Best Tips to Keep Your Home-Based Business Legal

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Written By Lori Wade

It is time to start your own business. Luckily, the internet makes it so easy for you to do business from the comfort of your home. This is especially actual due to the COVID-19 pandemic.

Today’s connected world affords us a lot of flexibility in starting a home-based business of any form. However, some steps must be taken to keep everything legal.   

If you are thinking about home-based business opportunities, then you should keep on reading to see how you can deal with the laws and complicated regulations.

But generally, there are not that many hurdles to launch a home-based business

In our article, you will find many practical tips that you can read through to legalize your home-based business with ease.

How to keep your home-based business legal?

Best Tips to Keep Your Home-Based Business LegalTo help you get started, here is a checklist to home business opportunities from Hans Jakobi that every entrepreneur needs to consider.

Hans Jakobi helps people build a part-time online business from their laptop and their mobile or cell phone.

He has also written several business books, so his advice will come in handy.

1. The business structure

Since it is so easy to start a small business, and they cost the least to maintain, most entrepreneurs opt to run them as sole proprietors.

A sole proprietor business requires a separate tax return form than that of corporations, partnerships, and limited liability companies.

However, if you want to limit the potential liability that can result from your business, then you better consider incorporating or forming a limited liability company.

Some states allow people to run an LLC as an individual, while other states require two or more people to be involved. 

The downside for forming a corporation is the amount of money you will need to maintain the business.

However, if you are looking to grow your business into a large corporation in the future, incorporate it from the start.

If your business has another person who is involved in ownership, then you can incorporate, form an LLC, or enter into a partnership agreement. 

2. Get permits or licenses

There are specific licensing, zoning, and permits requirements that vary from one location to the next.

Since each city and county raises funds for development through business license fees, this should be among the first things you consider when contemplating home business opportunities.

Visit the website of your city or county to get more information about the kind of license you are required to obtain.

If your city or county has an option to apply for these licenses online, then you can save yourself the trouble and apply immediately. 

A general business license should allow you to engage in any business activity with your local jurisdiction.

If your local jurisdiction requires you to obtain a specified license for the kind of business activity you will be conducting, then you can obtain the information from the city or county website.

Also, remember to check information about the zoning ordinance to ensure your business complies.

At the time, the homeowners association in your area might also have a form of restriction of home-based business restrictions. 

3. Get occupation license 

Some home-based business requires state or federal professional licensing. These include child care centers, legal services, financial advisors, even hairstyling.

You can find more information about this on the website of your state. There you will find a list of all businesses that require professional licensing.

What needs to be licensed in one state might not be a requirement in another state. Moreover, your city or county might also be regulating a particular field.

Hence, you should also check for information at your city and country website to comply with any requirements and obtain an occupational license if needed.  

4. Get a tax id

The Tax ID number is a term used by the Internal Revenue Service to designate and identify a business.

No matter the form of business you choose to start, you will need a tax ID. The information needed to obtain a Tax ID is the same regardless of the kind of business.

You will need to provide a business name and address for your business. Additional information that you must provide includes the kind of business, for example, sole proprietor.

However, as a sole proprietor, you can give your social security number to your customers for their records.

Regardless of where you live, you can obtain a tax ID when you want to go after small business opportunities online. This is the fastest and most convenient way to obtain a tax ID. 

5. Pick a business name

Before I start my own business, the first thing I should do is search for your business name and clear the trademark.

The first place you should go to ensure your business name is available in the secretary of state office before going to the national trademark search database.

Making a mistake with regards to your business name can be expensive.

You may find yourself being forced to change your business name, maybe even rebuilding your entire business identity from scratch.

The easiest way to find out whether your business name is already in use is through your local phone book.

You can also use online directories or, better yet, use an attorney who specializes in trademarks. 

6. Get a registered agent

If you are running a home-based business, you may not want your clients to know this.

Instead of having your business and legal notices delivered to your home, you can have them delivered someplace other than your home.

You can provide the agent’s name and address on the formation documents when you file with the state.

All states require business entities to maintain a registered agent’s name and address on file to determine who should receive a lawsuit against the corporation or LLC. 

The registered agent will also be responsible for ensuring you get the documents promptly. If the agent fails to do this, you might end up losing a lawsuit by default.

For this reason, it is essential to choose an agent that has a good reputation.

The agent should have a track record for providing registered agent services. Many states maintain a list of companies that offer registered agent services in the state.

You can visit your state website to find out if they have a list of registered agents. You can also consider obtaining registered agents who work in the multiple states where you will be operating. 


A home-based business of any form is a venture that needs to be operated legally.

Some home businesses, especially those that exist online, do not follow legal guidelines for running a business headquartered at home.

Naturally, there are upsides and downsides to running a home-based business this way.

As you think about how to start a home-based business, ensure you check everything with regards to legal matters.  

You probably know that no one succeeds in business by luck.

Every successful home business owner has a specific plan for business development, and he always comes up with something new, tries, tests, and adapts.

If you are a home business owner or do you have anything to do with it, please, share your tips or ideas with our readers in the comments section below.

Practical advice is always appreciated by our readers. Best of luck with your home business!

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