Lots of small business owners, particularly sole proprietors with service businesses, don’t have a unique address for their business. It makes sense: It’s logistically simple and doesn’t cost owners any extra money. For many, using a home address as the business address isn’t a problem. But for others, there are significant downsides and potential legal consequences for doing this. Here are some issues to consider.
Lease and Homeowner Association Rules
Many apartment and condo complexes restrict your ability to run a business out of your home. If you own a condo, check the covenants, codes and restrictions provided by your homeowner association (HOA). If you rent, check the terms of your lease. However just because there’s a restriction, it doesn’t necessarily mean there’s nothing you can do. If your small business is unobtrusive and won’t bother other residents (as is the case with most professional service businesses), you may be able to explain the situation to your landlord or HOA and ask for an exemption.
In an article for Inc., attorney Chas Rampenthal points out that business owners need to be aware of municipal code restrictions. Local zoning laws and home-based business ordinances may restrict your ability to run a commercial operation out of your home. Contact your city and ask if there are any codes that would stop you from using your home address for business operations.
LLCs and corporations should think twice about using a home address for a small business. One of the major benefits of these business entities is limited liability for business debts and activities. However, this protection only applies if you keep your business and personal activities separate. Using a personal address for a business could pierce the corporate veil, making you personally liable for business debts and obligations.
If you use your home address as your business address, that means you need to provide your personal address whenever a customer or a vendor needs contact information. Using your home address may compromise your family’s privacy. The last thing you want is for a disgruntled customer or vendor to be able to show up at your doorstep.
Many clients are pretty accepting of entrepreneurs and consultants who don’t have a unique business address. Still, a distinct business address provides certain benefits that can boost your reputation. Without a distinct business address, you normally can’t list a physical address on your company website, which may concern prospective customers. Prospective customers and clients may not take you as seriously if they can tell that your address is a personal one. In an Entrepreneur.com article, Karen Spaeder points out that having an apartment or unit number in your business address doesn’t sound terribly professional.
Getting a Business Address
There are several low-cost ways to obtain a unique business address. The U.S. Postal Service offers five different sized P.O. boxes for business mail. Fees range based on box size and location, but expect to pay anywhere from $20 to $600 for six months of service.
If you have an LLC or a corporation, be sure to ask the postal service for a real address rather than a P.O. box. For registration purposes, a business address must be a legally valid address—that is, a physical address.
UPS mailbox service offers an alternative to a USPS box. The company allows you 24-hour access to your mail, offers a legal street address and accepts packages from all carriers. It will also hold your mail and forward it to other addresses. Like P.O. boxes, mailbox prices vary but tend to be a little more expensive than USPS options. Contact your neighborhood UPS office for exact prices.