Any Questions?

Legal And Zoning Issues

4. What do I need to do legally to start a business?

If you start at home, as two out of three new businesses do, the legal steps are usually fewer and easier than if you were to start a store or office-based business. You need to:

A. Check the availability of any business name you'll be using other than your own name, without any additions (& Associates, Co., etc.). If your prospective business name is still available, you can protect it in a number of ways: by getting a fictitious name filing, by incorporating, by getting a trademark or a service mark, or by completing a combination of these tasks.

B. Obtain any required licenses. These include a local business license and, for some businesses, a state or federal license.

C. If you have employees, are a partnership or are incorporated, you need to obtain an employer's ID number with IRS Form SS-4.

D. If you're not going to be operating as a sole proprietor (filing a Schedule C with your tax return), you need to decide whether you will incorporate, form an LLC or file a statement of partnership.

E. If what you plan on doing will require you to collect sales tax, obtain a seller's permit, also known as Certificate of Authority or Resale Certificate. Non-homebased businesses also have to deal with leases and occupancy permits.

5. What can I do if my home isn't already zoned for business?

Don't rely on word-of-mouth to determine whether you can or can't work at home. You should read for yourself the zoning, homeowner association restrictions and, for condominiums, the Covenants, Conditions and Restrictions (CC&Rs) that cover your home. If you're still unclear, get an attorney to interpret the rules.

If you do have a zoning problem, consider applying for a variance or conditional use permit. Some industrious homebased business owners have lobbied to get zoning ordinances rewritten by their city councils. Conflicts with private homeowner restrictions are more difficult to change, as they require the consent of a majority of other home-owners. Some people who do their actual work at home (and have neighbors who don't mind businesses next door to their homes) make their legal addresses their private mailing addresses.

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This article was originally published in the October 2000 print edition of Entrepreneur with the headline: Any Questions?.

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