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Starting a Home-Based Software Company?
deanj asks: "I'd like to start a new software business, as I'm sure many Slashdot readers would. I'd like to be able to run the company out of my home, at least until I can afford to move into an office in commercial area. A major roadblock to starting a home business are zoning restrictions, set by both home-owners associations and by the town you live in. So, I'd like to Ask Slashdot: What were your experiences with getting your company zoned properly and started? What did you have to do? What other tips do you have for someone starting their own home-based software business?"
I know tht;s a bit flippant .... but if you use a PO Box for your company's registration and correspondance and no one ever is going to come to your house you're not going to piss anyone off .... and they probably wont care
That most companies in my experience will treat you as bedroom without decent headed paper, a domestic address and cheap prices.
Make sure you don't take on poorly paid jobs in the short term at the expense of long term security.
Why do you have to get it zoned? Just start working. A software company is hardly going to be complained about.
M@
Krispy Cream is people
*ducks*
Start with your city's Commercial Licensing offices, whatever they may be called. Many of them have all the paperwork you need for running a business out of your home, which includes the zoning change. It's a fairly minor change, and in most cases isn't a hassle, unless you have some seriously strict HOA or city codes.
Seriously, it's easier than you think. Hit up your local Chamber of Commerce as well, there are undoubtedly more people running businesses from their homes in your area.
- billn
Don't tell your clients you just learned how to do this on Slashdot forums.
If you don't have commercial traffic to your house, my understanding is that there is no problem with having a business.
I know I am. Ignore zoning/homeoner's associations/whatever. Who in their right mind is going to know or care if you're writing software in your house?? That kind of piddly shit is the last thing you should be thinking about when starting a business. Ignore it, and concentrate on building a business.
I think there's actually a bit of related legal precedent involved here. Remember when a Florida town tried to get an injunction against one of those Voyer Dorm type sites? The court ruled that since the acts of transacting business took place online that the zoning ordinances didn't apply. Their position was that since there were no customers visiting the house and didn't have any foot-traffic or outward signs of a traditional business that it was exempt.
To start your own "home business", an individual only requires two primary means of contact...
(1) An Address - that can be satisfied via a PO box at your local post office
(2) A Phone Number - this can be accomplished through something as simple as a dedicated cell phone which comes standard with caller ID and VM...
The issue of location rarely, if ever, has come up as I am always more than willing to meet potential customers either at their location or often times over lunch. Seriously, when was the last time you went to the home office of a small-scale software vendor!
Beyond that, I would suggest starting a relationship with a good attorney and create some high-quality (not home printed) business cards!
Of course, you will certainly bomb if you don't have the tallent to back up your aspirations, but that is a different 'Ask Slashdot' topic all together...
Hope this helps...and good luck!
n2q
Beer is proof that God loves us and wants us to be happy. -- Benjamin Franklin
You can only build houses in these locations
You can only build heavy industry in these locations
You can only build shopping centers in these locations
The idea is so that you don't have your next door neighbor starting to open a high traffic business in your neighborhood, making the streets, infrastructure support etc. change.
I can't believe you don't have SOME kind of zoning where you are
I have mod points and I am not afraid to use them
You can also write off capital items like chairs and computers, the a minimum lumpsum per year which you may fall under (makes it easier) otherwise you'll need tax help to figure out amortizations (still worth it).
do like everyone else... fuck the zoning restrictions, start up the company and launder the money.
i have this cousin who used to be a crack head, he can help you.
MARIJUANA, SHROOMS, X: ONLINE?! - E
Haven't you ever played SimCity?!
If you're starting a business you need to focus 100% on getting customers. Everything else you can do along the way. If you don't have customers, you won't have to worry about zoning. If you do have customers, the solution to any zoning problem will suggest itself. First things first.
As a practical matter, these kinds of things only present themselves as real problems secondary to traffic and parking. If you draw attention to the fact that you're running a business from your home by being obnoxious to your neighbors by bringing a bunch of traffic to the neighborhood, then you'll have to confront the problem. But, if you're that busy, you can afford to move anyway.
Don't sweat this, concentrate on getting customers.
The best way to do is to be.
I get bombarded with email from people who want to help me work from home. Perhaps I should forward them to you?
There is no America. There is no democracy. There is only IBM and AT&T and DuPont, Dow, General Electric, and Exxon
If you have to do an "Ask Slashdot" for this, I'd hate to see the follow-up Ask Slashdots that you have to do.
* My client is 30 days late on paying, is it wrong for me to hack them?
* What's a 941?
* Should I S-Corp?
* Will people know if I work in my pajamas?
You are WAY early in the game if you want to do this seriously. Best thing to do is to fine 5 experience, older people to use as advisors. Take on of them to lunch each month and pick their brains. I do this with accountants, tax people, lawyers, software execs, sales guys from other companies... whoever I can. Slashdot is not the forum for this. This isn't hard, but it is a different lifestyle and you have to start being an expert in 10 different things (marketing, sales, finance, taxes, etc.) not just one (reading slashdot).
What other tips do you have for someone starting their own home-based software business?
1. Build time machine.
2. Go back to 1999.
3. Start your company.
4. Profit!
Other than that I have no idea, the economy being what it is. Or perhaps being what it isn't.
PS. Trolls complaining about the lack of a "???" step: you may safely substitute that for the first three if so inclined.
"If you think education is expensive, try ignorance" - Derek Bok
If you must have customers come to your "office", and you live in a bigger city, consider renting office space by the hour. Believe it or not, there are companies that serve as front offices for tens or hundreds of businesses. They forward your mail, have a bank of telephone operators that answer with "Foo Bar Inc., how may I help you" or whatever, and forward the calls as appropriate. They also have office space rentable by the hour -- they go in ahead of time and put your pictures on the wall, put in the right plants, nick knacks, etc.
Bizarre? Sure. But, if you need to look like a real company before you've got the capital/manpower, this is the way to go -- and still be in compliance of zoning laws (as well as impress your new, small client base).
If you won't be entertaining/working with clients in your home, screw it. Get yourself a fat pipe, a few terminals, and a big whiteboard -- and get yourself to work.
Support a few technologists in Washington.
...and this isn't the right place to ask about the application of the law in your local area.
I've run a software company out of my home since 1997.
Generally speaking, regulations prohibiting the operation of a business from a residential zone only come into play if you're mucking about in your neighbors' quality of life *and* one of them complains about it. IOW, having a semi deliver stock to your house twice a day is probably against regulations, but no one is going to say anything unless your neighbors complain.
For a software business, even one with a couple of employees, none of that is going to matter. You'll won't be getting deliveries, you won't have customers coming and going, and you don't even really need a sign out front.
Note that I'm talking about municipal regulations, not neighborhood covenants. If you've made the unwise decision to purchase where anyone but you (and, as usual, the government) has the authority to dictate what *your property* may be used for...well, that's your own fault.
You can ignore your homeowners association but you might not be able to ignore the city. If you open up a separate checking account and start filing taxes they'll eventually come around to see if you have a business license. That reminds me, I'd better go get one.
http://www.rootstrikers.org/
Check your local Municipal code, a business license for consultant or software work is usually cheap, like $100 or less, and as others have pointed out, they're usually allowed in residential areas since they don't generate commercial traffic.
I worked as a freelance designer for a couple of years out of my house. There were no zoning issues here (New Orleans) because it was just me and clients didn't visit me, I visited them.
But, my advice, based on my experiences (good and bad) is this: Get a lawyer and ask him/her. Also, get an accountant. Talk with them both before you start. The cost will be more than offset. It's not about how smart you are or whether you Could figure it out. You need experts for these things the same way they need experts to write their software, create their websites and build their cars. Cause you've got other stuff to do.
You want to worry about your business - the parts you know and love, right? You want to worry about software. You'll need to worry about your clients. You don't want to worry about zoning and taxes. The last thing you want is to find out that you're in deep shit with the police, the IRS or immigration or whatever because you were working on a big job that month. Get your experts in order and make sure they handle this stuff for you.
That's my advice. two or three cents.
Seriously, you get what you pay for. It's amazing the difference in talent between American vs Indian (graduated undergrad and/or grad in India, not of Indian decent) programmers. No, this isn't supposed to be some "yay U.S.A." homer rant. Just an observation from someone that gets to waste time interviewing way too many people for a small handful of entry-level jobs.
What I've noticed is that the Indian programmers are solid when it comes to "I need a function to take X and convert it to Y, it needs to go here." However, they are very weak when it comes to "We need a function to do X, do it". While that may be fine for some simple jobs, most software projects require good problem solving skills
It gets frustrating when HR forwards me 30+ resumes a week all with insanely high grades, all claiming that they're in the top 2% of their class, yet when you interview them, they suck at basic problem solving. It makes one think that all they have out there is a hardcore "learn C++ in 24 hours" curriculum that is extended over 4 years.
Of course, there's always exceptions, and that's why we still interview people...even if our expectations of them have plummeted through the floor.
Next on ask slashdot:
Show us your cool new dwelling modifications...
Like the Type R Toilet!!!
Check out a nolo press book on the subject here: nolo.com
Here's a quote:
"In some residential areas -- especially in affluent communities -- local zoning ordinances absolutely prohibit all types of business."
In the next line:
"In the great majority of municipalities, however, residential zoning rules allow small, non-polluting home businesses, as long as any home containing a business is used primarily as a residence and the business activities don't negatively affect neighbors."
They sell many books specifically for the small / home buisiness.
Hope this helps, and good luck!
I dont belive there is any concern about zoning as long as your company isnt a public place. If you start as a consultant, having a room in your house as office it has nothing to do with zoning. All you need is a room (or more) and a web page and a phone. Zoning is mainly for managing the general look of a sector. Its mainly there to lower traffic in residential areas, make peacefull residential areas, and to regroup services. As long as you dont modify your home outside ( put a banner with company name ) and dont have trucks deliveries or any special need that would disturb the residential zone usual apparence and peace ( like massive noise or massive waist production ) you can have your software company home. I ve seen Doctors, lawyers, veterinarians, notary use their home as office. I belive there is a max workers you can have in such setting .. somthing near 3 or 4 workers ( you should verify this with your town office regulations )
However, if you operate as a sole propriortship, you dont need the second checking account. The money made is simply your income. The unfortunate thing is though, if your business harms someone, and they sue you, they can take your personal assets, not just busniess assets.
-- Insert wisdom here:
While I have never used their services, this company www.intelligentoffice.com lets you rent a "virtual" office where they handle incoming phone calls and mail, and if needed can set you up with conference rooms, etc. if you have clients you need to meet with. Again I've never tried their services, but I really like the idea :).
Take pictures and make notes and make a tarball ouf of them and don't forget to include the GPL a few hundred times and start project 'flyingpony' on sourceforge if that name hasn't already been taken by a Qt python XML extension to make emacs compatible with NetBEUI over a covert channel of steganography within ogg vorbis files.
First off, asking questions about the law on Slashdot is a futile endeavour. The best that can happen is that you don't get any answers at all. The worst is that you do, but they're all wrong.
I managed to find some general info on the net for you though; check this and this. I have no idea of whether or not they are relevant to your inquiry. I just happened to stumble upon them while googling for an answer to an even more general question, namely: "what the #%&! are 'zoning restrictions'?" (I'm not a US citizen and therefore have no idea.)
"If you think education is expensive, try ignorance" - Derek Bok
I also base my software company out of my home. I didn't notify anyone. In fact, notifying the city your in will probably just lead to more taxes for you to pay.
I read an article in the LA Times awhile back that some cities are now doing data mining on tax returns to go after home businesses so they can pay all the local taxes. Los Angeles is now doing this.
Your biggest choice is what kind of company are you going to be? I chose to be a LLC. Go to Nolo books to get any legal books you need (I incorporated myself rather than pay 500 bucks to some lawyers). If you don't incorporate then your going to have to post a fictious business notice in the paper.
I don't know about the zoning rules, but I can't imagine it's a real issue.
...
BUT, having started my own software company about 7 years ago, which is now doing about $3M/year, employs 17, here's my 2 cents, in the category of "other" advice
Get a lawyer. Won't cost that much really and the thousand dollars you might spend now will save you tens or hundreds of thousands or more later. You're bound to run into something, some deal, some license issue, something - that you'll regret later if you didn't have an attorney at your side. I HATE LAWYERS - but I now consider them a necessary evil (and the other side always has one).
Hire an accountant from day one. This will save you thousands of dollars, if not a lot more, in the long run. Not having an accounting firm day one has probably cost my business over $1M. (in my case, as with most small companies, I should have been an S corp and double taxation on C corp dividends has cost me, big time)
I didn't have an accountant, I didn't have an attorney, when I started my business... and again, if there is any advice I would give someone starting out, it is that you can't afford NOT to have them by your side.
You use a septic tank for your pool!?!
That is all.
I started my own e-commerce and computer consulting company (see sig). I started it out of my house. That was a mistake.
I'm all for working from my house. I work from there three days a week. But running a business out of the house is not good. From zoning issues, to mailing issues, to clients that want to show up at the office, to spousal issues, etc. etc. etc.: there are a lot of disadvantages.
I know it's scary starting your own company. I've been there. But if you seriously cannot afford up front even $100-$200/month for a year of rent, or you have so few connections (or marketable talents) that you cannot exchange some sort of service for office space, I strongly encourage you to re-think your decision.
My company takes advantage of free office space from one of our clients. They are our *tiniest* client. We would make no real money from them, but they give us an office for our use, in an attractive building, a nice lobby, a receiptionist, someone to sign for packages, etc. It's a good trade.
I would also say the exact same thing about setting up your business properly (with an S-corp or LLC), and an accountant (at least for taxes and such). It might cost you a couple of hundred dollars to get a lawyer to draw up the corp. paperwork, and it might cost you a couple of hundred a quarter to have an accountant handle your taxes, but it's work it.
Again, not to be harsh, but if you can't afford $500/month for the first year up front ($6000 or so, say) for setup paperwork, rent, phone (do *not* use your home number!) and such, you do not have enough resources to start the company.
I wish you much success! I certainly enjoy having my own company. It was a couple of rough years, but things are much more stable now. I've grown to the point where we have a few employees and long-term relationships and contracts. People talk about the lack of job security when you work for yourself. I disagree. I think that I have more security: I know exactly what the books say, and what my prospects are. I know that right now I have enough cash for several months even if I don't invoice a dime, and I know how much I'm going to invoice. That's a lot more information I've ever had from any other employee. And I can't get escorted off the premesis at 4:30 on Friday and told that my personal belongings will be shipped to me... :)
Linux IT Consulting and Domino Development in Michigan
I used to run a limo company from my home, first in Baltimore County, MD, later in Howard County. Customers rarely came to my home; once in a while someone wanted to inspect my vehicle before they hired me for a special event like a wedding, but that was about it.
I had all appropriate licenses and took a home office deduction on my income taxes. The law in both jurisdictions said I could run a business from my home that didn't generate "excessive traffic or noise," which I didn't. So I was 100% legal.
Virtually every shareware developer I know works from home, no problem.
Many graphic artists work from home, no problem.
A majority of the people whose bylines you see on Slashdot work from home either all or most of the time.
Marty Roesch started SourceFire, the "commercialization of Snort" from his home. He was selling/shipping hardware, not just writing software, and he got away with it for a good while. (He has an office now - the business got too big for the house - his wife started getting upset at having boxes all over the kitchen and the sales manager working from a card table in the living room.)
A neighbor of mine across the street installs satellite TV dishes and works from home. Every week or two a large truck comes with a bunch of systems, and he and his son unload them, then the truck goes away. He's probably right on the edge of the law, but I'm not going to complain and neither is the president of the community association, who lives next to us -- and is a computer programmer who does a lot of work from home.
It depends on your neighbors and your relations with them more than anything, I think. If you have clients coming into a ritzy gated community via noisy helicopter 3 times a day, and you have a lot of workers who sit on your lawn and drink beer and get rowdy during breaks, you're going to have problems. If you're in a normal working class community and know your neighbors, and stay fairly quiet, hey! You're working! The worst thing that's likely to happen is that once they realize you're around all the time and that you know something about computers, they'll stop by a lot and ask you lots of Windows questions...
- Robin
Ignore the flippant posts about "nobody will ever know", there are licensing and tax laws and even though the odds of being caught are low, the consequences can be bad enough that it's not worth taking a chance.
....". At a minimum if you make up a "company" name to use in correspondence and advertising rather than just using your own legal name, you'll have to file a "trade name" or "alias" registration with the state so that there's an official record that "Suckus Maximus Software" is actually you--so that people can find you if they want to sue you. In my experience this costs in the range of $5-$20 per year. You probably won't have deal with workman's comp, but you should find out.
1) The direct answer to your question, go down to your city hall, find the zoning department, and ask. Typical residential zoning restrictions have to do with the size of the sign marking your location, parking, foot traffic, animals, children, noise, outbuildings, security lighting, storage of hazardous materials and so on. IOW it's pretty likely you'll find out that none of the restrictions apply to your business and you're 100% in the clear. (I assume that if you're a homeowner in an HOA that you read the convenants before you bought!)
2) Now find the business license department and go ask them what kind of license you need. I have done this in 3 separate locations and each had different requirements: first location no license needed, second location license required with fee based on 1/10% of gross income, third location license required with $15 annual fee (initially, now they've eliminated that charge). If a license is required, it generally requires filling out a simple form.
3) Make sure your county doesn't have its own separate licensing requirements.
4) Check state requirements. Many states have all the information online. In others you can order a booklet titled something like "Starting a Small Business in
5) Go to the IRS site, get these publications and read them: 334 Tax Guide for Small Business, 535 Business Expenses, 583 Starting a Business and Keeping Records. Then keep the records and do it right--you really don't want to screw with the IRS!
6) Check the titles at Nolo Press; they have great info available and it's often a more clear than the government publications.
7) Don't forget the bits about business plan, budget, setting rates, finding customers, getting insurance (property, liability, health, disability), actually doing a good job, and so on. Always remember, cash flow above all else is what will determine whether you make it or not.
For the non-US poster who asked about "zoning": this refers to the local laws governing what you can and cannot do on your property. A city is typically composed of "zones" which are each rated in some category, things like "Residential Low Density", "Residential Medium Density", "Residential High Density", "Retail and Office", "Light Industrial", "Heavy Industrial", "Agricultural". So for instance it's pretty certain that if the poster lives in a building where it's actually legal for someone to reside, then it would be illegal for him to operate a petroleum refinery in his yard. Most residential zoning restrictions don't apply at all to a software developer hiding in his basement. Also, FYI, zoning is not immutable; there is generally a government body in charge of reviewing requests for changes in zoning, or exceptions to the rules--this is how farms are able to become shopping malls.
Do your self a favor, and please don't listen to people on slashdot who say that you don't have to worry about zoning.
Chack the laws in your area (duh!). Visit the local city hall and ask them. They are the people who know, not Slashdot.
I have no idea about your area, but here's my experience:
In 1999 I started doing web design and consulting, etc. out of my house. I had a website with my contact info (address) on it, and my domain's WhoIs information was accurate. The business was also registered to the same address. I never had a customer or client come to my house. Early one Sunday morning, I got a knock on the door. I stumbled out of bed to find the local code enforcement officer at my door. He asked if I was running an "Internet" business out of the residence, and I (not knowing any better) said "yes". He then told me how it was not legal without rezoning the house as a multipurpose, yada yada yada. He didn't give me the fine he was supposed to, but instead gave me one week to sort out the issues or close up shop.
I went down to the local city hall, and found out that rezoning the house would cost a lot more than I had to spend, and by rezoning, I would also incur many other additional costs.
In the end, I just closed shop (I only had a handfull of customers anyway).
On the other hand, my wife is currently running a small business from the same house, and she hasn't had any problems at all. She registered under a DBA/Fictitous Name (I incorporated), and used a PO Box as the address.
"A terrorist is someone who has a bomb but doesn't have an air force." -William Blum
What to do:
How to do it:
The first rule eliminates wannabe rockstars. the second one eliminates the production of the number one agricultural cash crop in canada and the us.The third one eliminates any retail sales establishment. The fourth one eliminates a great big sign, like golden arches, or a little sign, for that matter.
Pay your taxes.
Inc Magazine used, and probably still does have a book on the guidelines to starting a business at home.
Wind uder Thy Wings
Amber
Suppose you did.
Suppose you did not.
There is ALWAYS some idiot conversing on the telephone who is convinced he needs to yell for long distance phone calls.
They preferred to be called "salespeople" rather than "idiots".I live ze unknown. I love ze unknown. I am ze unknown.
Partner Jody and I wanted to create a consulting business, and decided for various reasons a Limited Liability Company was the right way to go. We visited the state small business office and picked up a very helpful booklet on how to start a small business in Utah. This little book had information on all the various forms you need, who to talk to at City Hall, and how to get a business license if you're not in an incoporated city. Very helpful.
Note: don't think about scamming the business license if you're going to do enough dollar volume to file taxes on. The state tax people will report your income to the city, who will make sure you have a business license. The business license doesn't cost much and is very little additional hassle.
We filed the LLC paperwork with the state first. (An LLC doesn't have to be a business so that paperwork had no prerequisites.) Everything went smoothly and a few days later we got a nice form letter from the State office of something or other notifying us our business name was now registered. The next step was to apply for the business license.
At this point we decided we should get a business bank account and run the checks for all these applications through that account. We tripped down to the local bank that was just up the street from the town hall to open an account, only to be informed we couldn't open an account without a business license. See what I mean about not skipping on the paperwork?
So Jody wrote the check for the business license and we finished our application. In South Jordan home business licenses have to guarantee not to generate business-related traffic; you're not allowed to meet or entertain customers at your home, for instance. Not a problem for us, we were going to sell information and services over the web and do our work on-line or at customer facilities. The hook is, your neigbhors, anyone within 500 feet of your home, get the right to comment at the next town meeting before your license is granted. So the city gave us a list of addresses, we had to write a note to them inviting them to comment at the town meeting and pay the postage. We printed the invites on post cards, got them metered at the Post Office, and brought them back to town hall a few days later. The town clerk looked at the stack, guessed it was about right, and chucked them into their out basket.
The town meeting was a couple of weeks later. Jody and I showed up, nobody else did. We said on our post card that we did our business online and planned to have very few deliveries and no customer traffic, but I doubt most people even bothered to read it. Our business license was approved that night, and the office mailed it to us the next day.
With business license in hand, we revisted the bank and our account was opened in a few minutes. It was shockingly painless. They were happy to add a second signature line on the standard checks for us. We were shocked to find out the same checks that cost $5/box for a residential account are $15/box for a business account, but the account itself was free and we only needed one box of checks anyhow. Be prepared to get charged more for everything from checks to phone lines if you tell them it's for business purposes. When dealing with phone companies, sometimes saying it's for a "home office" will get you the same features at residential rates. Caveat Emptor!
That was it. For the next 4 years we renewed the business license each year, for $35, and filed an annual report to the same State office of something or other with the $15 filing fee, and had no other interaction with the local authorities at all.
We did file for and receive an Employer Identification Number (EIN) from the Infernal Revenue Service (rat bastards), becaus
The only issue was to have the City send notifications out to our neighbors when we first applied for a zoning varience. It wasn't a big deal but there are no covenants where this house is located so we only had to deal with the city people. We do consulting and mostly we go to client's offices although the occasional client does come here. We use the entire top floor of the house, have 3 full-time and 2 part-time employees. We do get a fair number of deliveries but no one has complained. One important thing is to try to keep a relatively low profile. Don't park in your neighbors' driveway, don't let your employees speed through the residential area (and if they do and you see them come down hard on them). In short, be a good neighbor. If your neighbors complain you are likely to have to move your business. I also recommend you incorporate as an S-Corp. I did this myself with forms from a bookstore and it worked out fine. We also have an accountant to check that we are doing things right. We stay here because the house is lakefront and it makes a great office but one more employee and we will have to find larger quarters.
No one ever had to evacuate a city because the solar panels broke!
When I started freelance programming, I really didn't like the idea of working from home. There's just too much isolation from the world, and not enough seperation of work and personal.
Fortunately, I found a few other people in similar situations who felt the same way.
We got together and rented some nice studio space together. We called ourselves the Soup Group, since we're a mixture of everything. To fill the space, we had to convince a few others that they should quit their jobs and go freelance.
Now, 8 years later, we have a great studio, filled with 16 people who like to be around each other. We're an intentional community, not a corporation whose members are decided by the whim of the HR department. There's lots of synergy, as we have programmers, designers, project managers, video editors, animators, and lots of other talents.
We save a lot of money by sharing resources like our boardroom, Internet connections, colour laser printer, fax machine, kitchen facilities, copier, etc. This especially helps people just starting out working for themselves.
Have a look at the Soup studio.
So my advice is to do the same. There are a lot of freelancers out there, and a lot of great studio space. It might take some work to find the people to group up with, but it's worth it in the long run.
I run a business out of my house as a (tax wise) "sole proprieter". On my tax forms, I combine both consulting fees and products sold as income for my business. (I am also an author, but that income is tracked separately.) For consulting, no sales tax needs to be collected; for products, simply keep tract of which sales occur in your state (this might change!).
Not to give them a plug, but I use PayPal for all product sales and small consulting jobs - a yearly dump of payments makes doing my taxes fairly easy (actually, I print out the yearly report fairly often - just to have hard copy).
Since the economy basically sucks and the IT industry is in the tanks, it is great to be able to work out of your home to save money.
Anyway, I am not making much money (compared to a few years ago), but I am happy and having lots of fun.
-Mark
When you speak to your attorney and accountant (if you don't have one of both, you should) look into the possibility of forming an LLC, S-Corp, or C-corp. Working as an independent contractor can cost you fortune come tax time. Also, remember that as a corporation (not sure about LLC)the company is allowed to "loan" you up to $10,000, upon which you are not obliged to pay payroll taxes. This little loophole has saved my butt more than once. Above all else, DO EVERYTHING BY THE BOOK, especially when it comes to taxes. Do not listen to those on this esteemed forum who would recommend that you not take care of zoning issues and the like--they have never been on the bad end of an inquiry. Granted, chances are, you won't get caught. If you do, THE RESULTS CAN BE CATASTROPHIC. It is so easy to take care of little issues like this that there is really no excuse for not doing so. Good luck.
Don't Panic!
The first thing you need to do is check with your local zoning laws. In some states/counties/cities you can run a small business if it is not 'retail' out of your home, ie: as long as customers don't come by.
Here in NC, we had to go to the county zoning board, request a variance for a similar problem. It takes from 60 to 120 days in most places I know of, unless you live in a major city. Houston, on the other hand, only recently introduced zoning laws and it may not be an issue at all there.
If you do not have customers that come by, I would not worry so much. Unless your neighbors complain, there is no issue, and if you have no commercial traffic, there is nothing to complain about. A good relationship with your neighbors is more important than minute details of zoning laws, and if you have one or two customers come by a day, it is no more traffic than many people normally have anyway.
If you do have to go to a zoning board meeting, bring notes, be polite, be forceful but not rude, do your homework first and find comparible cases to present. Most of these guys want just don't want hassles, and if its easier to give you what you want than to deal with you if they think you will be back and back and back, then your odds are better. If they have done this variance before for someone else, you can present the case where they would rather quietly grant it for you than not.
If you get turned down, learn who is on the board, find a connection. Lion's club, Elks, Rotary, etc. and do a favor. Or find a way to do a favor directly, such as fixing a problem, or writing some small software program, whatever, not in exchange of course. In otherwords, schmooze him a bit. Then request the variance again.
Say what you want, but local govt. IS more corrupt that way, very small petty things. You can spend thousands fighting it, or get what you want first, then fight it.
Tequila: It's not just for breakfast anymore!
Just what my brother and I have done for our business interests. Check your local laws to see how they work where you live.
:)
First, let me give my specifics so you can know where we're coming from. We are living in Titusville, FL. Both unemployed since the tech bust.
My bro is a high level web designer who used to work for a BIG company out of DC. He's worked on nike's website, timberland's and exxon mobile's. So he's got the skills. I've been doing backend programming and database type stuff for a while... so we're a good pair to do a web design business.
Additionally, we're into kite flying and run sort of a hobby business off of our kite site. (see sig) So this is a second business.
Beyond that, my bro's wife... my sister in law... does medical transcription. So this is a third business.
Anyway, we knew there were going to be a multitude of businesses that we were going to have our noses in. So, we incorporated. For a fee (forget how much offhand, but not TOO much) we filled out the articles of incorporation for a Limited Liability Company (LLC). Thus began the company Lutter Enterprises, LLC. (lutter being our surname). The LLC then filed a fictitious name of Kitestop.com.
With a company, and a name (and the documents to prove it) it was easy enough to go to city hall and get a business license for our home. We had to get one from the county as well. They require that we don't have any employees that don't live here. We can't have signs or outwardly recognizeable business items. Can't be having trucks coming or going all the time either. After that, we registered with the feds to get a Fed Tax ID and the state to get a sales tax certificate (which is what all our manufacturers look for before they will wholesale us anything)Pretty easy to have a business structure, huh?
After this, we needed to give the bank about a million documents and forms before we could talk them into giving us a business account and merchant account in the company name.
Then, when we decided to expand a bit, we got an office space in Cocoa, FL for cheap. Now we run all three business out of it. Of course we had to get new fictitious names for Lutter Interactive (web design Biz) and Far Out Transcription. We also had to go to Cocoa city hall to get permits and back to the county again. Plus it was a headache again dealing with the bank to get our accounts split up so the names all match up.
Cost a heap in fees and all that, but this gives us plenty of liability protection. The city, county, state and feds are all happy and we are 100%legal.
Now... just to make some money.
Usually, homeowners associations cannot regulate the activities inside the confines of your home. They can only regulate the physical appearance and external upkeep.
Zoning restrictions may prevent you from doing things like having employees at your home, keeping inventory of any kind, and other things like daily or even weekly shipping pickup. Zoning laws, however, also usually cannot regulate the activities going on inside your home.
If worse comes to worst, get a co-lo and do your development over your DSL. You'd technically be working from home, with your "employer" being at the address of the co-lo facility. Bam, they can't touch you.
On the other hand, lots of people break these rules right and left, and nobody cares, because they're considered good neighbors. I have a friend who's operating a business out of her condo in total violation of her housing association rules. All the other condo owners know about it, but she's such a valued member of the community (networks a lot, goes out of her way to make friends and help people) that nobody's inclined to make an issue of it.
Of course, if she ever does make a enemy who want to shut her down, she's screwed! Worth bearing in mind before you build that illegal granny flat.
So you'd like to think perhaps, but in reality this is bogus. American programmers are no better (I'm interviewing too as it happens) - but they are the MINORITY of those I interview: the order is Indian-subcontinental, ex-USSR (including those via Israel), Chinese-east-Asian then a variety including American. I assume this is because non-Americans lose their jobs more easily. I don't believe this is for reasons of competance. I don't see any particular association between ethnic origin and competance amongst my colleagues - but there is obvious reduction in communication due to language in some cases.
Quite honestly I expect in the next 10 years the center of gravity for software production shifts to India. It will be diffused via the net of course but in terms of money earned most will end up in India by sheer weight of numbers.
Doubtful, but could depend on state.
Most states do not require your business to be in a business zoned space to get a business license. In fact, most zoning regulations allow home offices and home businesses in residential zoned locations. The zone regulations are ONLY FOR TRAFFIC. If you are a retail front, you need to be zoned that way. If you are a single software business owner who R&D's in his basement and sells on the internet and you don't get shipments all the time like a real business would, you don't worry about zoning. Home offices and Home businesses are legal, legitimate, and perfectly fine in residential zoned areas.
That is why its called a home business.
Two infinite things: your stupidity and mine. But I'm not sure about the latter. If my sig offends you, I'm sorry.
The most likely thing to annoy neighbors is visitors/co-workers blocking driveways or using up parking (assuming it's in a fairly busy area.
Zoning is one of those ordinances that's only enforced when someone gets pissed off.
You may not see this since I'm so late posting but here goes anyway.
Of course you should just check with your local city to find out what you actually need to do (simple call to city hall usually works).
I run both a consulting and software business out of my house and I've done everything 100% legally. All I needed was a form for permission to work out of my house (from the city) and a business license. That's it. It only took about 1 day to get everything signed and approved.
In my city there are additional rules if you place a sign larger than a certain size outside (I have no sign since I work entirely by Internet and referrals). Also if you have a lot of traffic coming and going (I don't). Basically anything that might disturb the neighbors might require additional permits where I live. I didn't have to do any of that though. It literally took me 1 day and about $100 to get everything setup and I'm 100% official and legal.
Nobody ever needs to come to my office. Every time I've dealt with a customer it was at their site. That only makes sense since I'm small and they have all the facilities. However, if they needed to come to my office that would be fine since I have an entire large room dedicated for business (conference table and all). Because that space is only used for business I can write that part of my house off on my taxes.
I see lots of other posts here talking about zoning and such. I only thought that was for store-front type businesses were there would be customer traffic coming and going. A simple consulting/software business doesn't need any special zoning in my area (see above about signs and traffic).
The ratio of people to cake is too big
... to bulldoze his residential into a industrial. Thanks to SimCity, everyone knows about zoning.
I made a new rule. It says "no criticizing the ability of others to speak English unless you can do it in their native tongue."
Simply put, you should probably list "do enough business to have zoning problems" as one of your business goals. You have to be doing business before you have to worry about whether doing business from your home--and the Number One issue for startup companies is doing business. Here's a list of things you need to worry about, ranked in order of how often I obsess about them:
The big employers in town worry about "booking the sale" or "shipping the product." You have to worry first, last, and always about getting paid. You have to deliver the goods, you have to send the bill--but you have to make sure to follow up if the check is late, continue to follow up through a dozen excuses, and even drop by to pick up the check if need be. The grocery store does not accept accounts receivable.
Forget what the slick TV ads tell you. If you're doing project work for a limited number of clients, your cash flow (see #1) is at the mercy of your client's accounts payable people. MasterCard doesn't take accounts receivable, either. Use debit cards, require clients to front money for travel, etc., and do not (NOT NOT NOT) float yourself money from a credit card. Loan sharks offer better rates.
Big Charlie from Queens, my sometime employee (and sometime employer) reminds me frequently that if I'm not spending 40% of my time marketing my buns, I'm going to go hungry. In project consulting work, that's a tad high--but not much: even if you are hip deep in a killer project with a fabulously wealthy client, keep networking, keep hustling, keep looking out for the next gig and the one after that.
Working from home can do funny things to your relationships. For some people (including my wife and me) working at home can be a terrific thing--and it can be very stressful. When you're both in that state of just-got-the-big-check euphoria (I'm a programmer, she's a book editor) long walks in the woods while the kids are in school can be a blast. But when you're on deadline, and so is she, the stress level can soar. (When the kids start complaining about having too much junk food, and asking to have things like salad, that's a cue.)
You're not "self-employed," a "small entrepreneur," or "on the cutting edge of new working/living patterns." To 99% of your potential clients you're "some guy who works out of his basement." They've all see the Dilbert "clothing optional" comic strip (and they will all ask you about it) and your choice of working patterns will mean that some of them will never do business with you. Buy a tie, wear a suit, bathe. Shave. Learn to eat with utensils--all the things CDWS (cubicle-dwelling wage slaves) do. The more you look like them, the more you sound like them, the more comfortable they will be.
You have to do more than walk right and talk right. You have to D-E-L-I-V-E-R. Every single time. You will have a tough time to start: your business will start to prosper when you start doing repeat business: because there is no marketing, advertising, or sales promotion like a long list of clients that have hired you repeatedly. A key performance metric should be how often you have worked for the same client.
Lots of startup consultants charge way too little. WAY too little. Worse, lots of startup consultants confuse "being busy" with "working." You need to market. You need to network. You need to find projects to try out new concepts and ideas--and usually those are pro bono gigs. But you need to nail down a chunk of billable hours each and every week. You cannot bill more than 30-32 hours per week without seriously hurting your marketing and networking time--and all the stuff like taxes and billing and collections, etc. You have to bill enough to make enough in those thirty hours. And you have to hit those thirty hours week after week after w
I went down to the county court house and got a DBA. I quit my old job after they got bought out by a really big company and management lost touch with reality. Now I do contract programming for various companies around the country - including the one I left for about double my old pay. It's a bit lonely but I'm very happy and don't have an insanely long task list or full of competing deadlines. I do miss the cheap insurance though.
I setup a DSL/WiFi network in my house and got a nice lock for my office door to keep my son out. That's the only modification I made other then running a phone line into a new room.
Zoning restrictions generally only apply to home businesses where the public may come to your house or you may have large/noisy/ugly machinery to do you job. Get a laptop and visit the clients. After over a year in business I have yet to have a client visit my home, and have never seen many of my clients.
Of Course you could always check google instead of Slashdot.
Best of luck to you, it's a wonderful life if you can work it, but it's hard to get 8 hours in some days when you can just as easily go out an play in the park with your family.
How about, how many bits are in a byte. If the answer is "I don't know", their CS program was a joke. If the answer is "8", then their program might not be a joke. If their answer is "it depends", then they are old. That's a joke, in case you're an idiot. The question though is quite real, and I am surprised at how many people don't know a valid answer.
Check out the information and resources provided by the National Association for the Self-Employed. They offer a wide range of help to the small business and self-employed (hence the name). Membership is not free; they DO offer one of the best independent health insurance plans you'll find. Yes, you DO want health insurance.
... was reading up earlier)
(oddly enough, i try the link right now and it returns nada. I know the site is there
Yup... this is definitely a danger. You've got to lay down the law and enforce it. You've also got to live up to it.
If you're goofing around at home instead of working, your spouse will get pissed off that you're not helping out around the house instead. If you tell him/her "don't bug me between 9 to 5, pretend I'm not here", you damn well better be busting your ass for a client.
If you're doing anything else, then just do some random stuff around the house BEFORE goofing off. It keeps the friction way down.
Please mod this post only if you think others should/n't read this. I have enough ego^H^H^Hkarma. Thanks!
I ran a business out of my house for several months, but decided it had to end when the police were taking a suspicious look at all the people coming and going, shootings taking place outside, etc. I now rent a room at a Motel 6 under an assumed name and make the crystal meth there. Sure, it's an extra $30 onto my overhead, but in retrospect it's much easier than hauling away hundreds of pounds of incredibly toxic by-product.
Also, don't listen to these guys telling you to register your business with the city, etc. That's just asking for trouble.
You've obviously never played Sim City 3000. A software company puts out as much pollution as a sludge factory.
If you were a poet and sold your stuff to artsy
magazines would you worry about zoning or
business licences?
Why should a software author be
treated differently?
Call up your local authorities and say
"I'm an author, do I need a permit?"
FLAWED (Free legal advice, worth every dime.)
And like all good advice it's blatently stolen (from Warren Buffet)
Learn accounting, at least enough to read financial statements and the footnotes, it's the language of business.
I can not tell you how much I agree with this, it should not be too hard to either grab an intro accounting book, or audit a class at the closest learning institution. Learning accounting will make your life much easier to see if you are profitable, generating cash, what deals might not be worth trying for lack of proceeds.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Start small with one contract working on one application. Work your tail off on it and generally speaking you'll start getting calls from other companies wanting your work. Thats how my employer did his company and it as a successfull at home software buisness.
My coworkers already know that I'm not working... so this way they wouldn't have to look at me :)
He's stating his experience. I've encountered the same. If you have friends from India/Bangladesh (sp?) their way of living is completely different than ours. It's stupid to assume that different cultures can solve problems the same way. I have friends from all over the world and everyone has different strengths and weaknesses. It's not racism to stereotype.
For example, my Asian friends (not born in America) have the most difficult time in Business Law (Legal Studies). This has nothing to do with intelligence or race. It has to do with the norms and mores of our society being learned from an early age. Laws are implemented and administered very differently in SE Asia than they are here. As a result all my Vietnamese, Thai, Chinese and Philippine friends struggle to understand the way Business Law works.
So take your narrow minded quick to yell "racist" shit elsewhere. Political Correctness is the worst fucking excuse for calling someone racist I've seen yet.
If you are in the US, look for your local "Small Business Development Center". You've already paid for them with your tax dollars. Some are better than others, but they all share the same basic mission -- free or inexpensive access to information and advice about starting a business in your community. They are usually associated with a local college. They should be able to supply you with a checklist of things that need to happen to legally start a business in your area. This is the information that the .gov people know, but are too busy to tell you about.
For instance -- should you form a corporation, an LLC, or a work as a sole proprietor? If you call and ask the county clerk, he'll only know about DBA (doing business as certificates) for sole proprietorships. The secretary of state will be able to send you forms to incorporate, but neither will (probably) have the info to help you make a decision about which is best for you.
When you see that stupid SOB on TV with the question-mark suit saying "there's government money to help small businesses" -- this is what he's talking about, not what he's implying. Ain't no grant money for start-ups of course, but the SBA and other such entities do fund the SBDCs.
How do I know this? I'm working on an MBA -- and I'm a grad assistant at one. Moving back to technological backwards state (due to family reasons) means I'm having to figure out a new or modified path -- not too much work for embedded systems guys in Huckabee's state -- hell, most people here can't even say "embedded systems".
Best of luck to you.