Starting a Home-Based Business

The world of online investments presents numerous opportunities which come in many different shapes and forms. Small businesses take more risk and require less attention than many larger investments, but that payoff can be enormous. Small businesses are an important part of our economy and bring jobs to almost half of the U.S. labor force. A home based business can have tremendous potential to become a large successful business if it is properly promoted and operated.

small business|small business

Starting a Home-Based Business

The world of online investments presents numerous opportunities which come in many different shapes and forms. Small businesses take more risk and require less attention than many larger investments, but that payoff can be enormous. Small businesses are an important part of our economy and bring jobs to almost half of the U.S. labor force. A home based business can have tremendous potential to become a large successful business if it is properly promoted and operated.

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Because small home-based businesses do not typically have much of a presence on the local news pages or in local newspapers, they’re difficult to find out about. Often times, when someone is looking for a small business they will turn to the Internet first. As a result, small home business owners may not even be aware that there exists a whole world outside their own turf. For that reason it’s important to acquire general business license for any home based businesses.

There are many reasons why small home-based businesses require a general business license. Generally, these licenses are required to operate and maintain any type of business that takes at least five people to operate. The most common licenses are a sole proprietorship and a partnership. However, there are many different types of licenses which can be issued based upon your business’ unique qualities. This brief article provides an overview of each type of license that is commonly required for home-based businesses:

Sales Tax License: A sales tax license is commonly required when you operate a business out of your home. In order to qualify for a sales tax license, you must demonstrate to the sales tax authority that your business meets the criteria to receive this tax credit. To qualify you must be selling tangible personal property or of tangible personal property to customers in your home. Examples of tangible personal property include furniture, electronics, jewelry, clothing and other similar goods.

In addition to being required to pay sales tax on purchases from customers in your home, small business owners must also pay state taxes on income earned by the business. Examples of state taxes include the business taxes that are owed for purchasing commercial real estate, selling gasoline, and receiving compensation as a professional tax attorney. In order to qualify you must have proof that your small business earns a specified amount of money annually. Some examples of money incomes include general revenue, profit sharing, dividends and installment rent.

Business License: home-based businesses is not considered a business if it only employs two to ten employees. Therefore these licenses are only available to businesses with two to twelve employees. These licenses are available in almost all areas of the United States and can range from a mere one to multiple licenses. The most common type of license offered by the state is the business license. Business license fees are generally only a few dollars but can increase if there are more than twelve employees. You must follow the same guidelines as business licenses in other states including proof of financial stability, legal standing and county filings.

Certificates of Registration: Most home-based businesses need to be registered in order to legally operate. To obtain a certificate of registration, you must first apply for one from your local county clerk. To be successful, you must provide solid documentation that your business meets the requirements.

Taxes: Like other businesses, home-based businesses are subject to state and local taxes. Home business tax rates vary greatly depending on where your business is located. Business owners must be aware that these taxes are typically assessed monthly unless the owner applies for an annual tax credit. These credits are available to business owners who meet a specified income requirement. Business owners may also be eligible to receive tax refunds based on the income they have generated over their tax year. Many business owners find this extremely helpful when preparing their yearly tax return.

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