Customer small business financing solutions delivered through a single, online application.
Loan Types
Free access to multiple funding solutions
See funding solutions from 75+ nationwide lenders with a single application.
Apply for financing, track your business cashflow, and more with a single lendio account.
Home Industry Trends Small business advice 6 Vital Licenses & Permits For Setting Up A Home-Based Business
There are 30 million+ small businesses in the U.S. Roughly 15 million, or half of these businesses, are home-based. Given this stat, it’s safe to say that home-based businesses are a popular option for people who are looking to take the leap into self-employment.
Beginning a home-based business is far less expensive than starting a business in a rented space. In fact, home-based business operators save a lot of money by cutting back on administrative fees, transportation costs, etc.
Most business owners utilize this money to repay debts taken to start the business, contribute to retirement savings accounts, build an emergency fund, and so on.
A popular choice among home-based business owners to pay off their loans is debt consolidation. The procedure of debt consolidation is to combine multiple debts into one. Instead of making separate monthly payments to several credit card companies or lenders, you combine them into a single payment from a single lender, usually at a cheaper interest rate. A qualified attorney is the best person to complete the debt consolidation procedure.
Starting a home-based business takes a lot, and one has to invest a great deal of effort and time to see their business bloom. Conducting proper research before diving in is also essential, but many people skip this vital step. As a result, they face consequences, such as a penalty and even getting shut down.
One integral part of your research before starting your business should be finding out the licenses and permits that you need according to your state to make your business legal.
Below you will find the necessary licenses and permits for home-based businesses.
Essential licenses and permits to set up a home-based business
Regardless of the kind of home-based business, most jurisdictions require new businesses to obtain a general business license. This license allows your home-based business to sell products and services both online and in person, as well as collect sales tax on any taxable goods.
You have three options for obtaining a business license:
If you plan to file on your own, follow these general guidelines:
Most states need business owners to collect sales tax when selling taxable items or providing taxable services. To collect sales tax on taxable transactions, a business must obtain a sales tax license, also known as a sales tax certificate of authority
Remember, executing a taxable transaction without a certificate of authority might lead to huge fines (the fine depends on the particular situation).
Follow these steps to register with your state to collect sales tax:
Professional licenses allow individuals who have satisfied specific education, work experience, and exam requirements to use their skills as their profession. The license demonstrates that you are qualified to execute a given profession. It includes ventures like attorneys, daycare centers, tattoo artists, hairstyling salons, architects, financial advisory services, etc. Each state has its list of licensed occupations.
A sign in front of your house can be an excellent way to promote and advertise your home-based business. However, you will need to obtain a sign permit to do so. Almost every city has specific sign ordinances limiting the sign’s location, type, size, and lighting that you can use for your business.
Be sure to learn about the regulations you must adhere to and apply for a permit. If you place a sign without a permit, you will face penalties, and the proper authority will remove your sign.
Each city has its own set of sign permit regulations, which may include any or all of the following:
A home occupation permit is essential if you’re planning to operate your business from home. The permit shows that you will operate your business according to Homeowner Association (HOA) laws and that your property owner is aware of your business. These permits protect your neighbors’ rights and ensure your business will not create any trouble for them.
As with everything else, each state or city’s application process will be slightly different. However, the fundamental aspects will be the same:
This permit is commonly required if your clients or customers come to your home for business purposes. You may also need an inspection and a permit from the local fire department, but it is usually unnecessary if your home-based business provides service or goods online.
However, if you need to keep an inventory of potentially flammable products at your home for your online business, you will have to get a permit. If you are selling food and beverage, you will also need a permit from your health department.
There are numerous requirements for starting a home-based business, and one crucial requirement is obtaining the necessary licenses and permits.
Failing to get or renew a business license can be a costly mistake, and you can face significant penalties such as fines, lawsuits, and, in extreme cases, the business will get shut down. Because the consequences of operating a home-based business without a license can be far-reaching and have a long-term impact on you and your business, you must understand the risks of non-compliance.
Many home-based businesses begin by using loans. When people face situations like this, they end up drowning in debt, falling behind on payments, and eventually ruining their credit. If you are one of them, seeking assistance from a credit repair company is the best option for you, and it will assist you in regaining control of your finances while also repairing your credit.
There are numerous examples of many blooming home-based businesses facing massive fines due to failure to obtain appropriate permits and licenses.
Getting necessary permits can be time-consuming and complicated, but making this effort can save your business from facing the difficulties mentioned above. As a result, registering and obtaining the necessary permits and licenses should be one of the first steps to starting your home-based business.
Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a principal attorney.
Subscribe to our weekly newsletter for industry news and business strategies and tips
Subscribe to our weekly newsletter for industry news and business strategies and tips.