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Zoning, Laws, and Taxes Affecting Your Home-Based Business

Zoning laws that relate to your home-based business

Zoning laws may be determined by your city or your county, and you should familiarize yourself with these laws so you will be able deal with any issues that may arise. First, you need to determine if your home-based business will have employees or walk-up trade. If not, the zoning questions may never arise. Home-based businesses that deal with the public or have non-family-member employees that work out of their home are more likely to have issues with with zoning laws. Before you start your business, get a copy of your local ordinances from your city or county clerk’s office, the city attorney’s office, or your public library.

Usually the problems arise when neighbors complain, and the zoning boards are required to deal with the complaints. If employees and customers are going in and out of your home, making noise, or parking by the neighbors’ homes, your neighbors will probably bring this to the attention of the zoning commission. Also, your hours of operation may also be an issue if you are open early in the morning or late at night and you disturb your neighbors. If your biggest problem is your neighbors, try talking to them about your business ahead of time to help allay their fears. If you meet with resistance from neighbors, you may be able to negotiate a resolution.

The amount of space your business is uses in your home usually cannot be greater than the actual living area. This is called “space percentage,” and it can lead to a zoning issue. Also, the type of merchandise you are selling may also be restricted in a residential area if you are using chemicals or other items that have an unpleasant odor. Most zoning laws allow a nonpolluting home businesses, as long as any home containing a business is used primarily as a residence and the business activities don’t negatively affect neighbors.

You may also be in breach of zoning laws if you post a sign for your business in your yard, and you should read up on signage laws in your area before you post a sign. You may be able to find other business owners in the area who have similar zoning issues, and you can organize a local business campaign to try to change your zoning laws to make them more favorable to home-based businesses.

In many cities and counties, if a planning or zoning board rejects your business, you can appeal or request a variance from the city council or county board of supervisors. You are more likely to succeed if you have the support of all affected neighbors and other businesses in the area. Because of the prevalance of home-based businesses, some communities are working to amend ordinances that prohibit home-based businesses entirely to allow “traditional home-based businesses” that are unobtrusive.

In an effort to protect residential property values, most subdivisions, condos and planned-unit developments create special rules called Covenants, Conditions and Restrictions (CC&Rs) that govern many aspects of property use. When you purchased your home, you received a copy of the CC&Rs, and you should read them carefully to be sure that you are allowed to operate a business in your home. Rules pertaining to home-based businesses are often significantly stricter than those found in city ordinances and they are more zealously enforced. If you violate these homeowner’s restrictions, the homeowner’s association or property management company could obtain an injunction to stop the business activities, and you could be facing stiff fines.

Legal issues affecting home-based businesses

The first thing you must do is establish a business entity for your new venture. You need to take this vital step for your business to protect yourself from liability issues. You will also need to apply for a business license before you start selling anything if your state requires one. If your state does not require a license, you may be required to have a reseller’s certificate. Research your state’s business laws and get the proper license or certification.

Many home-based business overlook their need for insurance. Unless you are covered already, you will need to provide your own health, dental, and life insurance. You will also need liability and business property insurance to protect your business and its assets if an accident or other unexpected event affects your business. If you have employees working in your home-based business, you must consider whether you will provide health insurance for them. Also, research the OSHA standards to determine if your home-based business is subject to them.

Tax laws that govern your home-based business

Your tax situation will change when you start your home-based business. Because new tax laws are passed every year, you need to hire a good accountant to be sure you are compliant. Even if you have done your own taxes for years, owning a business means that you will need different tax forms and schedules. It is well worth the cost of a good accountant to be sure that your deductions are viable and that you are paying the correct amount of tax.

State taxes regarding deductions, income tax, and sales tax vary from state to state. Contact your state’s tax office for specific information about how taxes are calculated and collected in your state. The Internal Revenue Service can be researched on-line at http://www.irs.gov to learn about the tax laws you will be facing. The IRS Web site provides comprehensive information for small businesses and also lists a toll-free number if you need more help. Spend some time at the IRS Web site until you feel comfortable with the new.

You can also get good information from the Small Business Association site on tax laws and other business issues. Another good resource is Nolo Press that sells books, e-books, and guides specifically about small business tax issues. Their Web site also offers free information. If you plan to hire employees, you need to be aware of employment taxes and other issues that face business owners. You will need to set up a system for federal withholding tax, state tax, and other employment taxes, and you need to report and pay the taxes withheld to the appropriate government agency.

Differences in the Types of Auctions That Take Place Around the World

Auctions are those events where properties or goods are sold to the highest bidder. Auctions are mostly public events, where bidders make a series of bids and purchase a particular item for a high price. During auctions, bidders decide the price of an item rather than the seller. It depends on bidders to decide the amount they would want to pay for a specific item. During an auction, a bid is a proof of a legal binding. Bidders agree to pay the amount that they have bid. In a high profile auction, bidders may have to pay a deposit in escrow accounts or give a proof that they can pay for those items.

Types of Auctions:

Different types of auctions take place around the world. Below mentioned are some types of auctions:

1. English auction:
This is a basic type of auction. In this type, people can see the item and then start bidding. Bidders slowly raise the value of their bid until everyone gives up. The highest bidder is the winner. An auctioneer manages an auction, keeps records of the on going bid and decides the winner. Sometimes, the seller will quote a minimum amount for an item to the auctioneer, below which the auctioneer cannot sell that item.

2. Dutch auction:
In this type, the auctioneer sets a particular price and then gradually lowers the price. People in public will start bidding and later decide which prices are suitable for the item. A seller may use this type of auction to sell large quantities of same products to the public. For instance, a seller may want to sell a large amount of hay and will thus, decide to sell this hay to people for the same amount, once a reasonable price is decided.

3. Silent auction:
In this type, the bidders in public will present their bids in a sealed format. These sealed bids open at the same time and bidder with the highest bid wins. There could be a modification in this type of auction. The bidders are allotted a specific period to bid. They can roam in a room displaying the items, and write their bids on an associated sheet of paper. The bidders are allowed to see bids of other bidders and can choose a higher price for an item. At the end of the allotted time, bidder with the highest bid is the winner.

Examples of Auctions:

Auctions can be of two types either public or private. Sellers may trade any kind of items in both types of auctions. Some areas where auctions take place are:

1. Antique auction: An antique auction consists of a trade opportunity as well as provides entertainment.

2. Collectable auction: In a collectable auction, the seller may put up collectables like coins, vintage cars, luxury, stamps, real estate, and luxury for sale.

3. Wine auction: In wine auction, bidders can bid for rare wine, which may not be available in retail wine shops.

4. Horse auction: Bidders can bid for young horses of the best breed.

5. Livestock auction: In livestock auction, bidders can buy pigs, sheep, cattle, and other livestock.

The other examples of auctions may not be public. These auctions are for bidders from corporate levels. Some examples of private auctions are:

1. Timber auction
2. Spectrum auction
3. Electricity auction
4. Debit auction
5. Environmental auction
6. Auto auction
7. Electronic market auction
8. Sales of business auction

Bidders in an auction need to examine the items displayed and decide an appropriate price for an item. Thus, auctions help buyers in getting the best deals and in gaining better profits for sellers.

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Real Estate Auctions – The New Land Rush

On a sunny afternoon in Florida, an energetic crowd gathers on the lawn of a high end luxury estate. A loud and eager banter between an auctioneer, a group of bidders and bidder assistants fills the air. For several minutes the auctioneer asks for the next highest bid and the bidders respond. Suddenly the bidders grow silent. The high bidder holds his breath in anticipation of winning the auction. The auctioneer calls for one more bid. In a loud clear voice which rolls over the audience he says, “Fair warning, last chance” the auctioneer pauses, “SOLD!” And in less than 10 minutes another multimillion dollar estate has changed owners.

Successful real estate auctions like the one above are happening all over North America and the Caribbean. Recently real estate auctions have been on the rise, the increase in popularity is partly driven by growing inventories and fading buyer confidence. Properties that were selling in weeks using traditional methods are now languishing on the market unable to attract buyers even as seller’s lower prices. Many say the real estate boom is over but savvy buyers and sellers are profiting from real estate auctions.

Real Estate Auctions Work in Up or Down Markets.

Regardless of trends or market cycles, real estate auctions provide an open and transparent process for buyers and sellers. Properly conducted real estate auctions attract ready and willing buyers and motivate them to act now.

The auction method removes the “wait and see” attitude which serves to further depress real estate values. Buyers are always concerned about overpaying. Buyers gain confidence with their purchases at real estate auctions because they can see what others are willing to pay.

When market demand is high and inventories low, real estate auctions can deliver selling prices well above what a willing seller would have accepted in a negotiated private treaty sale. In good selling climates many property owners using traditional real estate methods; negotiating with one buyer at a time, leave thousands of dollars of equity on the table. During up markets real estate auctions are the best way to establish top market price.

Evaluating Your Real Estate for Auction

Not every property or seller for that matter makes a good candidate for auction. First of all sellers must be ready to sell now and for the current market value. Also a real estate auction will not fix problems caused by a downturn in market value of your property, if you owe more than a willing buyer will pay, be prepared to come to closing with your check book.

Properties that do well in real estate auctions have a high uniqueness factor. Ask your self, “What makes my property different from most others?” Maybe you own a resort property or high end luxury home, commercial properties and land do very well at auction. Real estate auctions thrive on uniqueness. If your property is like everyone else’s, the best thing you can do is offer the most competitive price.

Most importantly sellers must be reasonable about setting a minimum bid. A seller must look at the lowest, most current comps and price below that to generate the interest and urgency necessary for a successful real estate auction. Once the auction begins and qualified bidders start competing against one another you can watch the selling price increase.

Locate a Qualified Real Estate Auctioneer

Start by checking with the National Auctioneers Association, the best real estate auctioneers belong to this organization. These real estate auctioneers are well trained and adhere to a standard of practice and a code of ethics. Many attend the annual International Auctioneers Conference where the latest techniques and innovations in the real estate auction industry are presented.

Find out if the company you are interviewing is a full time real estate auction firm. Many real estate agents are getting auction licenses yet have no experience with the auction method of marketing. Conducting a successful real estate auction is nothing like (private treaty) traditional real estate sales. Go with a real estate auction pro.

You’re probably better of with an auction house that specializes in real estate auctions. There are many qualified auctioneers who have generations of experience selling personal property; furniture, dishes, lawn equipment and the occasional rare painting. Selling real estate at auction is a complex matter that should only be attempted by full time experienced real estate auction professionals.

Commissions and fees may vary, sellers must pay all marketing expenses up front and buyers typically pay 10% of the sales price to the auctioneer of which a share goes to participating real estate agents.

Types of Real Estate Auctions

Auctions are effective because they create a seller’s market. Professionally conducted real estate auctions create urgency, a reason to buy today and competition for the property. Terms and conditions of sale are established ahead of the auction. Real estate auctions will follow one of these three approaches:

Absolute Auction

The property is sold to the highest bidder regardless of price- using this process often returns the highest sale price.

Minimum Bid Auction

Seller agrees to sell at or above a published minimum bid price – this method is useful for internet auctions.

Seller Confirmation or Reserve Auction

With a reserve auction, the seller “reserves” the right to accept or decline any bids usually within 48 hours of the auction. Reserve auctions are used when there is a lien on the property from a lender or a court ordered sale with a minimum selling price.

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