Setting up a home business can be a really great opportunity to make money from home. However, there are many legal factors and local policy issues that you should consider when starting your home business. This article will give you some tips to think about before opening a business in your residence.

When setting up any business, you have to decide upon the legal business structure. The various options differ based upon liability, setup cost, and reporting requirements. Many home business start as sole proprietorship because of the low setup costs. Another advantage of this business structure is the high level of independence you will have, as there are no other owners to divide profits with and there are few federal regulations to comply with. A partnership business structure is another option which requires more than one owner, which means shared responsibility and liability, and of course, collaboration. Other business structures, like corporations and limited liability companies require multiple business members. A limited liability corporation is advantageous because, as the name suggests, there is limited liability for company debts. The benefit of a corporation business structure is that the business can raise profits by issuing stocks and bonds.

With the advantages of the various business structures mentioned, it is important that the disadvantages are also included. A sole proprietorship has one major disadvantage, which is that the responsibility and the liability all lies on you. For a partnership business structure, the disadvantage is that you could be liable for the bad business practices of your partner. Although a limited liability company has a minimized risk when it comes to liability, the disadvantage with this business structure is that it is costly to start and it might be more difficult to raise capital. The disadvantage of a corporation business structure is that taxes must be paid twice, once at the corporate level and again from the shareholders. Understanding that each of your options has advantages and disadvantages should give you a better idea of which business structure you want for your home business.

Another legal implication of having a home business that you should take into consideration is local zoning laws. Depending on where you live, there may be restrictions placed upon your home business that make it difficult to promote. Some zoning laws include restrictions on traffic, limiting the amount of employees and customers you can have in your home business, prohibiting business being conducted outside of the home, and limiting parking or requiring you to supply additional parking. Other zoning laws include prohibiting you to make any physical changes to the exterior of the home that would promote or conduct business, and prohibiting you from putting up signs or having commercial vehicles. Be sure to research your local zoning laws as they can affect the success of your home business.

If you are getting ready to start your home business, don’t get held back by legal issues or local policy concerns. Make sure you know all of the rules and regulations associated with opening your home business and you will be on your way to success.