7 Disadvantages of Using Your Home Address For Your Business

Following the Great Recession, new business applications remained flat. One would assume a repeat during last year’s economic recovery as the pandemic winded down. But data from the U.S. Census Bureau from early this year revealed a significant spike in new business applications; a whopping 5.4 million were filed, surpassing the record set in 2020 of 4.4 million (which was up from 3.5 million in 2019). Many of those who filed new business applications lost their jobs during the pandemic and decided to become self-employed.

Disadvantages of Using Your Home Address

Running your own business brings much excitement. But it also comes with numerous decision such as what to use for your mailing address. Indeed, small businesses and entrepreneurs without a storefront or fixed office location must have a business address if you’re forming it as an LLC (which is highly advised). Many default and use their home address. It’s free and convenient. But is that the best option? The answer is no. There are numerous disadvantages associated with using a home address for your business.

Loss of Privacy

If you use your home address as your LLC business address, then your home address is available for everyone to see. Your home address is on your contracts, website, emails, directories, marketing, and other public documents. Malicious actors can use this information to target your personally identifiable information (PII) to steal your identity and savings. Customers and prospects can also unexpectedly show up at your home—whether you home or not. This can pose serious risk. Registering an LLC requires a registered agent in the state in which the business is to operate. The result is that legal notices, tax information, and government documents are sent to the registered agent’s address (viz., home address).

More Mail and Mail-handling Complexity

Registering an LLC requires a registered agent in the state in which the business is to operate. The result is that legal notices, tax information, and government documents are sent to the registered agent’s address (viz., home address). You can experience a significant influx in mail to your home address. The likelihood that something gets lost or accidentally overlooked increases. 

Negative Business Impression

First impressions count. Using your home address on contracts and other prospect- and customer-facing documents makes your business look unprofessional and small. Negative impressions of your brand can impact business.

Constrained by Zoning Ordinances

Some municipalities have ordinances in place that restrict or prohibit homeowners from operating a commercial business (or certain ones) from their homes. Zoning laws include usage, noise, parking, waste management, the appearance of a building, and building features. Home-based businesses may require a license in your city or county. This also includes hours of operation. 

Prohibited by Lease and HOA Rules

Some apartment and condominium communities have documented policies built into their lease and community agreements that prohibit residents from operating businesses out of their owns. Even some single-family home communities place restrictions on in their HOA regulations. 

Loss of LLC and Corporation Benefits

One of the primary reasons erntrepreneurs and small businesses register their businesses to separate their personal assets from their business. Having a business as an LLC protects your personal assets. However, something that often is unbeknownst to the business owner is the fact that the benefits of an LLC (or Corporation) can be lost if a court deems that business and personal activities are intertwined. You could suddenly be personally responsible for business debts, fines, penalties, and other legal and financial obligations. 

Diminished SEO Rank

Being found in the internet search engines is critically important for nearly every business today. Using a home address can diminish your SEO rank and search results—specifically Google My Business listings. 

Virtual Addresses, A Better Option

Because of the above disadvantages around using a home address for a business listing, many entrepreneurs and small businesses are turning to virtual addresses from providers like Davinci Virtual. A virtual address has numerous advantages, including:

• Great brand impression due to an address in a professional business location

• Mail receipt and forwarding

• Lobby directory listing

• Incorporation and registered agent services

• Ability to leverage coworking space, rented meeting rooms, and day offices

Running a business is not an easy undertaking. It is important to put your best foot forward when you start a business and getting a virtual office address is a great first step.

About Patrick Spencer

Patrick Spencer (Ph.D.) is the President and Founder of TIRO Communications that helps companies develop, build, and manage content, customer, advocacy, and demand-gen programs. Included in its offerings is TIRO Cognition Insights, a data analytics tool that enables B2C and B2B businesses to pinpoint what their customers and competitors’ customers are saying and to identify corresponding actionable product, services, competitive, sales, and marketing intelligence.

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Website: www.tirocommunications.com