Starting a home-based business offers great risks and rewards for a savvy entrepreneur. Professionals seeking to run organizations from their home often invest in a business license or incorporation to protect themselves against potential lawsuits or other liabilities. Not all business ideas require licensing, however; opportunities exist for home businesses without a license. Opening a home business without a license has its share of pitfalls — avoiding them may increase the longevity and profitability of the business.
Choose a business that avoids retail sales or regulated industries. Home businesses that engage in retail sales typically must report sales or use taxes and receive licenses to collect such. Federal- or state-regulated businesses often have mandatory licensing requirements. Check with your local chamber of commerce to verify if these requirements exist in your area.
Consider service-based operations with low liability. Consulting, data entry or freelance work typically doesn't require licensing or bonding and avoids the hassles of purchasing liability insurance. Without a license, any legal recourse taken against the company goes directly after the owner’s assets.
Verify local zoning regulations for businesses operating in residential areas. Not all laws regarding home businesses come directly from state offices. Local zoning laws may limit the number of deliveries, occupants and visitors or impose other limits on unlicensed home operations.
Advertise your services through professional publications in the field, classified ads or sponsorship of events. Home businesses that offer telecommuting, such as data entry or appointment setting, may have a national marketing reach, while localized services should focus on the immediate community.
Never falsely claim to be licensed, bonded or insured. False claims may put all personal and business assets at risk.
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