To start a business from home, check your local zoning first, then choose a structure, register, get your tax IDs, licences and insurance, and set up a workspace that passes the IRS home office test. Running it from home doesn't exempt you from zoning, and the home office deduction only counts space you use regularly and exclusively for the business.
Here's the catch. A desk in the corner of the lounge that the family also uses doesn't count for the home office deduction. The IRS says that if the space is merely appropriate and helpful for your business, the expenses can't be deducted. It has to be used regularly and exclusively, and your home has to be your principal place of business.
Start with zoning, not the logo
Your business location decides which taxes, zoning laws and regulations apply to you. Zoning ordinances can restrict or ban specific kinds of business in an area. The SBA says you may face fewer restrictions from a home base, but zoning can still apply, and it's controlled locally, so the people to ask are your city planning department.
I'd check this before you spend anything. A quiet online business is a different question from one with customers arriving at your door, and only your local rules can tell you which is fine where you are.
The SBA launch list for a home business
- Pick your location. Here, that's your home, so check zoning.
- Choose a structure. A sole proprietorship is automatic but leaves you personally liable. An LLC protects owners from personal liability.
- Choose and register a business name.
- Get your federal and state tax IDs.
- Apply for licences and permits.
- Open a business bank account.
- Get business insurance.
The SBA also offers free counselling if you'd like someone to walk through this list with you.
Does your space pass the home office test?
| Your set-up | Does it qualify? | Why |
|---|---|---|
| A spare room used only for the business | Likely, if it's your principal place of business | Regular and exclusive use |
| The dining table you also eat at | No | Not exclusive |
| A garage, studio or barn used only for the business | It can | Free-standing structures count if used exclusively and regularly |
| A room you use regularly for client meetings while working elsewhere too | It may still qualify | Substantial, regular use for meeting clients or customers |
| A space that's simply handy for business | No | Merely appropriate and helpful doesn't count |
The deduction is open to homeowners and renters and applies to all types of homes. You've then got two ways to work it out: the simplified method, which multiplies a prescribed rate by your office's square footage, or the regular method, which uses your actual expenses based on the share of your home used for business. An accountant can tell you which suits your figures. Either way, the test comes first: a room that fails the exclusive-use rule can't be rescued by the method you pick.
Tax once you're trading from home
Self-employed people pay self-employment tax, which is fifteen point three percent as of October 2026, and usually make quarterly estimated payments. That rate covers your Social Security and Medicare, including the part an employer would normally pay for you. Keep your business spending in its own account from day one. A tool from my list of accounting software for the self-employed makes the quarterly sums far less painful.
Get found locally without a shopfront
If you serve customers in your area, verify your business on Google so you control your Business Profile. Google says businesses with complete, accurate information are more likely to show up in local results. For a home business with no shopfront, that profile does a lot of the work a sign over the door would.
Your first-month order of jobs
- Check your local zoning with your city planning department.
- Choose a structure and register your business name.
- Get your tax IDs, licences, permits and insurance.
- Set up a workspace that meets the regular and exclusive-use test.
- Verify your business on Google if you serve a local area.
Pick a business that suits your home
Not every idea works from home. Before you commit, ask three questions: will customers or deliveries come to the house, can you give a room over to the business, and does the work need a licence or permit? If you want a business that runs from a laptop with no visitors at all, my guide to starting a virtual assistant business from home is one route that keeps things simple.
My verdict
I'd check zoning before you buy anything, register before your first sale, and set aside one room, or a garage or studio, that's used only for the business. Skip claiming the kitchen table. It won't pass the exclusive-use test, and it isn't worth the headache.
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Frequently asked questions
Do zoning laws apply to a home business?
They can. The SBA says you may face fewer restrictions from home, but zoning still applies and is set locally by your city planning department.
Can renters claim the home office deduction?
Yes. The IRS says it's available to homeowners and renters and applies to all types of homes.
Does a desk in my living room count as a home office?
Not if the space is also used for other things. The IRS needs regular and exclusive use, and space that's merely appropriate and helpful doesn't qualify.
Can a garage or studio be a home office?
Yes. A separate free-standing structure such as a studio, garage or barn can qualify if you use it exclusively and regularly for the business.
What are the two home office deduction methods?
The simplified method multiplies a prescribed rate by your office's square footage. The regular method uses actual expenses based on the share of your home used for business.
Should a home business verify its Google Business Profile?
If you serve a local area, yes. Verifying gives you control of the profile, and Google says complete, accurate information helps you show up in local results.
