Congratulations on your new home-based business. You’ve joined a growing number of people who operate businesses from home.
SBA.gov says more than half of all U.S. businesses are home-based, and Smallbiztrends.com says 69 percent of all businesses started in someone’s living room.
Now, really separate business from home by setting up your corporation and establishing a mail-receiving service.
Get a P.O. Box or Delivery Address
You’re living and working in the same place, but that doesn’t mean home becomes business, and business becomes home. Keep your business as separate from your personal life as possible.
Services such as Mail Boxes Etc. and some UPS franchises offer mailbox services, too, and they’ll accept packages on your behalf.
The best thing is your mailing address is their street address, and they will phone you when you have large amounts of mail or packages delivered.
Yes, it can be inconvenient to drive to these locations to pick up your mail, but they minimize your risk of identity theft through mail, and they protect valuable merchandise you send and receive.
Get a Tax ID and LLC
This is not a how-to to walk you through setting up an LLC. Instructions vary state to state, and if you are going to do it yourself, be prepared to read a lot of instructions.
If you aren’t much of a reader, consider paying your attorney his or her fee, plus a state-filing fee, to do this for you.
LegalZoom.com will help you do it for $99, plus your state’s filing fee, which is on its registration page. To give you an idea of fees, Arkansas is on the low end at $45, and Massachusetts is on the high end at $520.
Check Your Business Name
The Secretary of State’s office is where you’ll search LLCs to ensure no other company has registered the same name. Lawyer-client search service Avvo.com crowdsourced the question, “Can I use my name as a DBA for my LLC?” DBA means “doing business as,” which allows people to operate businesses under names other than their names, their partners’ names and their officially registered LLC names.
Attorneys Steven Alan Fink and Pamela Koslyn recommend against that, because the purpose of creating an LLC is to separate you from your business.
If you aren’t ready to name your business, consider creating an LLC under one name, and operate your business under a DBA.
For example: Rebecca Howe wants to open a bar and call it Rebecca’s. She creates an LLC called Howe Entertaining, and opens the bar under the DBA “Rebecca’s.”
How Do I Get an LLC?
Your state’s Secretary of State’s office will either handle the forms, or connect you with the agency that does.
A few states use Corporation Commissions (Arizona is one of them) to handle corporation filings.
Get a Tax ID
Once your state has approved your application for an LLC, you may apply for a tax identification number, or EIN (employer identification number).
You’ll use your EIN instead of your social security number when you do work for other companies. They’ll issue a 1099, rather than a W-2, for fees they pay you.
Apply for your EIN through the IRS.
Should I Hire an Accountant for My Business?
Yes. QuickBooks, TurboTax and other programs make do-it-yourself bookkeeping easy, but an accountant — a good accountant — stays up-to-date on tax laws and has your back.