For a lot of stay at home moms, a home based business is a great way to
bring in some extra income.
But while you might know about making or selling your specialty, the legal
aspect of starting a business is a whole different topic.
1. Have a good idea! (And follow a proven business model)
There are always opportunities to make money, but there are also always
ideas to make money that just won’t work. It is wise to bounce your ideas
off of a few people and ask them to render honest criticism and advise.
This can be a cost effective way to obtain free market data on whether your
concept will succeed.
Think about how to sell your talents and strengths. Lots of people are able
to blog about their passions and attract numerous visitors to their blog.
Once you reach a consistent stream of visitors, you can charge others to
advertise on your blog and make a decent amount of money. There is also
an increasing market for homemade or other artistic items.
There are lots of ways to evaluate the strength of your business idea.
www.business.utah.gov provides a number of guides and insight, including
a guide at http://www.business.utah.gov/start/starting-your-
Another way to meet up with seasoned entrepreneurs in Utah is to join the
Entrepreneurs Circle at www.meetup.com. This group meets often and
provides opportunities to meet investors and entrepreneurs alike and
receive guidance on business ideas.
2. Register your Company with the State
for a quick and easy filing. The
Department of Commerce regulates the incorporation of businesses in the
State and has a how to guide on the site mentioned (the guide is included
at the end of this). To incorporate, you will need a business name and
articles of incorporation or similar documents, as well as bylaws and similar
documents to dictate your desires with your business. Check the Division
of Occupational and Professional Licensing’s website (www.dopl.utah.gov)
to see if any professional licenses are required to engage in your business.
Check also with IRS, Utah State Tax Commission, and the Utah Division of
3. Collecting Sales Tax
A business is required to collect and pay sales tax on items sold to
customers who live in the same state as the business is located. This is
known as the business presence rule. If you work out of your home in Utah
for half of the year and Florida for the other half of the year, you are
required to collect sales tax from Utah and Florida residents. However, if
your only office is in Utah then, with some exceptions, you will owe only
Utah sales tax.
Some states are getting around the business presence restriction imposed
by the Supreme Court back in 1992 by legislating that if you affiliate with a
company that has a presence in the state and sell over a certain amount in
products each year, then you are required to collect sales tax on products
sold to residents of that state in addition to the residents of the state that
your business is present in. For example, Arkansas says that if you sell over
$10,000 in products to its residents and affiliate with anyone that has a
presence in the State, you are required to collect sales tax and pay it to
4. Check with the Local Authorities (e.g. the city your business is based
Each county and city in the State can require additional registrations or
license arrangements. Go to the website for the county that you live in and
the city that you live in and check their business registration/license
requirements. Zoning regulations can restrict many business activities.
While blogging is virtually always allowed, zoning regulations might
interfere with other planned business activities (such as day care facilities,
5. If You Have a Partner, Get an Agreement in Writing!
Often, individuals starting a business do not make the attempt alone and
partner with others to start something together. There is nothing wrong
with doing so, but it is essential to hammer out the details of your
relationship in writing before any problems arise. Written agreements (such
as an operating agreements) are useful to define expectations of various
partners. Partnership disputes can be as difficult as they are costly to work
through especially if lawyer involvement is necessary. As Benjamin Franklin
said, “an ounce of prevention is worth a pound of cure.” The same is true of
the home-based business. Spending a little money and a little time today
with an experienced attorney can save a great deal of expense tomorrow.
Cole Cannon, Esq. is a principal attorney at the Cannon Law Group, PLLC
, 801.363.2999 specializing in business
transactions in both Utah and California.
DISCLAIMER: The above represent only some of the legal implications of a
business and is not intended to create any form of professional relationship
between the Cannon Law Group, PLLC and the reader. For more information
please contact a licensed attorney.
Cole Cannon is a lawyer with the Cannon Law Group and deals a lot with
business law and shares his tips on making a home-based business work.
For more information, you can contact Cole at www.cannonlawgroup.com