If you’ve read this blog for awhile, you’ve probably heard me harp on the fact that someone starting a home based business should make sure they have the proper licensing in place. This can help keep you out of hot water with neighbors and local authorities in particular.
Some home based business opportunities such as ITV Ventures which was mentioned in this post, don’t require the business owner to have a license. The requirement for licensing is particularly lax in Network Marketing home based businesses. Does that mean you shouldn’t need to obtain business licensing in those cases? I think whether or not you’re required to have business licensing in place, having the proper business paperwork can go a long ways in helping your business to run better. Here are a few reasons.
Business Bank Account – In order to obtain a business bank account, you must have the proper licensing in place. No bank that I know of will issue a business bank account without having you produce a copy of your Tax ID / EIN and your business license. At the very least, this helps you separate your business finances from your personal ones. Also, you get some better perks with business accounts, such as access to lines of credit and often a personal banker.
Business Credit Card – Along the same lines, you can get a business credit card only with business licensing in place. A business card can help separate your business credit purchases from your personal ones. Also, business cards often have better rates than personal ones and in the case of American Express, some extra perks.
Liability Protection – If your business is a limited liability company (LLC) or any kind of corporate entity, you get the added value of having a shield against liability in most instances. In these business entries, the business itself is liable rather than the person. In our litigious society, this can provide an extra layer of protection for you.
So whether or not your home based business technically requires business licensing, it’s usually beneficial to have it in place anyway.