Several types of businesses can be operated from your home, but ignoring basic legal issues can turn your business opportunity at home into a nightmare. Federal, state, and local regulations should be considered before your home-based business is launched.

Every home-based business is required to file federal income tax returns, as well as, forms for the costs of home depreciation and home office expenses. On-line tax services make this task less expensive then using a tax preparer and these services compute the necessary calculations and are easy to use. The on-line tax services have programs designed specifically for small home-based businesses. Attempting to negotiate your own way through the rules and regulations of the Internal Revenue Service can be a nightmare that comes back to haunt you with penalties based on incorrect calculations and interpretations. Violation of federal regulations could turn your opportunity at home into criminal charges so it is vital that these are not ignored.

If your home-based business uses independent contractors or has employees than you must also file forms with the Internal Revenue service reflecting any payments and with holdings to these persons or entities.

Every home-based business is also required to file state income tax forms. If some of your income comes from out of state, this should be separated from in-state income as your tax form will request this differentiation. If you use an on-line tax service for your federal income tax return, your state return is often included for the same fee. While generally not applicable to home-based businesses, you should ensure that you are not required to pay sales tax or excise tax. Most states do not require payment of business personal property taxes but this should be discussed with a tax preparer. If an on-line service is used, it will likely indicate the necessity to pay such a tax. On-line tax services place a business opportunity at home within reach of anyone who can read.

Except for child-care, most home-based businesses are free from state regulation, including licensing. States will generally license professionals but these licensing regulations rarely apply to a business opportunity at home.

Some localities apply a home occupation tax so you should check out the locality where you live and see if they have such legislation that allows such a tax. Further, local zoning regulations and other codes should be checked to see if they are applicable to your home-based business. Zoning regulations can prohibit traffic, advertising, and the external appearance of your home or home-based business. If you expect several customers to travel to your home-based business and park in your neighborhood, you may wish to reconsider renting a space to avoid violating zoning restrictions.