care services that are provided for children, the elderly, or physically or mentally handicapped. This exception applies only if the owner of the facility complies with the state laws for licensing.
To be eligible for business deductions, your business must be an activity under taken with the intent of making a profit. It's presumed you meet this requirement if your business makes a profit in any two years of a five-year period.
