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| | The Minding Your Own Business Network is not currently active and cannot accept new posts | | Creating a company run from home | Views: 1930 | | Jul 31, 2007 4:59 am | | Creating a company run from home | # |
bradley luke | | Hi,
I am looking to incorporate a new business from home, is it possible to use a home address as the registered office address? Additionally as a way of cutting costs etc do I actually have to appoint a company secretary?
Thanks,
Private Reply to bradley luke | | Jul 31, 2007 11:43 am | | re: Creating a company run from home | # | 
Fred Keller | | Hi Bradley,
Great questions.
You may want to have your legal advisor help you incorporate your company.
It is tempting to want to 'save money' by handling incorporation yourself. Usually the fee you pay your lawyer to set-up your company pales against issues that may arise later..... or why bother incorporating.
A couple of thoughts:
- usually it is best to use an 'address of convenience' as a business address. It appears as being more professional.
The registered address will typically be either your home address or wherever the books are housed.
- appointing a company secretary (your legal advisor will help you with this as part of the incorporation process. It can be set-up as a non-payroll position.)
Hope this is helpful.
Good Fortune to you!
Fred
Build Your: http://website-that-works.first411.comPrivate Reply to Fred Keller | | Jul 31, 2007 2:40 pm | | re: re: Creating a company run from home | # | 
Laura Wheeler | | We have a corporation, and it is run from home. We did hire a lawyer to incorporate, but other than writing up some very generic bylaws, he did not do anything that we could not have done ourselves - and even then, we had to write our own policy to support the bylaws (they were too non-specific). I don't regret paying him the first time, but if I were to do it again, knowing what I now know, I'd go it alone.
We have a home business, and the biggest issue with that is that many companies that we deal with will ask whether we are a home business or not. If you are a home business, you are not given the credibility that you have if you are not, in SOME arenas, not all. It is an increasingly common question on credit apps, and other forms that you fill out. And many won't come back to ask you later whether you are STILL a home business (we intend to grow, and our current growth pattern indicates that we will have to move out of the house or get a bigger house in about 6 months to a year).
Our address of record is our home address, and a post office box. Out here there is no street delivery, so a post office box is a necessity. Some people will use a different "registered agent" address. I advise that you do not if you want any credibility. You should have "transparent" contact information for good credibility.
There are advantages and disadvantages to having a corporation. I'm glad we do, but it does add a layer of expenses to our operations that we did not have before. It does make us better able to get work in our field, because it indicates that we are a serious company, and not a fly-by-night scammer. I dislike though, that our corporate contact info is now on corporate lists, and we are a target for all sorts of solicitors, legit, and otherwise.
As to the issue of a secretary, yes, you need to have one. But it can be the same person as holds other positions. The company secretary has specific duties in most states, and is the one to whom much of the record keeping duties fall. We have a President, a Vice-President/Treasurer, and a Secretary, consisting of myself, my husband, and our third son. We incorporated as a Wyoming Close Corporation (limit of 40 shareholders - we have nine), but we did NOT elect S-Corp status with the Federal government (people always look at us over that combination, like we just don't understand what S status means, but we do, and we did this so that our income would be designated as employment income, not as self-employment income). Close Corporation status allows us to be more informal about notification and meeting procedures, as befits a family operated business.
I recommend you research thoroughly before you choose a corporate structure, and that you talk to people who have done it along with seeking legal assistance if that is what you choose to do. Think about what your corporate policies will be for "checks and balances" also, even if you ARE small - if you put them into place when your company is small, you'll avoid a lot of growing pains later if you've created smart policy that is scalable.
Laura
Mom to Eight
Firelight Business Enterprises, Inc.
http://www.firelightwebstudio.com - No one knows more about high value, low cost web services than we do!
http://www.westernhillsinstitute.com - MicroBusiness Service Provider Training teaches how to provide low cost, high value services at a healthy profit.Private Reply to Laura Wheeler | | Jul 31, 2007 4:52 pm | | re: Creating a company run from home | # | 
Suzette Flemming | | Hi, Bradley ~
Laura is spot on about incorporation. You may also want to speak with an accountant about the best corporate structure for your business, your goals and what you want to accomplish. There are some tax advantages and disadvantages to each type of structure. I have two articles that may be of interest to you . .
http://www.flemmingbusinessservices.com/whichoneisrightp1.htm
http://www.flemmingbusinessservices.com/whichoneisrightp2.htm
Most states require the registered agent to have a physical location and will not accept a PO box (meaning your home addy is just fine, I use mine). They want to make sure that if they need to send certified mail someone will be there to sign for it. If you are uncomfortable listing your home address you may wish to pay a registered agent to receive mail for you.
As far as the secretary goes, in some states you can elect the same person to each position in others you can't. Double check with the Secretary of State to make sure you can hold all positions (i.e. pres, vp, secretary, treasurer). Board members aren't necessarily paid positions. This would be handled in your by-laws. The next trick would be to find individuals willing to serve without payment.
Got more questions? Feel free to ask. I am happy to help.
Suzette
****
http://www.FlemmingBusinessServices.com
Saving Money - Increasing ProfitsPrivate Reply to Suzette Flemming | | Aug 01, 2007 5:56 am | | re: Creating a company run from home | # |
santiago9767 com | | It is perfectly possible to have your company registered from your home address and many people do this. There may be restrictions in your lease or by way of restrictive covenant on using your home for anything other than residential purposes, which is a rather different matter. In practice, it will depend on the nature of the business. If you are just using your spare bedroom as an office and so there is no interference with your neighbours, etc., it is unlikely to be a problem.
With regard to the company secretary, this is still a requirement until the new (2006) Act comes into effect which, for these purposes, is April 2008. Until then you need a company secretary. You may refer to the online services Tax haven companies for the best answer and solution to your requirements.
Best of luck.
Private Reply to santiago9767 com | | Aug 09, 2007 1:00 am | | re: re: Creating a company run from home | # | 
Jim Swank | |
My only concern is everyone knowing where you live. Some people for safety reasons have a PO Box because once you put your real address out there, everyone in the world will know where you live. Unless you have a huge dog and a ugley daughter, Id use a PO Box if possible.
Jim Swank
http://www.MultiAffiliateIncomes.com
SEO is the way to go, http://www.sitewizardseo.com/1198 Private Reply to Jim Swank | | Aug 09, 2007 1:25 am | | re: re: re: Creating a company run from home | # | 
Denise O'Berry | | Jim --
With today's technology anyone can find out where you live pretty quickly if they really want to so using a PO box isn't that high of a level of protection.
We had a discussion about privacy and the internet on the Virtual Handshake network a little over three years ago. Here's a post the moderator Scott Allen made on the topic.
http://www.ryze.com/postdisplay.php?confid=586&messageid=428326
I'm not sure if he still offers the report he refers to there or not. Perhaps he will pipe in on this thread.
Best regards,
Denise O'Berry
Network LeaderPrivate Reply to Denise O'Berry | | Aug 09, 2007 3:35 am | | re: Creating a company run from home | # | 
Scott Allen | | Actually, the answers to this depend very much on where you live. Many cities have zoning laws and many subdivision have deed restrictions that may require you to pay additional fees or place certain limitations on your business if the office is at your house. You need to check with both the city and homeowner's association (or your deed, if you own your home).
One thing you may want to consider as an alternative is using a private mailbox. This has a number of advantages over using your home address.
As far as incorporation, a lot of people incorporate for the wrong reasons. They get told that it protects you from liability. Liability for WHAT???
Basically, there are two kinds of liability that typically occur: civil liability for negligence, breach of contract, etc., and debt.
Let's look at each of these:
Civil liability -- If you actually did something criminally negligent, you're going to be personally liable anyway, even if you were acting on behalf of the company. And in many cases, it's possible to "pierce the corporate veil" and go after the owners of the company as well. But most importantly... you NEED general business liability insurance. And if you HAVE it, and you're not doing anything outrageously risky, then it should cover you, and you don't need a corporation to protect your assets.
Of course, if you're doing high-risk business, or dealing in large dollar amounts, then it's more of an issue. But I know that in my case, it's never been an issue.
Debt -- If you're not taking on debt, then you don't need a corporate structure to protect your assets from creditors, now do you? And even if you have a corporation, when you first start out, odds are that you (or someone) will have to personal co-sign as a guarantor on any loans anyway -- new businesses can't get credit on their own. And guess what -- if you have employees, you're going to be responsible for making their payroll, even if the corporation goes bankrupt.
Of course, if you have a situation in which your debt is to the IRS, then you definitely want to have that corporate structure there! ;-)
Another reason people incorporate is credibility.
Please.
File a DBA / fictitious business name and put that on your business cards and everything else. People don't really care if there's an Inc. or an LLC afterwards. Your company name is your brand. It's not "Royal Dutch Shell PLC", it's just "Shell". I keep seeing various articles saying this, but I think it's a complete myth.
I'm not saying that there aren't ample reasons to form an LLC or incorporate (see Business Legal Organizational Structures) -- I'm just saying that a lot of one-person businesses incorporate because some expert has told them they should, when in reality there are other ways they could address those issues. And incorporating means taking on a bunch of additional expenses, even as an S-corp. You're going to have franchise taxes and other annual filings, the corporate book to maintain, and so on.
If you don't incorporate, you obviously don't need a corporate secretary. Most LLCs don't have one either.
Of course, you should consult with an attorney and an accountant about your particular case -- I'm speaking in generalities. But just don't make the assumption that you have to incorporate. It may be the right decision in your case, but make sure you've considered the alternatives. For every advantage of incorporating, figure out how you would handle it if you stayed a sole proprietor.
Scott Allen
About.com Entrepreneurs Guide
Ryze Entrepreneurs Network Leader Private Reply to Scott Allen | | Aug 09, 2007 4:07 am | | re: re: Creating a company run from home | # |
Laura Wheeler | | I think there is something to the credibility issue - if you have a structure other than sole proprietorship, people think you are more serious about your business. I'm living this right now, and we get taken seriously by influential entities in the region that did not do so when we were a sole-proprietorship. The difference has been measurable. It does open some doors - not for all businesses, but for some (more likely to in the professional arena, and more especially if you have plans that require cooperation from power players in your area). Given our grandiose plans, it was the logical thing to do, and people whom we need to get in our corner to make it happen are more willing to listen since we have a structure that will support the growth we intend.
I think you tend to take YOURSELF more seriously, and be more diligent about running the business like a business when you have some sort of official status also. Just my opinion.
And even though you do have to have a personal guarantor for a corporation, getting credit is much easier with a business form other than sole proprietor - again, not because of legal reasons, but because banks are more willing to believe you are serious if you form a business on a structure that is more formal than sole proprietorship. In some states, ANYONE can declare that they own a sole proprietorship, and they do not even have to register a DBA. Banks also look at corporations as growth vehicles, so they are more willing to take a risk early on, in the hopes that they'll ride the wave with you.
Credibility does not come in on the surface, but it can in those situations where someone actually looks into your organization before doing business with you. If you sell jewelry retail, it isn't likely to matter. If you sell jewelry wholesale, it may make a difference. If you deal with providing training, professional services, or consulting, to businesses, it can make a difference if you have a structure other than sole proprietorship. Again, I'm saying this from experience, and from seeing the difference in how people react to us, and how much more easily they trust us since we have a business structure they feel has some substance behind it. When we had a sole proprietorship, I never thought there was any disadvantage to having that structure - I never even noticed the difference until we incorporated, and that was in NO WAY our reason for doing it.
I think that growth potential, and growth plans are a prime consideration in choosing a business structure. You really need to know where you are going, and with whom, before you choose a vehicle to travel in.
Laura
Mom to Eight
Firelight Business Enterprises, Inc.
http://www.firelightwebstudio.com
http://www.westernhillsinstitute.comPrivate Reply to Laura Wheeler | | Aug 09, 2007 4:24 am | | re: re: re: Creating a company run from home | # |
Scott Allen | | Thanks for sharing your counterpoint, Laura.
I agree with you about credibility when going to the banks. If you're going to take on a significant amount of debt, I do recommend incorporating -- however, NOT because it will protect your personal assets in the case of an inability to service the loan, because it won't -- you'll probably have to co-sign anyway, as I said.
I think you really hit the nail on the head with this statement:
"I think that growth potential, and growth plans are a prime consideration in choosing a business structure."
For example, for my business, I have made the absolute decision that I will not hire employees, set up an office outside the home, etc. I don't want it. I will do everything by hiring freelancers and partnering with other independents or small businesses. I know people who do this who make high 6-figures and even 7-figures working this way. It's the lifestyle I choose and consistent with the brand positioning I have chosen. And simply put, I don't want to do business with a company that wouldn't want to work with me because of those decisions. There are plenty of other fish in the sea.
But that doesn't work for every business, by any means.
Scott Allen
About.com Entrepreneurs Guide
Ryze Entrepreneurs Network Leader Private Reply to Scott Allen | | Aug 09, 2007 1:57 pm | | re: re: re: re: Creating a company run from home | # |
Laura Wheeler | | It is very much about choices, and direction. Out here, I could have taken the route you did, but I think it would have been much harder due to differences in the marketing demographics of farspread rural communities. There are other factors within our business model that would make subcontracting a less viable option than employing also - fairly complex dynamics involving our target market, pricing, and available skilled freelancers since much of what we do is unique.
I never wanted to grow beyond a small, home based business either, until about a year ago. My goals in a few areas changed, and I began to perceive the entire concept of our business differently. It became about not just me, but about our family - my husband and I together set the goal of developing a company that grew beyond the home, and which grew to hire employees. We envision a company of 100-200 employees, with two divisions which provide some very innovative services. We also want to bring employment to our town - again, a complex and twisted issue, but because we live in a dinky town that has stagnated for 20 years, providing jobs and bringing students here is an important part of our goals.
And we do have to sign as the responsible party on any corporate loans - this can be true of corporations that are not startups also - any time the banks feel there is an unacceptable risk. But we are careful anyway about how we use credit, we limit it to certain types of expenses, and to specific amounts. It has to be something that will improve the business monetarily.
I agree that misperceptions are common, and that some people do incorporate for the wrong reasons. If you intend to be less than 100% honest and ethical, a corporate structure will offer you no more legal protection than any other structure, and it really won't make a difference otherwise unless you do plan for major growth.
We have found that the bookkeeping, taxes, and other aspects really aren't more difficult, or much more costly than for a sole proprietorship. The differences are really minor. The biggest change was when we first incorporated, moving everything from the sole proprietorship to the corporation books, and getting all the stuff figured out the first time around for state and federal employment taxes.
It was fairly simple with the IRS - when you get your EIN, they send you everything you need to know - sometimes the instructions are not clear, but between their information and Payroll services from Intuit (not expensive), it wasn't hard.
Wyoming though, was like navigating a minefield in the dark. You are required to file timely - but nobody tells you WHAT to file. There are about 4 different entities you have to check with, and no place within the state government where they will tell you all the stuff you have to file. Further, when you DO figure out which agencies you have to go through, they don't make it easy. They asked us what we do - we wrote "Web Design", "Electronic Informational Product Sales", and "Technical Training". They called us and said, "What does that mean?". I explained in small words. The lady on the phone said, "can you send me an email and tell me what each of those things means?". I did... in smaller words. She then said, "I'm sorry, but I need you to explain better what those things are." GRRR! All she needed to do is classify each item under a state code as either taxable or not. I told her which ones were taxable and which were not, and she still acted like she was clueless! Another office sent us a form to fill out. We filled it out and returned it, and they sent us the packet that gave instructions for filing. We filed the first quarter, and then the second... and then they sent us a form, marked urgent, saying WAIT! We needed to fill out this form and get it back to them as quickly as possible! It was the same form we had filled out initially. I am now getting to know some of the people that influence how these things are operated, and at some point they are going to get an earful - along with some suggestions for simplification.
Many of these issues would have been the same for a sole proprietorship (sales tax and regulatory issues), some were due to incorporating because when you incorporate, you become your own employee and subject to unemployment, federal withholding, and worker's comp (which means you can actually lay yourself off and draw unemployment if you choose! WEIRD!).
Laura
Mom to Eight
Firelight Business Enterprises, Inc.
http://www.firelightwebstudio.com
http://www.westernhillsinstitute.comPrivate Reply to Laura Wheeler | | Aug 09, 2007 2:03 pm | | re: Creating a company run from home | # | 
Colleen Connery | | I think everyone hit it pretty well on the answer to this question. I've been running a CA S-Corp out of my home for 6 years. We will end up getting a small office space again in the near future, but it is absolutely OK to run a corp from your home. Lawyers and CPAs are the best folks to help you with the answers to your questions depending on your location and future growth plans. However, we were told by our attorney once he consulted us, to register our corp online if we wanted to at www.mycorporation.com. We did, we saved money, but yet we had all our ducks in a row before because we consulted our attorney and got a good CPA to take care of our books.
Also remember, you will need to do things like yearly board of directors meetings and have to write up meeting minutes...this is critical if you get audited or if you go in for a loan the bank may ask to see your documentation. There are other issues too...taxes, sales & use taxes (if that applies), stocks, corporation record keeping in general, contracts need to be in order, etc. Once you incorporate, you have loads more responsibilities, and have to keep it up, and having an attorney you can consult with as well as a CPA will save you a lot of headache in the long run. Not to mention you'll need an attorney to draft, or at the very least edit your contracts, and a CPA for financial advice and planning.
And while we do currently use our home address for the corporation address, on anything that is not required for corporate paperwork, we always use our PO box...at least for now until we get into a new space. ;-)
I hope this is helpful! And good luck! It's a very exciting journey and I hope you enjoy yours!
Cheers, Colleen
President/Creative Director
CoCo & Associates, Inc.
www.cocoassociates.com Private Reply to Colleen Connery | | Aug 13, 2007 6:29 pm | | re: Creating a company run from home | # | 
Andy Craig | | Hi Brad,
You may create your company from your home. In addition to the many posts that have already come, I will add, certain states have a greater amount of protection with their corporations than others do. Nevada actually has the greatest level of protection available in the U.S. for corporations. There is a company in Nevada called Executive Solutions (I don't have the website handy and I wasn't able to google it either) that helps a person set up a C Corp and other entities. These entities will help you protect your assests and shelter yourself from taxes. They can also help set you up to base yourself internationally and take advantage of other investments available outside the U.S.
Hope that helps.
Andy Craig
Personalized MotivationPrivate Reply to Andy Craig | | Aug 13, 2007 9:04 pm | | re: re: Creating a company run from home | # |
Fred Keller | | Ummmm.....just wanted to step in here on setting up a corporation to protect assets in another jurisdiction.
This can be a pitfall - major.
eg: what guarantee do you have that the person you appoint in the far-off jurisdiction doesn't create more problems for you.
Giving someone total control over your assets .... and paying for the privilege .....???
They disappear after running up some/a lot of liabilities on your behalf....and then what??
As for protecting assets, generally with a new company a lender will want your personal guarantee, at least at the beginning of the relationship.
This is a great topic - probably suited for another thread - but in view of advice above....a huge red flag.
Touch on the link below. Sign up for their fr*ee newsletter. It will give you much insight into the much misaligned subject of 'protecting ones assets'.
Good Fortune to You!
Trusts http://offshore.first411.comPrivate Reply to Fred Keller | | Aug 14, 2007 12:21 am | | re: Creating a company run from home | # | 
Lindy Asimus | | You've had all kinds of great answers on this thread, and like many have said, a Post Office Box is a good idea. Not only because it doesn't leave your private address plastered over everything you print for your business, but if you move, then you don't have to change anything.
As to whether incorporating is an appropriate measure for you, as others have mentioned, get some advice from an accountant. It depends on many things, but it for sure, won't make you any money.
I am rather intrigued though, at what I perceive to be a thought that one should be concerned about pretending to be something other than "working at home". Have we not progressed further than that in this day and age? With many successful people operating their core business from home, and taking their careers into their hands to create lifestyle choices that make sense for them, I had thought that this may have been all but dispelled. I have to say, if your (generic)credibility as to whether you can perform is based on whether you have elected to spend money on office space then you (generic) have bigger issues to address.
But that is not to say, working from home may not have its drawbacks.
For all with a business based from home, I recommend _Flying Solo - Loving Your Own Company_ to add to your bookmarks http://www.flyingsolo.com.au/
On the other hand Bradley, filling out your Ryze profile might be a good start. What do you actually Do?
Lindy
Private Reply to Lindy Asimus | | |
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