Home Occupation?

[jonathon94]

I am helping a friend of mine out who along with her mother, has an established photography business. While I wouldn't say they are fully professional, as there are only two of them, they shoot with a Canon T2i, and their editing program is PSE (Photoshop Elements). That being said their photos are pretty good and they know enough to take some good shots.

They are beginning to establish a price plan and I was talking with my friend, she told me that she didn't have any form of insurance set in place, which I warned her about. I explained how anything could happen and she needs insurance so it doesn't affect their personal finances too much. She asked if a contract of some type could help with this and I explained that while it may possibly take away from some liability, that still won't prevent someone from trying to sue, in which case they would still have to pay legal fees.

Now here is where my question comes from, I asked her what type of business licence did they apply for, partnership, sole proprietorship, or a Limited Liability company. She showed me the license, and it has on their "Home Occupation" What exactly does that mean? I was never taught that in business class, and a Google search did not bring any relevant results so what exactly is this? What are some issues to watch out for?

While I have this thread started, what would you advice her to do or not to do to minimize liability?

 

[Big Mike]

As far as I can tell, business licenses are usually issued by the local government, so whatever city/county that they are in. So that's where you could look for clarification on what 'Home Occupation' means. Sometimes, there are two different licenses...one is the license for having the business and the other is a permit to operate out of the location (whether a home or a commercial/industrial building).

I'm not a lawyer or an accountant, but when a business owner wants to separate and protect their personal assets, they usually have to incorporate the company. That way, someone can sue the company, but the shouldn't loose their house etc. if the company is bankrupted etc.

I'd suggest that you tell your friend to visit an accountant (and maybe a lawyer) who is familiar with small business in her area. A one hour meeting may be enough to give the the guidance to set up their company properly, which will likely save them time, money and trouble down the road.