Baby Boomers working from home have numerous issues to consider over the course of launching their businesses. In Part 1 of this article we looked at topics such as entity formation, protecting confidential information, employees compared to independent contractors and contracts with third parties. We will discuss the following issues in Part 2 of this article:
- Assemble a team of professionals
- Know when to call it quits
Here are more key steps to making a home business successful:
Zoning: If you are using your home office merely for phone calls, file storage and a place for you, alone, to work your business, it is unlikely to raise any zoning issues. However, if your home business involves visits from others (customers, associates, workers, contractors, etc.) or entails more than the occasional shipment of materials or products, you may actually have a zoning issue.
For the same reason that zoning regularly does not allow industrial buildings in single family zones, zoning may also limit what non-residential activities a person can do in his or her home. Therefore, you should not spend a lot of money fixing up your basement or home office to accommodate workers, a satellite tower and an expanded parking area without knowing whether you first need a zoning permit. Between nosy neighbors, the building department that issues permits, the tax assessor and competitors, the local zoning officials generally know everything that is going on in your area.
If you are found to be in violation of City codes and zoning, the City can have the right to impose a cease and desist order. It can be expensive to fight or even comply with these orders. If you are unable to fight or comply, the fines, construction costs, etc. can be expensive and take a long time. They can be embarrassing as they are frequently written about in the local paper or online news. Be sure to consult with your attorney before proceeding.
Insurance: Be sure to check with your homeowners’ insurance company to see whether operating your business from your home affects your policy, or whether you are not covered for liabilities that arise from the businesses’ activities at home. Depending on the nature of your business, you may need to secure additional coverage (usually quite inexpensive) to make sure that your liability will extend to acts arising in the course of doing business from your home.
Your car insurance policy may also need to be reviewed and updated if your amount of business-related driving is beyond what you had reported when filing your application. Many small business owners are surprised to find out that there is relatively inexpensive liability insurance (which can include defective products or errors and omissions coverage) for their type of entity. Such policies usually cover your legal fees if you are sued by a customer or client for product defects or negligent consulting advice. Make sure you have the proper insurance to cover the business.
Permits: Evelyn was stunned to discover that she would require a building permit to change an electrical apparatus in the loft room she utilized for jewelry making. She was told that inspectors will come out to make sure she hasn’t tried to hang a heavy rotating ceiling fan from a box meant for a lighter, stationary fixture.
You may be surprised to find out that permits are needed for projects such as sign installation, sheds, fences and walls over 4-6’ in height and demolition work. Changing windows to doors, moving plumbing fixtures, moving interior walls, altering a driveway or replacing shingles all require permits.
If you are just hanging wallpaper or painting wall you don’t need a permit. Nor do you always need one for changing bathroom fixtures and replacing them with a similar product in the same space. One rule of thumb is: Anything requiring a dumpster requires a permit.
Your business is your investment. If your project does not comply with the codes and standards regulated by your community, the value of your investment could be reduced.
Assemble a team of professionals:
Small charges to run a business can add up quickly. The legal and insurance considerations and bookkeeping demands soon overwhelmed her. Every self-employed person should surround themselves with a team of professionals to assist in their respective area of business.
Know when to call it quits:
From the get go Jonathan appeared to be turning a healthy by offering antiques from home, on the web. Before long it became clear that he had far overspent on his inventory and marketing programs and was incurring more debt each and every month. An unforeseen hospital visit sent him into a financial tailspin.
Declaring bankruptcy is a gut wrenching decision for most people, necessitating uncomfortable and uncomfortable decisions such as abandoning the dream of having your own business.
Most cases filed under Chapter 7 of the bankruptcy code involve people experiencing a crisis that prevents them from meeting their financial obligations.
Many worry that their financial circumstances will become public knowledge, but bankruptcy proceedings are not published and rarely involve a court appearance. Many people also fear they will lose everything they possess if they file bankruptcy but that isn’t the case. Many assets such as the debtor’s home, many household goods, and wedding rings) are exempt and can be kept by the filer. Those filing under Chapter 7 also may retain their retirement accounts, social security and other government subsidized benefits. Properly funded college accounts for the debtor’s children are also beyond the reach of creditors. Personal injury claims and payments also can be protected with proper planning.
Many protections for those filing under Chapter 7 exist. Private employers can refuse to hire a person who previously filed for bankruptcy. Landlords can refuse to lease to them. Private college can deny transcripts. There are other issues that may arise and it would be advisable to determine all the pluses and minuses before making the decision to file.
A home business can be a wonderfully rewarding pursuit both financially and emotionally. It can provide a Baby Boomer with years of fulfillment and can fund a comfortable retirement. Once the numerous legal issues are considered and appropriate safeguards are put into place, Baby Boomers are free to turn their home business into a booming success.
Written by Michael Goldman
Article contributed by BabyBoomer-Magazine.com