Starting a home business is a very exciting time in your life, and no doubt will fill you with anxiety as well. One question that many home business owners ask is: "Do I need to obtain a business license for my home business?" It's a great question. The answer depends upon a few factors: what type of home business you are running, what area do you live in and what product(s) or service(s) do you offer.

Many people mistakenly assume that because they run their business from home they do not need a business license. This is not necessarily the case, although it's true that many types of home businesses do not require a business license.

The first thing to do is contact your local municipal affairs office. They will tell you whether or not your city regulations require a business license for your home business. If you find that you do need one, you'll be asked to fill out an application and answer questions about the nature of your business. Of course, expect to pay a licensing fee.

Next, find out whether you need a state business license. Sometimes a home business may be required to obtain a city business permit, but not a state one. Other home businesses may need a state license, but not a city one. This is because municipal and state governments set their own rules based on their own needs. Never assume that because you don't require a local business license that you don't need a state license.

Whether or not you will be required to obtain a state business license is largely dependent upon the type of product or service that you offer. For example, if you are a hair stylist running a business out of your basement, you will likely be required to obtain a state license. That industry is regulated by most state governments. If the nature of your business is not state-regulated, you may be able to skip this step. The Internet and your local library are good sources of information on what types of home businesses require a state license and how to apply.

If you sell products out of your home, you may be required to obtain a sales tax license. This tends to be a gray area of the law and often home businesses that make and sell products, like hand-made craft items, do not obtain a sales tax license. The selling of a product; whether hand-made or manufactured, sold from home or a retail store, usually requires a tax be paid. Ignoring this law will lead to tax troubles or fines. Ensure that you check into your state's law regarding charging sales tax.

Even if you aren't required by local or state law to maintain a business license, it may still benefit you to apply for one. Holding a business license gives your home business credibility in the eyes of your customers and inspires confidence in your product/services. It's a small price to pay compared to the amount of business that it generates. It would likely be worth your while to budget for it as a part of your normal operating and advertising expenses. For those home businesses which do require a license, operating without one could lead to fines or other types of disciplinary action. Be sure you understand what the law in your area states before you open for business.

Tom McMullen

http://www.pluginprofitsite.com/main-13714