Many businesses are heading home. Moving their business location to their homes, that is. The Wall Street Journal says the recession is causing many small businesses to consider a move back home to cut costs. But before you make that move, consider these 7 issues:
1. Breaking Your Lease
Look at your lease to see what penalties you must pay to break the lease early. If you can get someone to sub-let, you may be able to work a deal with your landlord.
2. Zoning and Variances
The next most important task is to find out if your locality will allow you to operate from your home. If your home zoning is residential, you may have to get a variance and permission from your neighbors.
3. Business Insurance
Talk to your business insurance agent to see how your move will affect your business insurance rates. You may be able to get a rider on your homeowner's insurance for your business equipment.
4. Employees
Most businesses cut employees when they move home. If you have a health plan for employees, you will need to notify them of their right to COBRA coverage.
5. Sales Taxes
A change in location may mean a move to different city or state, entailing a change in the state and local sales taxes you collect.
6. Notifying Authorities
A brief list of notifications you should contact includes
- Notify your state secretary of state of the change of address of the business entity you registered (limited liability company, partnership, or corporation)
- Notify your locality of your new address for business licenses and permits.
- Notify taxing authorities, including the IRS, state department of revenue, and local tax offices.
7. Home Business Tax Deductions
As soon as you move to your home, talk to your tax adviser about collecting information for tax deductions for business use of your home. The sooner you start collecting information, the easier this process will be at tax time. If you keep good records, you should be able to justify taking part of your home expenses as a business tax deduction.
Planning a major business move is always difficult, so add these issues to your list to avoid problems.