Many new small business owners stumble across this question "can I use my home address for LLC?" It's a legit question, especially for those who do not have another physical address to list for their place of business.
The answer is simple - but at the same time, there are a few considerations you will have to remember. Read on in order to find out what they are.
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Legally speaking, yes, there should be no reason why you cannot register your home address as a business address for your limited liability company (LLC). There is no LLC requirement that say you cannot do that otherwise. It has several advantages that can help you in the long run as you are starting up your business.
You do have to keep in mind that while it does have a few advantages, it also has some drawbacks. If you are serious about your business and have big plans for future growth, then you might want to refrain from using your home address as your LLC.
There are several reasons why you may want to use your home address as the business address. Here are the most common ones:
If you are still unsure about the path of your business and do not know for sure whether you want to make it a career or not, then you can use your home address as a business address. This way, you will not have to make any commitments for maintaining a business building.
Bear in mind that this uncertainty might make you want to re-think the issue of starting an LLC altogether. LLCs are legal business structures, which you'll have to register with the government. You might want to go through every aspect before deciding to open a limited liability company.
If you are the sole proprietor of a business, with no employees and no one else aiding you with your business, then you may use your home address for your LLC.
For instance, let's say that you are a freelancer, and all the work you do is online. You do not have to physically meet the clients, nor do you have to hire employees to come to your location. In this case, using your home address for your LLC might prove beneficial.
If you use your home address as your LLC, then you will no longer have to pay for leases, building costs, or other separate building establishments. You will have your own home for that, which you are already paying for anyway.
The best part is that you may even deduct certain aspects that deal with your business. For example, if you list your home address as your business address, it also becomes your business tax home. Any taxes associated with your home office and your business expenses may be deducted.
Using your home address for your business has several advantages, among which are included:
If you use your home address as an address for your business, then you may get tax deductions for your home office. Home-based businesses can have their rent, mortgage and utilities deducted for the part used for business. The only condition is for the said part of the home to be used exclusively for work.
New business owners that run their business from a separate location from their home will have various costs to cover. For instance, let's say that you rent a room or building to use as your place of business.
If that happens, then you will have to pay utility costs and rent for a second building as well. By listing your home instead, you remove those extra funds and focus on the matter at hand: providing the product.
Using your home address as your business address also gives you a few lifestyle advantages. If you set your LLC at home, then you will not have to commute to a certain location or wear specific types of clothing. You can set your own schedule with a home-based LLC, which will give you more freedom.
Besides the advantages, there are also some drawbacks for business owners to use their home address as a business address. Here are some issues you may come across:
If you are working from home and do not have an office to meet your clients regularly, then you must find other locations to meet your clients.
For example, you may have to meet with your client at their place of business, or you may have to find another gray area, such as a restaurant or a coffee shop. Most owners of small businesses prefer to use a virtual office for these meetings.
When you start a business and do not have an actual business building with a legit business address, your clients may not take you seriously. This is especially the case when you work in an area of business that puts a great accent on professional image.
In some business areas, this is not really a problem - especially if you are a sole proprietor. However, if you wish to create an image, then an actual office might go a long way. Simply working from home may affect your credibility.
When you start an LLC, you need to choose a registered agent for the business. A registered agent has the role of collecting notices and government correspondence on behalf of your business.
Most LLC owners will take one of their members and give them the role of a registered agent. However, if you are working from home and you are the sole proprietor of your business, this may be tricky.
You'll have to find a third-party individual (i.e., your attorney) to act as your registered agent. Alternatively, you may hire someone from a registered agent service for this purpose.
When you use your own address for the LLC, then your home address becomes public for anyone looking up your business. This can be a privacy and safety concern. If you do not want your collaborators to know where you live, then setting your home address for your business might not be the best move.
After you have decided that you wish to set your personal address as your LLC mailing address, there are certain things that you should do first. Make sure that you follow the steps below:
Not every landlord wants their home address to be visible to anyone you may potentially do business with. Check your lease carefully, and make sure that you aren't violating any terms by listing your address.
Home-based businesses may have certain limitations, depending on the area that you live in. For instance, you may have a limited number of clients allowed to visit you or a limited number of employees. Make sure that you know the zoning laws, as this kind of information may offer you liability protection.
Home-based LLCs are also businesses - and like any other business, you will have to make sure you respect all the licensing requirements for your state. No one will take you seriously with a home business unless you have all your licensing and registration in order.
Bear in mind that aside from state licensing, you might have to research local business licenses as well. Each area has different laws, so you'll have to do your research and ensure you do not miss anything.
Not everyone may benefit from using their home address as their LLC. For instance, when privacy issues are a concern, or when you need liability protection, there are several alternatives to putting in your home address.
For example, you may go for commercial business addresses, such as virtual office spaces, or perhaps some virtual mailbox places.
PO boxes are also a common and beneficial option, as they offer a physical address so that you can get your mail. It is a good option for those who live in a rented home and need an actual mailing address.
If you are running a small business from your home - one that you consider more of a side hustle - then you may list your home address as a business one. It is actually the best option for most people who are just starting out with their business.
Eventually, when the company grows, you can make the move and put in the paperwork to list an actual office. It is safer and more convenient this way.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?