How to report someone running a business from home

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I have an idea for a business I can run from home. Are there any property law issues I should consider? Yes, plenty. The first thing to find out is whether there are any legal restrictions on using your home for business purposes.

What sort of restrictions could there be? Where do I start looking? The property may be affected by restrictive covenants that prohibit certain uses, and there could be an outright prohibition on business use. Your neighbours are likely to be the ones with the right to enforce these covenants against you and they might be able to get a court order to stop you running your business from the property. The title to the property (held by the Land Registry) should have details of any restrictions and you should check what you were provided with by your solicitor when you bought the property. Even if there aren’t any restrictions on the title, there is a risk that your use could disturb neighbours and cause a nuisance, for example, by noise caused or increased visitors to the property. From a legal perspective, something has to be more than irritating before it is a nuisance and must actually cause damage or interfere with someone’s enjoyment of their property. If the nuisance was severe enough, your neighbours could take you to court.

I live in a flat but I own the leasehold. Does that mean I can use the flat for whatever I want? The short answer is no, you can’t. Your lease will govern how you can use the property so you will need to check whether it contains any restrictions. There may be an absolute prohibition on business use, or it may say that you need to seek your landlord’s consent. Certain types of leases (including the widely used assured shorthold tenancy or “AST”) prohibit business use. Running a home business in these circumstances would be a breach of your lease and there would be a risk of your landlord trying to terminate your tenancy.

Do I need to tell my mortgage lender? Residential mortgages usually prohibit using the property for a business, so you need to check the terms of your mortgage and if necessary, ask for consent from the lender. Breaching your mortgage could risk the loan being terminated and being repayable immediately.

Am I likely to need planning permission? It depends on whether you are intending to make any alterations to the property. If you are planning on making structural changes or constructing any extra buildings, you are likely to need planning permission.

What if I am not making any alterations? Will running your business materially change the use of the property? The answer is likely to be yes if your property will no longer be used mainly as a private residence or your business will increase traffic, involve activities unusual in a residential area or disturb your neighbours. The key test is whether your house is still mainly a home or whether it has become business premises. If it has, you may have to make a planning application for change of use. If you are in any doubt, you can apply to the local council for a Certificate of Proposed Lawful Use or Development in relation to your proposed activity, to confirm that it is lawful. The Planning Portal has some helpful links.

Will I need to change my buildings and contents insurance? You must consider it. Check the terms of the policy, because if you don’t, there is a risk that your building and contents insurance could be invalidated. If the policy prohibits business use then you will need to ask for consent from the insurance company. Depending on the nature of the business, you may also need to consider employers and/or public liability insurance to deal with employees or third parties, for example, covering the risk of them injuring themselves in the property.

Will my local authority need to know? That will depend on the nature of the business and the number of people that you are planning to employ. For example, businesses related to child care, food production or hotel/B&B businesses are likely to need specific licences. The government website has a “licence finder” tool that you may find helpful. You may also need to comply with relevant health and safety and equality legislation.

Will it affect my council tax? It may. Businesses are liable for business rates rather than council tax. If you work from home, depending on the level of use, the part of the property used for the business may be liable for business rates while the remainder of the property remains liable to council tax. You can get advice from the Valuation Office Agency.

Are there any other useful websites? See the gov.uk page on home business.

Matthew Lucas is a solicitor in the Real Estate team at King & Wood Mallesons SJ Berwin

How to report someone running a business from home

Dealing with an untrustworthy business or contractor can lead to a dead end with frustrating results. Of course, paying for services from any business carries a certain amount of risk, but those risks are usually less if the business is operating under proper permits and licenses. A business license gives customers some reassurance that the contractor or company they have chosen to work with is legitimate and trustworthy. If you discover that the business you are dealing with is unlicensed, there are several options you can take to report it.

Check to see whether the business is truly unlicensed. Enter “Department of Licensing” and your state’s name in your search engine. There should be a listing for a government department that regulates and lists licenses and permits. Click on this department, then look for a search option on its web page that allows you to type in the name of the business to see whether it is licensed.

Report an unlicensed business to the Better Business Bureau (BBB). Enter the BBB website by clicking on the link at the end of this article. On the upper left corner click on the “For Consumers” option. Click on “File a Complaint.” There will be a short questionnaire involving the business you are reporting and your specific complaint.

Report unlicensed contractors using a separate option within the BBB website. Click on the “For Consumers” option. Under “Programs and Services” choose and click on the option titled “Unlicensed Contractors.” This will connect you to a page where you can click on “Report Unlicensed Activity Here!” Clicking on this option brings up an email pop-up that allows you to email a complaint to the BBB.

Contact your local Department of Consumer Affairs. Enter “Department of Consumer Affairs” and your state’s name on a search engine. An official government website should show up in the listings. Click on this site and follow directions for reporting an unlicensed business or contractor.

How to report someone running a business from home

Running your home business without a license can be a serious offense. Government treats business differently than individuals, and depending on the severity of the offense, running your business without a license can result in paying back taxes, paying fines and even enduring jail time. Here are a variety of factors to consider when deciding whether or not you should get a license for your business.

Local governments usually have parts of town where business can’t be conducted. This is usually a matter of traffic. If your business plans to have a lot of customers coming in and out of your home, or if you are planning on getting a lot of deliveries, there’s a good chance that you will require a license for that business. The least consequence for violating zoning laws is having your business shut down. If you’re not as lucky, you could face fines or jail time!

Sales Tax

If you are selling products to customers, you may be required to collect sales tax for your state and pay that to the government. If you are discovered to be doing this without a license and collection of these taxes, it can lead to the payment of back taxes. Depending on how long you’ve been operating before you are discovered, this could lead to quite a lot!

Food and Alcohol

If you plan on selling on food or alcohol, you will most certainly need a business license. The government highly regulates the selling of food and alcohol for health and safety reasons. Would you want to buy food from somebody off the street? As long as you have a clean area to work from and are willing to have your home inspected, getting a license to sell food shouldn’t be too difficult. Consequences of serving food or alcohol without a license include losing your business, fines and jail time.

Children

The safety of children is paramount in our society, and most local governments around the country have laws about daycare. If you are planning on running a daycare center from your home, definitely look into them. Both certification and a business license may be required to operate a daycare center in your area. You could face fines and jail time, not to mention opening yourself up to civil lawsuits.

Medical Services

If you plan on running any type of medical service from your home, whether it be care of animals or taking care of the elderly in your home, the state will certainly require a business license of some sorts. Just like running a daycare, you open yourself up to civil lawsuits, fines and jail time if you neglect to acquire this license.

Basically, if you suspect that you need a business license to operate your home business, you probably do. Check with your local government before you start any new venture. Even if you think that you can run your business under the radar, you should protect yourself and stay with the laws.

Businesses are usually licensed for a reason. If you operate without one, it only takes one complaint for you to be found and shut down. If that happens, you will lose not only your business and its income, you may be fined or responsible for back taxes. Better to be safe than sorry.

Learn about starting a business, self-employment, and applying for a commercial driver’s license.

On This Page

  • Start a Business
  • Self-Employment and Working from Home
  • Commercial Driver's Licenses

Start a Business

Building your own business from the ground up is an exciting opportunity, but it can also be challenging.

Follow the 10 steps from the Small Business Administration (SBA) to starting a business. You’ll learn about writing a business plan, determining the legal structure of your business, and more.

Avoid common mistakes and get advice from experienced small business owners who want to help. Local SBA partner organizations offer free access to mentors and trainers.

The following tips and checklists can help you with other important parts of the process.

Business Funding Options

Learn about funding options to help start your business, including government-guaranteed loans.

Tax Requirements to Start a Business

It’s important for your business to comply with federal, state, and local tax laws.

Make sure to meet all federal tax requirements for starting a business. Follow this checklist from the IRS.

Each state has additional tax rules when you start and operate a business. Get information on state-level requirements.

Learn more about business taxes, including energy tax incentives that can help you save money.

Business Insurance

When starting your own business, you’ll need proper insurance coverage to make sure you are protected. Find out what kinds of business insurance you’ll need.

Learn about health insurance plans to cover you and your employees. The Small Business Health Options Program (SHOP) is for small employers who have between 1 and 50 employees. Through this program, employers can provide their employees with health insurance.

Hiring Business Employees

When starting a business, you may decide to hire some help. Find information about hiring your first employee, including how to start the hiring process. You can also get information about key federal and state regulations that your business will need to comply with.

Hiring Foreign Nationals

By law, you must only employ individuals who have permission to work in the U.S. The online E-verify system allows companies to determine the eligibility of potential employees. Register your company with E-Verify.

Consumer Protection Law

As a business owner, it’s important for you to understand your rights and responsibilities when it comes to protecting your customers. Get tips and advice on complying with consumer protection laws. These laws cover many business-related topics, including advertising, marketing, privacy, security, and more.

Self-Employment and Working from Home

You are self-employed if you operate a trade, business, or profession either by yourself or with a partner.

Find out the basics of self-employment to help you succeed in the small business world:

    – Explore opportunities and get tips to help you succeed. – Learn about filing requirements for the self-employed, reporting responsibilities, and more. – Explore coverage options for the self-employed. covers how to report your earnings when you file your taxes.

Work from Home

Are you thinking about basing your business out of your home? The Small Business Administration's 10 Steps to Start Your Business includes the licenses and permits you need to run a home-based business.

Home Office Deduction

If you use a portion of your home for business, you may be able to take a home office tax deduction.

Work-at-Home Scams

Learn what to watch out for to avoid work-at-home scams. In one common scam, you may be tricked into paying to start your own internet business. These scammers will keep asking you to send money for more services related to this fake business opportunity. To file a complaint about a scam, contact the Federal Trade Commission (FTC).

Federal Government Telework Guidelines

If you’re a federal employee looking for information on teleworking, visit www.telework.gov.

Note: The federal government never charges a fee for information about, or applications for, government jobs. You can search and apply for federal government jobs for free at USAJOBS.

Commercial Driver's Licenses

A commercial driver's license (CDL) allows someone to drive vehicles used for business, like tractor trailers and buses. State motor vehicle agencies issue CDLs to drivers, if they pass state tests. Apply for a CDL with your state motor vehicle agency. States determine the:

  • Application process
  • License fee
  • License renewal cycle
  • Renewal procedures
  • Reinstatement requirements after a disqualification

States issue classes of CDLs. The classes determine the types of vehicles that a CDL holder can drive. The Federal Motor Carrier Safety Administration (FMCSA) sets requirements for motor carrier companies and the state motor vehicle agencies.

Do you have a question?

Ask a real person any government-related question for free. They’ll get you the answer or let you know where to find it.

In many cases, operating a business from your home is not legal. Laws in most cities and towns in the U.S. and most developed countries severely limit the locations and under what conditions businesses may operate.

But if every illegal home business in America were shut down, millions of businesses would be impacted, the economy would grind to a halt, and the country would fall into a massive recession, with ripple effects sending tens of millions into joblessness.

Furthermore there are huge advantages to running a business from your home, including saving a lot of money. I started most of my businesses in my home and sometimes I had employees working in my home. So you want to carefully weigh the pros and cons to decide if a home business location will work for you.

Running a Business Out of Your Home Is Part of the Fabric of American Commerce

But that doesn’t mean that town bylaws and zoning created by zealous and anti-business politicians can’t make your life miserable and in some cases shut down your business.

Many localities do not permit any businesses to be operated in residential neighborhoods without a specific variance, which many zoning boards are very reluctant to grant except under extenuating circumstances. Often, variances are only given after an extensive public hearing, including invitations for presentations of objections by all nearby residents.

Just because there are already some businesses operating in your neighborhood does not mean that your neighborhood is zoned commercially or that you will easily obtain a variance. Many businesses currently operating in residential neighborhoods were “grandfathered in,” meaning that they were in operation before the zoning laws took effect and were therefore almost automatically granted variances.

Most towns and cities have various zoning districts allowing different types of homes and businesses. Usually in any one town many businesses have successfully obtained variances allowing an exception to zoning in their district, but there are plenty of other businesses that did not successfully receive variances. There are still other businesses that did obtain variances but only after agreeing to certain changes in their plans (such as a smaller building) or limits on their operations (such as no business after 9 p.m.).

Is It Legal to Run Your Business From Home?

So before you start your business you should determine whether your planned business can be legally operated out of your home. If it can’t, then you need to make a decision. Should you proceed anyway? Should you try for a variance? Or should you try to operate quietly under the radar and take your chances?

Local government officials do not inspect homes to see whether you have a small business office tucked away in a small corner of your house. However, if a neighbor complains, then the building inspector is obliged to enforce the zoning ordinances. Furthermore, hanging out even a small sign, having commercial vehicles on the property, putting in additional parking spaces, or having a lot of client or employee traffic is likely to trigger a complaint even if you have friendly neighbors.

If your business is going to involve heavy truck or car traffic, then you also need to consider the safety of your neighbors. I remember one business property I considered buying in a residential neighborhood in South Boston had a commercial variance, but the variance prohibited any truck traffic after 2 p.m. in the afternoon because of the potential hazard to children attending a nearby school.

Running Your Business From Home: Takeaways You Can Use

  • Home-based small businesses are a crucial part of American society.
  • Investigate town bylaws and zoning regulations carefully.

Are you looking for a home based business idea?

See my article, 42 Home Based Business Ideas You Can Start Today. This article presents my best ideas for starting a business in your home plus my insight on each idea.

Also consider my longer and most popular article, The 300 Best Small Business Ideas. This comprehensive multi-page article offers expert advice on every single business idea. Includes home based, online, steady income, low cost, product and service ideas. Many of the ideas in this long article can be started part time.

Start Streaming the Courses on BusinessTown

Learn how to start and run your business by watching the many courses on BusinessTown including Start-a-Business 101, How to Create a Business Plan and How to Find a Business Idea. You can try BusinessTown for free.

How to report someone running a business from home

About Bob Adams

Visit Identity Theft Central if you think someone stole your identity and used your Social Security number for employment or could use it to file a tax return. You can also visit Taxpayer Guide to Identity Theft.

Report Tax Fraud

We don’t take tax law violation referrals over the phone. Use Form 3949-A, Information Referral PDF if you suspect an individual or a business is not complying with the tax laws. Don’t use this form if you want to report a tax preparer or an abusive tax scheme.

We will keep your identity confidential when you file a tax fraud report. You won’t receive a status or progress update due to tax return confidentiality under IRC 6103.

Tax fraud includes:

  • False exemptions or deductions
  • Kickbacks
  • A false or altered document
  • Failure to pay tax
  • Unreported income
  • Organized crime
  • Failure to withhold
  • Failure to follow the tax laws

You may send a letter instead of using Form 3949-A. Include as much information as possible in your letter, including:

  • The name and address of the person or business you’re reporting
  • The individual’s Social Security number or the business’ Employer Identification Number
  • A brief description of the tax fraud you are reporting, including how you became aware or obtained the information
  • The years of the suspected tax fraud
  • The estimated dollar amount of any unreported income
  • Your name, address and telephone number.(You are not required to identify yourself, but this information is helpful to us.

To claim a reward for information about tax fraud, use Form 211, Application for Award for Original Information PDF .

Report Other Types of Tax Fraud

Return Preparer Complaint – Form 14157 PDF
Fraudulent activity or an abusive tax scheme by a tax return preparer or tax preparation company.

Tax Return Preparer Fraud or Misconduct Affidavit – Form 14157-A PDF
Tax return preparer filed a return or altered your return without your consent and you are seeking a change to your account. Send this form in addition to Form 14157.

Tax-Exempt Organization Complaint (Referral) – Form 13909 PDF
Misconduct or wrongdoing by an exempt organization or employee plan.

Report Fraudulent IRS Emails and Websites

See Report Phishing and Online Scams to report fraudulent IRS emails or websites.

How to report someone running a business from home

For anyone who has a love for all things culinary, a personal chef home business could be very rewarding and potentially lucrative.

Personal chefs prepare meals for busy families, small home parties, corporate lunches, and for special events, such as birthdays or anniversaries. Anyplace there is a kitchen; a personal chef can come and prepare meals.

If you’ve considered starting a catering business, a personal chef business is a great way to test the waters or to use your culinary skills without the hassle of starting a catering business, in which the cooking is usually done on a larger scale.

Many personal chefs specialize in specific areas such as gourmet foods or people with special diets. Pay will depend on experience, training, and type of menu requested.

Pros of Starting a Personal Chef Business

This type of venture has very low start-up costs. In most cases, you can use the kitchen supplies and equipment provided by the client.

It's also a gig with relatively low overhead. Generally, anything you buy for the client will be reimbursed through your fees. So all you need is transportation, possibly cooking utensils (items may not be common in kitchens), and marketing costs.

You can grow this business, even part-time, at your own pace through referrals from satisfied clients and word-of-mouth advertising. Build a website that outlines your services and includes testimonials from satisfied clients. Word of mouth is very important for any new business, especially a sole proprietor.

Consider attending local networking groups to meet small business owners who might want a personal chef for their home or a business function. You might offer to cook for a networking event to show off your skills.

It may be worth joining the local chapter of the Personal Chef Association as well or starting a chapter in your area.

Practical Concerns

Professional chef experience and/or training, while not a requirement would be very helpful, and might allow you to charge more. You may be competing with trained chefs, so make sure you can explain why someone should hire you if you don't have a culinary school background.

All food-related businesses carry some liability exposure. In this case, a client could become ill or injured from your cooking. It's worth your time and possible investment to explore how much personal liability insurance would cost you.

It might not be a good choice in tough economic times when people cut back on unnecessary extras and entertainment. But in affluent areas, this might not be an obstacle. As with any entrepreneurial venture, be sure to research your clientele before launching your business.

Getting Started

Decide if you want to specialize in a particular area. For example, will you do only corporate parties and retreats? Will you be a vegan chef?

Complete the paperwork and other tasks related to starting a business, including getting a business license and setting up your business structure.

Create a menu of services as well as a menu of food you cook. Make sure you price your services to take into consideration your prep time, expenses, and your time. Remember, some foods cost more, so you'll need to consider that when providing a bid to a client.

Start recruiting clients. Start with your friends and family. Consider advertising or posting bulletins in your church or other organization, or at local stores. If friends and family have events coming up, offer to provide services for free or at a discount, to get a few big gigs under your belt.

A home-based business is one where your home is also your principal place of business. You run your business at or from home, and have a room or space set aside only for business activities.

Due to COVID-19, many people have been operating their businesses from home and have realised the benefits.

However, running a business from home permanently doesn’t suit everyone. It takes a lot of discipline to establish, run and maintain a home-based business.

Your local business adviser can help you work out whether your home and your business are a good match in the long term.

Work-life balance

When you start a home-based business you need to establish boundaries between work and home life. To separate these you can:

  • set up a dedicated work space
  • have a second business mobile
  • schedule your own business working hours.

These suggestions will help you maintain a work/life balance. It’s important to prioritise balance so you don’t become overwhelmed by your new business. It can also help you to identify which deductions you can claim as part of your tax obligations.

Tax, insurance and registrations

Tax obligations

As with any new business, you must comply with tax obligations. You may need to register for:

Home-based businesses have specific tax obligations that you need to know. You’ll need to know what expenses you can claim and whether you have to pay capital gains tax when you sell your home.

To make it easier for people to claim deductions for working from home due to COVID-19, the Australian Taxation Office (ATO) are accepting a temporary shortcut method for calculating home office expenses from 1 March 2020 until 30 June 2021. This allows you to claim a rate of 80 cents per hour for all additional running expenses.

Understand what deductions you can claim and capital gains tax implications.

Insurance

Running a home-based business is no different from running a business based out of an office. It depends on the type of work you do, but you may need to consider:

  • public liability
  • professional indemnity
  • product liability.

Public liability is important if you have clients that come into your home as part of your business.

Read about the different types of insurance for business.

Licences and registrations

Using your home as a place of business means you need to comply with particular regulations. These can be set by your state, territory and local governments. The registrations and licences you need for your business will vary depending on your industry.

If you have a home-based business, you still need to register for a business name, ABN and required business licences and permits.

Some business activities may impact your surrounding residential area. Depending on your type of business, you may need special permits relating to zoning, signage, noise levels or health issues.

Find the licences and permits you need for your business

Search the Australian Business Licence and Information Service (ABLIS) to find information on the licences you may need.