Bill had a career at General Motors in Detroit. He now sells special fishing lures by mail order from his home in the Traverse City area. Kay retired from Ameritech in Lansing. She now has her own business in Leelanau County restoring antique furniture in her modernized barn. Art and Fran had owned a popular restaurant in Grand Rapids. They now sell fresh herbs and spices to restaurants in this part of Michigan using their garage as their warehouse.
The idea of being one's own boss has never been more popular. Many local seniors are realizing the benefits of the low expenses, the flexible hours, and the freedom from commuting.
What are the legal requirements for operating a small home business? First, decide if both spouses will be the owners. A sole proprietorship is a business owned by one spouse. Only the one spouse is personally liable for the debts of the business. "Joint marital assets" (the home and investments) are exempt. In a partnership, both of the spouses are the owners and are personally liable for the debts of the business. Therefore, their nonbusiness "joint marital property" can be subject to a creditor of the partnership business. Incorporating a business can provide some "limited liability," but it is often too complicated and expensive for a small business.
If you plan on using a business name, you must register it with the clerk of the county where you will be conducting business. You should not order stationary or advertising, or open up the business checking account, until the registration has been completed.
Complaints about a home business can often be prevented. Check the zoning laws to see if your home is located in a residential or commercial zoned area. If you are located in a residential zoned area, you may qualify for a "home occupation" exception. If your customers or clients will be coming to your home, you may need to comply with other requirements. These include parking spaces, disability access, and display of advertising.
Most subdivisions and condominiums have express restrictions barring all home businesses. Unless your business causes excess traffic, noise, or smoke, or is prohibited by zoning laws or by a restriction, your neighbors should have no other grounds to complain of a "nuisance." Renters should review their leases or check with their landlord.
Ask your insurance agent to review your homeowner's insurance policy. These policies usually eliminate all fire and public liability (such as "slip and falls") arising out of commercial activities in a residence. Coverage for these kinds of losses is available by paying an additional premium. If you are selling a product which might injure someone (used bicycles, for example), it would be advisable to get product liability coverage.
Many business activities require a license or permit. Check with your city, village or township. The Michigan Bureau of Occupational and Professional Regulation is located in Lansing: (517) 373-1253.
Maintain accurate financial and bank records. Keep them separate from your personal records. The kitchen table should not become your records department.
Most important, before you commit your time and money to starting your home business, make sure that there is a real demand for your product or service and that you are capable of filling it. The Traverse City Chamber of Commerce offers free business advice through a program called SCORE. The number is (616) 947-5075.
Credit:
Robert J. Dederichs is a
Traverse City attorney who specializes in business law, estate
planning, and realestate. He has been a part time business law
instructor at Northwestern Michigan
College since 1978. Comments may be sent to ag039@traverse.lib.mi.us
Robert ("Bob") J. Dederichs, Attorney
Traverse City, Michigan, US
FAX: (616) 947-0580
E-mail: ag039@traverse.lib.mi.us
af840@detroit.freenet.org
Faculty Home Page at Northwestern Michigan College:
http://nmc.edu/~bdederic/