License and Permits for Your Home-Based Business

“You have brains in your head. You have feet in your shoes. You can steer yourself, any direction you choose.” – Dr. Seuss

Did I get you fired up in January to quit your job and start out 2018 as your own boss? Have you come up with an exciting (and hopefully profitable) idea for your home-based business?

If you don’t know what I am talking about, check out my post from January. I wrote about starting a home-based business and the simple steps you should take to make sure you are legally protected.

The least glamorous item on that list? Licenses and permits. Think your business is too small to attract attention from the city, county, or state? Think you don’t need to worry about it until you have made some serious money? Think you won’t get caught? Think again.

Here’s the problem. If you start a business without the proper licenses and permits and you get caught, there will be penalties and legal hassles. These penalties and legal hassles could put you out of business. Also, having the proper licenses and permits make you look more like a legitimate business.

Now that you know I am serious about licenses and permits, here’s the good news. For most home-based businesses, it is usually an easy and affordable process.

Here is a list of some of the common licenses and permits you might need for your home-based business.

General Business License

This is an annual license or permit to legally entitle you to operate a business in your city or county. Check your city or county government website for information.

Occupational License

Many states regulate certain types of jobs. For example, if you want to run a home daycare center, you will have to be licensed before you open to show compliance with government regulations and industry standards. Google your state and “occupational licenses” to find information for your state. Here is a link to the Texas Department of Licensing and Regulation for a list of jobs in Texas that require a license or permit.

Home Occupation Permit/Zoning

Many city and county and planning agencies require home-based businesses to get a home-based business occupation permit. If the permit is not required, the agency can tell you if your neighborhood is zoned for the home business activity you plan to do. If it’s not zoned for your business, you will need to file for a variance or conditional-use permit.

Sales Tax Permit

If you are going to be selling taxable goods or services (online or in person), you may be required to collect state and local sales taxes from your customers. Check your state’s tax comptroller or tax office website for more information, including what is and what is not taxable. Here is a link to the Texas Comptroller of Public Accounts website.

Health and Safety Permits

Depending on where you live and what you are doing, you may need a permit or inspection from your local fire department, especially if your business involves several people coming to your house at one time, like a daycare center or physical therapy.

Sign Permits

Some cities and towns have ordinances restricting the type, size, or location of signs placed on your property.

Home Owners Association (HOA)

This is an important one for me personally because believe or not, my husband and I managed to buy a house that is in not just one but two separate and very active HOA(s). Be sure to check with your HOA to make sure there are no rules restricting the business activities you do in your house.

Please note that this isn’t intended as an exhaustive list of every license and permit that is required for every home-based business. If you need help finding all of the licenses and permits you need for your business or with the application process, consult with a business attorney.

Are you planning on starting a home-based business? What’s your biggest obstacle in opening for business? Leave a comment or send me an e-mail.

Disclaimer: This website is made available for educational purposes only as well as to give general information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney client relationship between you and the publisher. The website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Copyright © 2018 by Siobhán Fitzpatrick Kratovil. All Rights Reserved.

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