Checklist to Start a Home-Based Business
Home-based business opportunities can include everything from using your artistic skills to buying products at wholesale and taking advantage of auction sites and the Internet to resell. Regardless of the type of home-based business you run, the basics of setting up your business will be the same. Making a checklist can help guide you through the steps you'll need to accomplish as you set up your home business.
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Name Considerations
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After you decide what to name your business, you'll determine the business structure. For most home-based businesses, a DBA, or fictitious, name is all you'll need. You won't even need the DBA if you intend to use some part of your legal name as the name of your business, but if you are going to operate under a fictitious name, you need a DBA (Doing Business As). This allows you to legally operate your business under an assumed name. It will also allow you to open a bank account under the business name. Visit your county clerk to file the necessary papers for a DBA. The fee, as of 2011, ranges between $25 and $45.
Dedicated Work Environment
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Purchase the items you will need to run your business from home, including a computer, software (for tracking expenses, accounting and tracking orders), desk furniture, printer/copier and basic office supplies. Decide where your business area will be set up in the home. Measure this area for the purpose of deductions at tax time. You'll be able to use a portion of your rent or mortgage as a deduction if the area is dedicated to your home-based business.
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Tax ID Number
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Unless you have employees, you won't need to apply for an EIN (employee ID number). Chances are, you will operate a home-based business on your own or with the help of family members. For home-based businesses, a license is still required in most states, although laws governing licensing requirements for home business vary by state. The general rule of thumb is, if money changes hands, you're operating a business. The county clerk where you live can provide details regarding the laws of home-based business in your municipality. If you are purchasing goods to resell, you will need a tax identification number even for a home-based business. Apply for this number at the IRS website. A tax identification number registers your home-based business with the government and allows you to purchase items for resale without paying sales tax.
State and County Compliance
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Check with the business laws in your state and your city and county as well. Besides complying with federal business laws, you'll need to comply with laws your particular state or municipality have set up. This is especially true of home-based businesses because local government needs a way to monitor zoning considerations. Some industries have specific rules and regulations. A food business, for instance, will require special licensing that an online auction business won't. Many types of foods can't be sold from the home at all in some states.
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