Having a home business is a dream for many people. The idea of making your own hours, being in control of your time, and being your own boss is enticing. But, owning a home business can quickly become a nightmare, if you do not have the proper paperwork to make your business legal. Different states will have different regulations when it comes to running a home business, but listed below are the common pieces of paperwork that are required by most home business in the U.S.

Business License: A business license is issued by the city or county clerk’s office. It gives you the authority to run your business in the state that you reside. The business license application form will ask for information such as:

Your business name
The address of the business (even if it is your home address)
Number of employees
Expected gross income
Vehicles used for business purposes
Other information as deemed necessary

Some states will require an application fee prior to being issued a license. In addition, your application will be reviewed before acceptance.

Doing Business As (DBA): A DBA is required to be filed in instances where a business runs under a fictitious name. The purpose of the DBA is to alert the public that you are running a business under a fictional name, but you are the owner of the business. The DBA also gives you exclusive rights to own the name of your business, and no one else can assume that name for themselves. Some states will even require you to file a DBA, even if you are using your full legal name as the name of your business. Be sure to check with your state laws governing a DBA form.

Seller’s Permit and Sales Tax Forms: If you are planning to sell something as part of your business, then you will need a permit to sell these items. The form that you fill out for a Seller’s Permit lets the state agency that works with businesses know exactly what you are selling, so they can determine what types of items will be eligible for sales tax. This holds true for a brick and mortar location, as well as selling items on the Internet from your home. You must also be sure to collect the proper sales tax on your items. When selling items on the Internet, it is usually required that you collect sales tax only on the items sold in your state. Make sure you check with the agency that handles sales tax for your state before starting a business.

Business Bank Account: One mistake that many home business owners make is that they use their personal bank accounts for their business. This can cause many problems when it comes to sorting out business taxes and tracking actual income from your business. It is always best to have a business bank account set up. First set up a business checking account. In order to do this, you will probably need proof of your business’ existence. Your DBA or business license should suffice as proof. Then you can set up a business savings account, if you desire. Banking professionals are very familiar with working with home-based businesses, so they can offer you some great resources and advice when it comes to your business banking needs.

As you can see, running a home business does require you to be accountable for your income and expenses. If you set up your business properly from the beginning, it will be less of headache in the future. In fact, setting up your business properly will make things run much more smoothly than you could ever imagine. It’s worth the effort, and it is the law.