COMPLIANCE & LICENSING.
By Kathryn Pomroy
Lots of small business owners, sole proprietors, independent contractors, solo entrepreneurs, and digital nomads with virtual offices use their home address for their business. It makes sense. Using your home address is simple and doesn’t cost you a cent.
While using your home address may be the best choice for you, it may not work for everyone. Why? Because there are significant downsides to and potential legal consequences of using your home address for your business. Sometimes a better option is getting a virtual business address.
Let’s take a look at virtual business addresses, their benefits, and some issues to consider. We’ll also explain the drawbacks to using your home address, and the pros and cons of a PO Box.
What is a virtual business address?
A virtual business address is a real street address at a mail center or in an office building. It’s a place where you receive your business mail and packages, but it’s not a PO Box. A virtual business address relies on the Internet for meetings, document exchange, telephone answering, and video conferencing, so employees, no matter where they’re located, can keep in touch.
If you have a home-based business or if you need an address for your business in another city, you can get a virtual business address. They’re available in 50 states and abroad, and add a little more credibility to your business than using your home address. There are no long-term commercial leases to sign and no strings attached to set one up.
Aside from the name, the fee-based mail forwarding service isn’t actually “virtual” in the way most people would think. You have a professionally-trained provider filtering your mail on your behalf. And depending on who you use, you can arrange for them to do a number of other tasks:
- Most providers scan your mail and then send you virtual copies of all the mail you receive.
- Some providers will weed out the junk, leaving you to decide what to keep and what to throw out.
- With most providers, you can also receive mail no matter where you’re located, which allows you to hop on your computer or smartphone and view your mail anytime.
- Most providers will accept envelopes and packages from all the major carriers, including UPS, DHL, FedEx, and USPS.
Another perk is privacy. A lot of people who run a business out of their home don’t like the idea of giving out their address. Having a virtual business address can save you the worry of having customers or vendors show up at your door.
If you want to send a letter or other business correspondence from your virtual address, you can do that too. Just scan or take a photo of your document, upload it, and enter the address you want it delivered to. Plus, you can set up your virtual street address in any state where you do business, even if you don’t personally do business at that location.
Most services provide the same solutions, but it’s a good idea to shop around for one that meets your needs.
Why you may want a business address
Every business has to start somewhere, and for some, that means starting out of their home. While working out of your home office will save you the cost of renting a commercial space, there are some things to think about, like privacy concerns, zoning restrictions, professional presence, and liability issues.
Let’s take a look at why you may want a business address.
Privacy concerns
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 your business’s contact information. You may have to use your home address on your website or even on your business cards.
While some home businesses opt out of using an address online, you typically must provide an address on your business records. Unfortunately, using your home address can compromise your family’s safety and privacy. With Google and Bing Maps, everyone can easily find where your home is located, and the last thing you want is for a disgruntled customer or vendor to show up at your doorstep.
Lease and homeowner association rules
Many apartment complexes and condominiums 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 Home Owners Association (HOA). If you rent, look over the terms of your lease.
Just because there’s a restriction 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 receive an exemption.
Zoning restrictions
Local zoning laws and home-based business ordinances may also restrict your ability to run a commercial operation out of your home. This is usually due to zoning laws that seek to maintain the residential character of a neighborhood. Contact your city and ask if there are any codes that would stop you from using office space in your home for business operations.
Some zoning boards restrict the right of home-based business owners to build separate structures, and there may be limits on the number of employees you can have. Keep in mind that some regulations don’t allow you to hire any employees who will work out of your home. There may also be restrictions on the percentage of your home that can be used exclusively for your business.
In addition, you may not be able to display advertising signage, and some communities have parking and traffic restrictions that may restrict access to your business. Even noise can be subject to zoning laws.
Liability issues
Although there are no restrictions saying you can’t, limited liability corporations (LLCs) and S or C corporations should think twice about using a home address for their small business.
One of the major benefits of these business entities is a limited liability for business debts and activities. However, this protection only applies if you keep your business and personal activities separate. Using a personal home address for a business could “pierce the corporate veil,” making you personally liable for business debts and obligations.
If you run an LLC and no longer want to use your home address for business, there are several ways you can easily get a business address.
- TheUnited States Postal Service has PO Boxes available for businesses in a variety of sizes. Just make sure to ask for a real address rather than a PO Box address.
- You can pay to use someone’s office to receive your mail.
- You can choose a mail-receiving service for packing, shipping, and tracking packages.
- Instead of the USPS PO boxes, you can use UPS Mailboxes. They offer 24/7 access and will even hold or forward your mail.
Professional reputation
More and more clients are accepting of entrepreneurs and consultants who don’t have a unique business address. However, unless you have a professional business address, you won’t want to list a contact address on your company website for security reasons.
At the same time, many business owners with home offices risk losing sales by making people search for contact information — or by not providing it at all. The name of your business, a real street address, phone number, and email address should be onevery page of your website.
That’s because visitors will arrive at your site via search engines, and you want to make it easy for Google to find your physical address. With a physical address on every page of your site, Google can better send traffic to your website and business when your potential customers perform a local search.
Sending out invoices, contracts, or statements of work with your home address listed may also have customers questioning your professional status. If clients see that your business is run out of your home, they may hesitate to trust that your business is an established, long-term endeavor.
Registered agents
Many business owners who chose to use their home address or don’t want to use a mail service but still want to preserve their privacy opt for registered agent services. A registered agent can receive legal documents, like a summons, lawsuit papers, or a subpoena — papers you may not want delivered to your home. Every state requires that a company’s registered agent have a physical mailing address in the state where the company is registered. A PO Box won’t count as a physical mailing address.
What about a PO Box?
A Post Office Box, or PO Box, from the US Postal Service helps you keep important documents confidential and your home address private. You won’t have to worry about packages and mail being delivered when you’re not home, and a PO Box also allows you to separate all of your business mail from your personal mail.
To find a PO Box near you, simply go the USPS homepage and look for the “Reserve a New PO Box” tab. You can then search by zip code or address to find the nearest location. You can reserve a United States Postal Service (USPS) PO Box with your online account or open a new account at usps.com/poboxes. Once you find a Box that fits your needs and reserve it, print the PO Box application: PS Form 1093. Then take it to your Post Office with two forms of photo ID.
After you complete the PO Box application, submit it at the Post Office, and pay your rental fee via credit card, you’ll get a Box number and two keys or a combination for your Box. If the USPS doesn’t provide mail services to your home, you may be entitled to a free PO Box. Check with your local Post Officeto see if you’re eligible.
A PO Box is affordable and allows you a change of address if you cancel. In addition to the above, a USPS mailing address gets you package notifications, 24-hour access, and text or call-in mail check. If a box or package is too large to fit in your Box, you will receive a notice to pick up your package at the counter during regular business hours.
If you decide to look into getting a PO Box for your business, there are a couple of things to keep in mind. If you’re an LLC or a corporation, you are not allowed to use a PO Box as the physical address you list on your business license. So be sure to ask the postal service for a real address rather than a PO Box. For registration purposes, a business address must be a legally valid address — that is, a physical address or a virtual address.
Also, most USPS offices won’t sign for packages from the UPS or FedEx. However, if your PO Box is eligible for Premium PO Box Services, packages from any shipper can be held at a Post Office location.
And if you’d rather not stand in the long lines at the Post Office, you can set up automatic renewal payments online to pay your PO Box fees using a credit or debit card. Just log into your account and go to Manage PO Box.
Something else to keep in mind is if you already have a PO Box for your personal mail, you can switch to a business account online. However, if you have a business account, you cannot switch to a personal account. You’ll need to apply for a new personal PO Box.
Aside from the convenience of a PO Box, there are a number of other services you can get for your business such as Caller Service. This is for businesses that have more than five PO Boxes or receive more mail than can be delivered to the largest Box. You’ll be notified to come pick up your mail during business hours if your packages can’t be delivered to your Boxes.
Another service is called Reserve Service. This is designed for business owners who send out lots of promotional mailings. This service helps you distinguish between promotional mail and standard business mail.
A PO Box is a good option for many small business owners who don’t want to use their home address as their business address. Your mail is secure, you can access your mail during USPS business hours, there are a range of mailbox sizes to choose from, and the rental periods are priced fairly.
So when considering whether a PO Box is right for you, consider the benefits as well as the limitation to decide if its the best choice for your business.
Getting down to (virtual) business
While using a home address may work out great for you, the independent contractor down the road may decide otherwise. No one choice is best for everyone and you have to carefully weigh your options before deciding.
A virtual business address may provide the security and privacy you need so you don’t have to worry about vendors or customers showing up at your home unannounced. Getting a PO Box with a real address also works, and they come in a range of sizes and rental costs are reasonable.
If you want your business to look professional, a real street business address will create more credibility, as well as protect your privacy and personal information. And you can still enjoy the freedom that comes with working out of your home.Rate
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About the author
Kathryn is a journalist and storyteller. She’s a sucker for great content that matters, pushes the boundaries beyond her core responsibilities, and actually enjoys making challenging, complex ideas and concepts understandable and appealing to diverse audiences. She was as a newspaper editor, a senior writer at two advertising agencies, proofreader of college textbooks, and journalism teacher. Kathryn has a working knowledge and years of experience in finance and financial concepts, investments, markets, and more. She lives in Duluth, Minnesota with her family and her dog, Nellie. Read more