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What are the Consequences of Running Your Home Business without a License?

 

Running your home business without a license can be a serious offense. Government treats business differently than individuals, and depending on the severity of the offense, running your business without a license can result in paying back taxes, paying fines and even enduring jail time. Here are a variety of factors to consider when deciding whether or not you should get a license for your business.

Zoning

Local governments usually have parts of town where business can't be conducted. This is usually a matter of traffic. If your business plans to have a lot of customers coming in and out of your home, or if you are planning on getting a lot of deliveries, there's a good chance that you will require a license for that business. The least consequence for violating zoning laws is having your business shut down. If you're not as lucky, you could face fines or jail time!

Sales Tax

If you are selling products to customers, you may be required to collect sales tax for your state and pay that to the government. If you are discovered to be doing this without a license and collection of these taxes, it can lead to the payment of back taxes. Depending on how long you've been operating before you are discovered, this could lead to quite a lot!

Food and Alcohol

If you plan on selling on food or alcohol, you will most certainly need a business license. The government highly regulates the selling of food and alcohol for health and safety reasons. Would you want to buy food from somebody off the street? As long as you have a clean area to work from and are willing to have your home inspected, getting a license to sell food shouldn't be too difficult. Consequences of serving food or alcohol without a license include losing your business, fines and jail time.

Children

The safety of children is paramount in our society, and most local governments around the country have laws about daycare. If you are planning on running a daycare center from your home, definitely look into them. Both certification and a business license may be required to operate a daycare center in your area. You could face fines and jail time, not to mention opening yourself up to civil lawsuits.

Medical Services

If you plan on running any type of medical service from your home, whether it be care of animals or taking care of the elderly in your home, the state will certainly require a business license of some sorts. Just like running a daycare, you open yourself up to civil lawsuits, fines and jail time if you neglect to acquire this license.

Basically, if you suspect that you need a business license to operate your home business, you probably do. Check with your local government before you start any new venture. Even if you think that you can run your business under the radar, you should protect yourself and stay with the laws.

Businesses are usually licensed for a reason. If you operate without one, it only takes one complaint for you to be found and shut down. If that happens, you will lose not only your business and its income, you may be fined or responsible for back taxes. Better to be safe than sorry.

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