How to Set Up a Home-Based LLC

by Angela Floyd
Home business

Home business

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Having a home-based business can be a rewarding experience. Liability protection and ease of formation make the Limited Liability Company (LLC) an attractive option for your home business. Establishing an LLC for a home-based business is fairly simple with proper planning, including complying with local and state home business requirements and restrictions.

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Zoning Laws

Find out if you can operate a business out of your home. Your city or county has likely established planning or zoning laws that designate residential, commercial and industrial zones. In some communities, zoning laws prohibit operating any business in a residential zone, but in most communities, small businesses can be operated out of the home. Requirements and restrictions differ, but common restrictions involve limits on types of merchandise sold; environmental hazards or disturbances, including noise; external signage; hours of operation; or walk-up customers. Your city or county clerk’s office will have a copy of the local zoning ordinances. Also, check any rules your subdivision or homeowner's association may have regarding home businesses in your community.

Business Name

Choose a business name that is not in use by any other business on file with your state. Your name must also end with the proper designator such as Limited Liability Company or Corporation or some abbreviation of these words, such as LLC or Inc. After you’ve chosen a name, you’ll need to do a business name search in your state to make sure the name is available. In addition to following your state's LLC naming rules, you must also make sure your name won't violate another company's trademark. When you file your articles of organization, your business name will be automatically registered. If you need to reserve your name for a short time while you prepare to file your articles, you can usually do so for a small fee.

Filing Your Paperwork

Prepare articles of organization. This usually can be done in just a few minutes by filling out a short form provided by your state's corporate filing office, which is usually the secretary of state's office. Typically, the articles must specify basic details about your business, such as its name, main address and sometimes member names. If you are the only member, make sure your state allows single-member LLCs. You usually also have to provide the name and address of your business’s registered agent, the person who will receive legal service. In most cases, you can be your own registered agent and you can use your home address, if it is within the state. In most cases, one or all of the members may prepare and sign the articles. You'll pay your filing fee when you submit your articles of organization.

Licenses and Permits

Check with your local and state government for license and permit requirements. These may include a business license, occupational license, home business license, sellers' permit or a zoning permit. In addition, your state may require that you obtain certain insurance for your home business, including property or professional liability insurance.