Should I Use my Home Address for my LLC? For some owners, it’s a simple decision and doesn’t cost them any additional money. For many other owners, it is not a problem to use their home address; however, there are substantial downsides and/or legal consequences by choosing that route.
Every business has to start somewhere, and for some business owners, that is in their home. Many small business owners, especially sole proprietors with service-based businesses, do not have a unique address for their company. Some business owners have concerns that there could be some confusion about using their home address. What does it mean if your personal bills and your business utilities come to the same address? As long as you aren’t paying your personal bills with company checks, there isn’t an issue. Always remember to only write checks from the LLC bank account to pay for business expenses and profit distributions to the members so you keep from commingling funds.
Depending on your living situation, it could be a problem to use your home address. Some apartment complexes and condo developments do not allow you to run a business out of your home. If you own a condo, be sure to check with your Homeowner Association (HOA), as well as applicable codes and restrictions. If you are a renter, verify the terms of the lease. If there is a restriction, it doesn’t mean there is nothing you can do about it. If you have a business that doesn’t involve dealing with the public and won’t bother other residents, you can try to explain your situation and see if the landlord will grant an exemption.
Business owners also must have an awareness of any potential municipal code restrictions. Laws regarding commercial and home-based businesses may restrict your access. Be sure to contact your city to verify whether there are any local laws in effect that prevent your ability to use your home address for an LLC.
Liability is another topic LLC owners need to consider. One of the major benefits of LLCs and corporations is the ability to retain limited liability for business activities and debts. However, this only applies when you keep your personal and business activities separate. In the event your LLC faces a legal suit, protection from personal liability is important. Using your home address has the potential to put you at risk for “piercing the corporate veil,” which makes you liable for business obligations and debts.
When you have your personal address as your business, you will need to provide personal information every time a vendor or customer needs contact information. This could compromise your family’s privacy. No one wants a disgruntled customer or vendor to show up at their home.
People tend to be more understanding and accepting that a business owner is based at home, but it still takes some time to get past any stereotypical images of someone walking around in pajamas all day. Having a separate business address can provide additional benefits and help maintain a professional reputation. Not having a physical business address on your letterhead or website can concern some prospective customers. Clients and customers may not take you as seriously if they think your address is a personal one.
There is a difference between a business address and a registered agent. A registered agent is someone designated to receive legal and other important documents on behalf of a company. Registered agents are individuals or even another business. All registered agents, no matter what state, must maintain a physical mailing address in the LLC or business’s registered state P.O. boxes do not count as a physical address. The registered agent only accepts legal documents and forwards them on to the LLC contact person, they have no other involvement in the business.
This post originally appeared on the American Express OPEN Forum, where Mashable regularly contributes articles about leveraging social media and technology in small business.