Steps in Making Your Home-Based Business Legal

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More and more people are slowly transcending to home-based businesses. Aside from the flexibility it offers, it is also worth trying because of its convenience. You don’t have to wake up early to prepare and rush worrying about the traffic outside just to get to your office. If you are already in this setup right now, congratulations are in order as you successfully adjusted to this new norm. However, just like an ordinary business, legally organizing a home-based corporation is also essential. 

Working from home will not exempt you from the legal requirements that entrepreneurs need to follow. This is why you might want to keep reading as we give you the steps on how to legalize your home-based business.

Choose your business structure.

Before you can proceed with the legal steps, you need to define what business structure you want first. One best option is an LLC or Limited Liability Company, wherein you can enjoy personal asset protection. Your properties, investments, and finances are separated from your business activities.

To form an LLC for your business, you need to file Articles of Organization and pay for the filing fee. The Michigan LLC cost is $50, and you can pay for it at the Michigan Department of Licensing and Regulatory Affairs. After you determine your business structure, you’re ready to proceed.

Obtain your business permits and licenses.

Typically, there are three permits you need to have. These are the state, federal, and local permits, which are essential while your business is under operation. Most states will require you to have these documents ready before you can legally run your home-based business.

Set up your tax.

All entrepreneurs are obliged to declare the right tax depending on what business they have. You need to clear and set up tax terms and pay them on time to avoid any legal problems. Although you are operating as a home-based entrepreneur, you are not exempted from taxes.


Protect your trade name.

Before you can start running your business, a trading name is essential. In fact, it should be unique and distinguishable from other companies. You should be aware if the business name you want to use is still available or not. If you missed out on this, you might face copyright issues sooner. However, you can opt to reserve a business name on the Michigan Department of Licensing and Regulatory Affairs.

Trade Name Registration

Check your state’s zoning restrictions.

You need to figure out if operating a home-based business is acceptable under your state’s policies. Countries and cities have various zoning restrictions, and some have specific guidelines on using a property for business activities. If you failed to check this and started operating without the assurance, you’ll run into trouble with your government.

If there are some legal matters left untackled, these could be the written agreements and contracts between you, your clients, and subcontractors, if there are any.

Understandably, you are excited and hype to try operating a home-based business. However, you should not be overwhelmed by it. To avoid legal issues in the future, secure all the essential papers and consider the steps above to get where you want to be.

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