Starting a Home-Based Software Company? 535
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?"
Don't tell anyone ... (Score:5, Insightful)
Re:Don't tell anyone ... (Score:2, Interesting)
Otherwise the biggest problem is family, friends, and relatives treating you as a lay about, and bugging you to do real work, because they can't see nor understand what you do!
Re:Don't tell anyone ... (Score:5, Interesting)
Many family and friends who came over were in shock and awe about my ability to lay on the couch and work. The comments weren't directed at me, but I could tell they weren't impressed, for they know not what I do (code Java).
My dad is a building inspector, and he gets zoning complaints about illegal dwelling modifications. Some are for bedrooms, and some are for offices. Our city will look into things without a formal written complaint. Any drunk idiot can call in complaints to the city.
Most of the complaints are generated by estranged family members or the "Ex." So if you're going to break zoning law, make sure you're on good terms with all of your friends and family, or just don't invite them over during business hours.
HEHE (Score:4, Funny)
Show us your cool new dwelling modifications...
Like the Type R Toilet!!! [cox.net]
Re:Don't tell anyone ... (Score:4, Funny)
Re:The war (tm) and our vocabulary (Score:3, Funny)
Re:Don't tell anyone ... (Score:5, Informative)
Re:Don't tell anyone ... (Score:3, Informative)
Do you still have to put "PMB" as a line of the address? (To cut down on "Suite 7800" scams being run out of these private mail boxes.)
You can use number sign ('#') or PMB, those are the only options now allowed. So, do something like this:
John Doe
5675 Nowhere St., #5800
Somewhere, FU
zipcode
It works fine, never a problem.
Re:Don't tell anyone ... (Score:3, Informative)
Also, consider getting a postal box from a private company (Postal Annex, Mailboxes Etc, whatever) so you can keep business separate from per
Re:Don't tell anyone ... (Score:3, Interesting)
Not flippant at all (Score:5, Insightful)
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.
Re:Don't tell anyone ... (Score:5, Informative)
Is a bad idea if you have a nice house, car or other stuff that someone may sue you for over real or imagined damages.
Buy a couple of hours with a local attorney and accountant. Every state and municipality in the US has different regulations so the advice you are getting on
In my previous state I was up and running for less than $500. The attorney advised that zoning and association rules would not be violated if you were unable to tell I was running a business in my house and I could even use my home address. The possible problems he cited where signage and traffic. The accountant advised that it was very important to keep the business and personal monies separate and about tax strategies and their consequences.
In my current state I never made it past the attorney. The company was strictly for side work and not my main employment and I found that I would be taxed and feed out the wazoo by the state and the town. I would have to incorporate in Delaware and get a mail forwarding service and still get partially screwed by my state. So it is on the back burner for now.
If possible make your wife or mother 51% owner of the business so you can be a minority owned business. Good luck.
Re:Don't tell anyone ... (Score:4, Insightful)
Just remember (Score:2, Informative)
Make sure you don't take on poorly paid jobs in the short term at the expense of long term security.
Why zone? (Score:3, Insightful)
M@
Re:Why zone? (Score:3, Informative)
How many employees will you have and how many clients will be coming through the house. If the answer is "not many" then there is probably not a zoning issue.
The main thing you will want to is to make sure you have a corner of your house (den, etc..) dedicated to the business and nothing but the business, so that you can get the home office
Re:Why zone? (Score:2, Informative)
I do run a software company out of my house and decided against the home office deduction because of the above - plus a home office deduction is a redflag to the IRS.
Home based software company for cheap: (Score:5, Funny)
*ducks*
You get what you pay for. (Score:4, Insightful)
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.
Re:You get what you pay for. (Score:4, Interesting)
The parent is right on target. From everything I've seen, if you know what you want, you can't beat the price/performance ratio of indian programmers. The majority of programmers from that country that I have met have an attention to detail that is absolutely astounding.
However, once you need someone to think, their skills break down. I think the original poster is correct about it having to do with the curriculm. From what I've heard, the majority of thier coursework is rote memorization, whereas most american schools tend to stress problem solving. It's not very often you come across a CS test in the US where it is not open notes or book. It really leads to graduates with two totally different skillsets.
In the end, who you should hire really depends on what you need. Different people are suitable for different rolls.
Re:You get what you pay for. Not. (Score:5, Interesting)
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.
Re:You get what you pay for. (Score:4, Interesting)
I have formed a partnership with two Indian development companies. I get the contracts. I meet with the customer. I do all requirements gathering. I do the UML. I manage the project. I do everything except actually write the code.
I send the Indians the stubbed out code generated from the UML, the database as generated from the ER/WIN model and the UML. They send me back a project plan with dates and a fixed bid. The lowest bidder of the two gets the contract.
We have done 3 jobs together this way now -- one for a small software company that was outsourcing its Web Services upgrade to its existing product and two medium sized projects for Fortune 500 companies.
The biggest issue so far is getting the big guys to take you seriously and the background check they put you through to get you on the job. After that, it all comes down to dollars and this arrangement is delivering good code for about the price of 1-2 good developers but it gets done in a fraction of the time.
And
Caste system and lack of experience (Score:4, Interesting)
I have worked both as a programmer and an assessor of qualifications, and I think the problem with Indian programmers might simply be a lack of work experience, especially challenging lead programmer type stuff, combined with the cultural baggage of the caste system.
In the US, Australia etc there are a lot of experienced programmers and managers, most of them with some sort of graduate or postgrad qualification. I think that in India it is easy to get the qualification but hard to get the same quality of experience. I've worked in several software houses which received a lot of Indian resumes but never hired any Indian workers. This wasn't a racist thing IMO; the same companies employed a lot of Thai, Russian, Korean programmers and managers. The Indian applicants just didn't have the same 'senior developer' (or DBA or sysadmin or whatever) type experience.
The Indian high school system produces graduates that, in the opinion of the British and Australian government Education departments, are a year ahead of US high school graduates. Indian university is not quite so good, and only the Indian version of honours is considered as equivalent to UK/Aust qualifications. A pass level Indian Bachelor degree is considered to be equivalent to a US degree by these institutions. This might be explained by India being a good place to get theory (of the Sun/MS/RedHat certified flavour rather than Western CS stuff) but a tough place to get real experience.
A friend of mine has just returned from overseeing a software project in India and says that the caste system is a big problem in software development. Lower caste people are often eager to do fill in the blanks type work but are culturally conditioned not to show initiative (as decribed by the AC original poster). Higher caste people sometimes have the opposite problem -- they don't believe that you have anything to teach them, and they don't want to do grunt work like testing or refactoring.
Re:You get what you pay for. (Score:3, Insightful)
I'm an Indian programmer. I have to agree that the average Indian programmer is not up to the quality. But that's only because there are TOO MANY Indian "programmers" out there. It's just the overwhelming numbers.
That frustrates me as much because I've seen many a good Indian programmer get dropped in favour of the typic
Re:You get what you pay for. (Score:5, Insightful)
Let me give you some examples here are statements that some would call racist without thinking but certainly are not.
Blacks are usually poor.
In the US at least this is actually true. Not every african american is poor. But most are centered in less properous areas, this is nothing bad about the race, it's a statement of fact as defined by research and data, you know those things that trascend some self righteous prick who is itching to play the race card.
Females are better at english than math.
While this (and the statement above) could be mistargeted as slander against individuals, the numbers on the subject indicate this to be a statement of fact. Male math related test scores tend to be higher than those of females and the reverse is true of english.
These are a couple I chose because they hit very sore spots for some people but have real basis in fact. It's nothing against the people who fall in those categories. Remember 40% of either group can and in many cases does represent an execption to these statements of averages which means that any given person would more than likely know numerous exceptions to them or possibly only ever meet exceptions without making the averages a hair less sound.
Re:You get what you pay for. (Score:5, Informative)
He obviously haven't. That's probably why he writes: "Of course, there's always exceptions, and that's why we still interview people..."
If someone else won't say it, I will: "You are a racist."He isn't, though. He wrote: "It's amazing the difference in talent between American vs Indian (graduated undergrad and/or grad in India, not of Indian decent) programmers." (emphasis mine). He explicitly states that programmers of indian descent (or, if you prefer the archaic term, "race") are no worse or better than others, but those who are educated in India tend to have some problems. He is criticizing India's education system, not making a slur against Indian people.
I hate racists as much as the next guy, but to pull that term out whenever someone makes a comment about a completely non-racially related aspect of a foreign people is just silly.
He's not a racist you dip. (Score:4, Insightful)
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.
In this economy (Score:2)
Re:In this economy (Score:2)
Don't click on my site [rocketclub.org]
Home business licensing. (Score:5, Informative)
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.
#1 (Score:5, Funny)
No commercial traffic? No problem. (Score:5, Informative)
If you don't have commercial traffic to your house, my understanding is that there is no problem with having a business.
Re:No commercial traffic? No problem. (Score:3, Insightful)
I think it may have something to do with parking / nuisance to neighbors.
However, if you intend to hire people as employees, then you should get some basic business insurance to protect yourself, since your home is typically NOT exempt from safety standards, and you could be sued by an employee fallin
Are you fucking serious? (Score:3, Insightful)
Re:Are you fucking serious? (Score:2)
I came really close to starting a business where we were simply going to rent a 1BR apt. for "office space" bring in a DSL line, networking etc. and we are set to go. But as soon as we got larger than 4-5 people this plan wouldn't work.
Re:Are you ****** serious? (Score:2, Insightful)
Re:Are you ****** serious? (Score:3, Informative)
Re:Are you ****** serious? (Score:3, Informative)
Re:Are you ****** serious? (Score:2)
Re:Are you ****** serious? (Score:3, Informative)
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, y
Re:Are you fucking serious? (Score:3, Interesting)
The last freaking thing I need in my life is to get this wrong, and have some bozo at the IRS (or wherever) taking all my personal assets, which is my main reason for wanting to incoporate in the first place.
There's a precedent (Score:5, Interesting)
Re:There's a precedent (Score:5, Funny)
This is simple...I've done it! (Score:5, Insightful)
(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
obvious solution. (Score:3, Funny)
i have this cousin who used to be a crack head, he can help you.
Starting a business from our home. (Score:2)
Don't worry about that sort of stuff... Just start making money first... I know of plenty of home businesses that started with almost no "official" stuff at all... You can take care of the technicalities later.
Fsck the zoning (Score:5, Insightful)
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.
I took a quick glance of the topic... (Score:5, Funny)
I get bombarded with email from people who want to help me work from home. Perhaps I should forward them to you?
What's next? (Score:5, Insightful)
* 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).
Re:What's next? (Score:5, Funny)
But what if they refuse to pay?
Humble suggestion (Score:4, Funny)
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.
Are you meeting with customers in person? (Score:5, Informative)
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.
Where I am, this is OK (Score:2)
As long as it remains small and there's no store-front, I'm in the clear. I would think you would be too. Since most major corps started in someone's garage, most jurisdictions don't want to discourage things like that.
Soko
Zoning ordinances probably don't apply... (Score:5, Informative)
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.
Move (Score:2)
Many states allow "low impact" home based businesses. There are restrictions, like how many deliveries you may receive a week and so on. (example) [gaithersburg.md.us] The objective is to keep the residential areas residential, and move all the 18 wheelers into industrial areas.
Do some research into what the local municipality allows. You may find it's friendly for what you want to do. Otherwise, move
my advice (Score:4, Insightful)
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.
NOLO press is your friend (Score:5, Informative)
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!
Zoning (Score:2, Informative)
Rent virtual office space (Score:3, Informative)
Some links (Score:4, Insightful)
I managed to find some general info on the net for you though; check this [alllaw.com] and this [entrepreneur.com]. 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.)
Maybe this person means more of a business... (Score:2)
Maybe something with a bunch of people working, working late sometimes; lots of deliveries, possibly clients or investors or business partners coming in for meetings.
I realize this wasn't specified, but if zoning really is a big issue, then it sounds to me like it's not a case of "me and my friend writing programs and selling them online."
I see a lot of posts going in that direction and rising to the top, but I'm curious whether anyone has advice
Some major advice.... (Score:5, Informative)
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.
Re:Some major advice.... (Score:5, Interesting)
Better idea: purchase a membership to Pre-Paid Legal. [kenbeal.com]
This is a service which costs $26 a month (or less, depending on the state you live in), and allows you telephone access to lawyers for any question, any number of times.
They will write letters and make phone calls for you, for instance if you're trying to collect, or if you need help resolving a dispute. If the issue takes more resources, they have a reduced hourly rate (25% off) so it's worth it even if your problem is not covered for free.
They offer more services, like traffic defense, civil (or job-related criminal) defense, and audit defense; and there's a "legal shield" which is available 24-hours a day in case you're detained by a police officer or security guard.
Yes, I do make money when someone joins, but I use the service myself and it has saved me a ton of money. There's a short movie at the web site if you want to check it out.
They'll even be able to answer your zoning questions for you. For free.
Re:Some major advice.... (Score:3, Insightful)
With the first penny, you have legal obligations to your customer. There was some kind of contract or at least EULA, wasn't there? Did you write it yourself? Don't tell me the CUSTOMER wrote the contract! In any event, without proper council, you could already be liable for your customer's losses, potentially thousands if not millions of dollars even if they misapply or misuse your software.
It doesn't matter if your application is a game or an egg timer. Your program COUL
talk to your local government (Score:2)
Larger cities often have offices whose sole purpose is to help small businesses. They are probably your best first resource for understanding basic legal issues related to your business (i.e. what taxes you have to pay, what permits are required, etc.). The peop
Think long and hard (Score:5, Informative)
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... :)
Re:Think long and hard (Score:5, Informative)
Do not start your own business unless:
1) You have enough money in the bank to support yourself (and your family) for AT LEAST three if not six months OR you have a spouse who makes enough money to support you and your family (I started my business just after my wife got a major promotion, so we had money to spare)
2) You have AT LEAST $6,000 start-up cash for every three months you plan to lose money. For instance, if you think your business will be profitable after six months, start with $12,000. Expect your expenses to be at least $2,000/month, not the $500 in the parent post. If you go under budget, put the money in a reserve -- don't just spend it the next month.
When I started, I had just quit my job as a partner at a much, much larger business consulting house. Though I'd worked my way up from being an associate, I hadn't realized how much of the "little stuff" the company took care of for us. Everything from office supplies to the phone bill, xeroxing, marketing etc.
Don't start from home. Find an office, even a cheap one. Home is too distracting. Good luck!
Re:Think long and hard (Score:5, Insightful)
When I started my company, I burned through $20,000 in the first 6-8 months before I brought in enough money to pay my bills (barely). That was with my family of three (Me, my wife and newborn daughter) living on $2000 or less per month. That was definitely on a shoestring: after taxes, our $640/month rent took literally half of our income. That doesn't leave much...
However, the mistake I made was in not budgeting an extra couple of hundred dollars a month to pay for office space, accountant, etc. Like everyone else, I assumed that saving money with a home office was a smart move. I see now, though, that it was not. I *had* budgeted for food, clothing, shelter... I just wish I had budgeted and planned on a couple of more services that would have made my life a *lot* easier.
Believe me, $2000 a month is bare *minimum*. For me, $2000 was living expenses. Given $2000/month for living expenses, I would expect to burn through about $3000 a month (assuming no income). And assuming no income is a good thing to do. It took me 3 months to land my first real work, and it took a couple of months to get the money. A software development business is going to be even worse: unless your product is ready to ship *today*, you've got to build the product, let alone start selling it...
Hope the advice helps...
Depends where you live (Score:5, Interesting)
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
Here's what you really need to do ;-) (Score:5, Insightful)
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 [irs.gov] 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.
Don't Listen to them... (Score:5, Informative)
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.
Unwritten guidelines for small businesses (Score:3, Interesting)
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
Been there, done that, didn't get hurt. (Score:5, Informative)
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
We Run our Business from my house... (Score:3, Informative)
Get some people together (Score:5, Interesting)
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 [soup.net].
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.
Here is how I do it (Score:3, Informative)
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
my 2 cents (Score:4, Informative)
Howto (Score:4, Informative)
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.
Here's what *I* did. (Score:5, Informative)
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.
palloc() (Score:3, Insightful)
Zoning is one of those ordinances that's only enforced when someone gets pissed off.
Zoning is the least of your worries... (Score:5, Informative)
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
NASE (Score:3, Informative)
(oddly enough, i try the link right now and it returns nada. I know the site is there
Don't try it... (Score:5, Funny)
Also, don't listen to these guys telling you to register your business with the city, etc. That's just asking for trouble.
My best advice (Score:4, Insightful)
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.
Re:My best advice (Score:3, Informative)
Good accounting will hopefully keep you from doing something deadly like offering software you took weeks or months to create out under GPL because you heard this was "good". So
Zoning regulations? (Score:3, Informative)
This applies to software companies. Check regulations in your area!
It's almost a year now since my company moved out of my home into an office building
Roger.
Re:Zone what? (Score:3, Informative)
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
Re:Zone what? (Score:2)
One such example is when we built a pool at our house it had to X feet (Can't remeber how many) from the septic tank. Also, the pipes supplying propane had to be about one foot under the ground, and had to be some amount of feet away from any electrical lines in the area (For obvious reasons).
Re:Zone what? (Score:2)
Re:Zone what? (Score:2)
Re:Zone what? (Score:4, Funny)
Re:Zone what? (Score:2)
way more than this ... (Score:4, Interesting)
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).
Re:way more than this ... (Score:2, Informative)
You have to be careful about this however as it can bite you when you sell your house. That are rules that allows you to not pay taxes on a sale of your own home, however as you are now claiming a portion to be your business you may end up paying some taxes when you sell the house. In other words, consult with
Re:No reason for complaints (Score:2, Insightful)
Not in any cubicle infested office that I have worked in. There is ALWAYS some idiot conversing on the telephone who is convinced he needs to yell for long distance phone calls.
Re:No reason for complaints (Score:4, Funny)
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".Re:How (Score:2)
Does that answer your question?
Give it a try. (Score:2, Funny)
Re:Easy... (Score:5, Informative)
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.
Re:fun until somebody has to do the dishes (Score:3, Informative)
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