Running a business from home has its risks – and one of them is running afoul with the law. One of the common mistakes of home-based entrepreneurs is thinking that local regulations do not apply to them. After all, they are just operating their businesses from their homes. They don’t have storefronts or any visible indication that they are running a business.
Alas, sometimes the long arm of the law can reach you even if you are just working in the comforts of your home. Just like what happened to a popular YouTube video blogger Justin Chandler, who was cited by authorities in Georgia for violating county codes for running a business.
According to AJC.com, the county issued a “notice of violation” to Chandler for “running a business out of a home without a business license.’
The video blogger (vlogger), whose YouTube screen name is KOSDFF, has been uploading videos on YouTube since 2012. His videos have generated more than 155 million views, and his channel has 994,000+ subscribers as of this writing. In a video he posted on YouTube complaining about the violation notices, Chandler asked the question:
“This extremely unique and rare scenario poses the question: [Does] filming and uploading YouTube videos from your home constitute the home as a business?” he said. “Does it matter how many views I have or how much income I make from it? Because to be honest, I do the same thing millions of other Americans do.”
Warning: use of profane language
These are valid questions. I bet that many YouTubers, even other home-based business owners, also are asking these same questions. According to the IRS,
“Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.”
In order to make this determination, taxpayers should consider the following factors:
- Does the time and effort put into the activity indicate an intention to make a profit?
- Does the taxpayer depend on income from the activity?
- If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
- Has the taxpayer changed methods of operation to improve profitability?
- Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
- Has the taxpayer made a profit in similar activities in the past?
- Does the activity make a profit in some years?
- Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?
The above may pertain to taxes, but likely that local governments’ definition of what a business is also cover the above points. Go to your local county and ask about requirements for running a home-based business to reduce your chances of getting fines and even court litigations.
Know the licenses and permits that you need to get and other regulations that you need to follow. If your goal from the very start is to start a business that will grow and become profitable, set up your business properly and be sure that you have followed all the legal requirements. Sure, you may save yourself some money and time if you don’t register or legalize your business, but the headache and cost, when caught, is not worth it.
>> RELATED: Zoning Laws and Your Home Business
Then make nice with your neighbors. As Chandler’s experience has shown, your neighbors can make or break your home business!
Here’s the deal: your local government will not issue your home business a violation notice unless someone complains. In the case of Chandler, the local TV network reported that the local county authorities visited him “after a neighbor complained of the noise and heavy traffic.”
Local authorities normally enforce the zoning rules for home business only after someone complains. Neighbors can complain about the noise, too much traffic coming and going to your property, even too many deliveries. Review how you do things and try to look at how you operate from the perspective of your neighbors to find anything that they may object to. How many people are coming and going to your property? How many delivery trucks arrives in your house every day? What is the noise level? Do you have any signage, poster or sticker that may give an indication that you are running a business?
Unfortunately, some neighbors can be very unreasonable, or think it is their duty to report anything that local rules do not allow, including running a business from home. I had a previous neighbor who reported us to our homeowner’s association for putting a sticker of our website address in our car! You just never know sometimes what other people are thinking.
So what’s the lesson from this YouTube vlogger’s experience? If you want to avoid headaches like the local county officials knocking on your door, be sure to file all the legal papers, get the licenses and permits that you need and. And most importantly, be nice to your neighbors!
Category: Challenges of Working at Home