When you're running your business from home, having a physical address for the business can seem like an unnecessary expense, especially in this digital age when meetings, communications, and even making a sale often take place virtually.
Some business owners decide to forgo the use of a physical address entirely, while others let their residence double as their business address. If you choose to use a physical address, it needn't be your home address, nor do you have to invest in an outside workspace to get a physical address for your business.
Before we dive into what a physical address can and can't do for your business, let's first address when you absolutely must use a business address. You must have a valid, legal street address to register your business as a limited liability company (LLC), corporation, or limited partnership.
States don't allow LLCs, corporations, or limited partnerships to register using a P.O. box. These business entity types are also required to designate a registered agent (someone available during business hours to accept legal and government documents), and registered agents also must have a valid, legal street address.
While LLCs, corporations, and limited partnerships must register using a street address, there's no rule that says they can't use the owner's home address for that purpose. Sole proprietors and general partnerships aren't required to go through the same formal business registration process as these other entities, and they too, can use the owner's residential address. Using your home address is free, but just because you can use it, doesn't mean you should.
Some of the issues to consider before you use your home address for your business include:
Does your rental agreement or your Homeowner Association (HOA) rules allow you to operate a business from your home? Many HOAs and rental property owners don't allow residents to use the property for business. Clearing your intention to run your business from home with the HOA or your landlord can avoid problems that might arise from a steady stream of packages, business mail, clients, or employees arriving at your doorstep. On the other hand, if yours is a one-person operation, with communication done mostly on the phone or online and little if any mail, packages, or visitors, chances are that your business won't draw any attention, and you probably don't have to notify the HOA or landlord.
Does your municipality have zoning restrictions? Some local governments place restrictions on the types of activities permitted in a neighborhood. Here too, it's best to check with your local government before deciding to use your home as your business address.
How much privacy are you willing to give up? If you use your home address to register your LLC or other business entity type, your home address becomes public record. It will be accessible to junk mailers, irate customers, and pushy vendors. The same goes for putting your home address on your website and other business marketing materials, regardless of your business entity type. Consider the possible effect of making your home address public before you decide to use it.
Will you jeopardize your limited liability? LLCs, corporations, and limited partnerships enjoy limited personal liability for the debts and mistakes of their business, provided they keep their personal and business activities separate. In most cases, you won't risk your limited liability status simply by using your home address for your business, but it's a good idea to designate a separate home office area (and never write personal checks for your business expenses or vice versa) to avoid running the risk of piercing the corporate veil and jeopardizing the limited liability that your business entity provides.
Some businesses might not need a physical address at all. But it's important to remember that, even in this digital age, a physical address can give your company legitimacy and assist in marketing your business.
If you depend on internet search engines to help local customers find you, a physical address can be key. Internet search engines direct searchers to local businesses using the address that appears on websites, digital marketing materials, your digital footprint, and other sources. Without a physical address, your company might not show up in these searches.
Another alternative to having your own physical address is to use the address of a third-party registered agent, if you have one. Keep in mind, though, that registered agents typically limit their responsibilities to accepting official documents, not packages and other types of correspondence. If you're going to be receiving or sending business mail, you'll need an address different from that of your agent.
A business address can serve many needs, from the most basic—a place to receive mail—to a virtual or actual office that provides a number of administrative services.
If you need a place to receive mail and nothing more, the least expensive option is to rent a P.O. box from the United States Postal Service (USPS) or from a mail service company like The UPS Store. These mailboxes come in a variety of sizes and are secured with a key.
The services vary from one company to the next, but in all cases, a P.O. box is a mailing address, not a street address. You won't be able to receive packages that require a signature, and companies like UPS and FedEx won't accept a P.O. box address for deliveries.
If you need a place to receive mail and a physical address for your business, the USPS provides a service that allows you to use the post office's street address as your company's physical address. You can choose the address of any post office, and your mail will be delivered to a P.O. box located at that office.
Unlike the P.O. box option, when you use a USPS street address, you can receive packages at the location (USPS will hold any packages too large to fit in your box). Some states don't permit the use of a USPS street address for official documents such as a driver's license.
A virtual office provides a valid street address for your business, and some virtual offices offer additional services. These include physical meeting rooms, a receptionist, and office equipment such as faxes and printers. Depending on the company and services you choose, a virtual office can scan your mail and send you copies electronically, and even weed out junk mail. Because a virtual office gives you a valid street address, you can use it to register your LLC.
Coworking space is a relatively new offering in the business world that allows companies and individuals to rent small portions of office space in a brick-and-mortar location. Offerings range from renting a desk in a shared room for a day or an hour, to exclusive use of a desk in the same room, or even a private office. Amenities might include meeting and office rooms, receptionist services, phone services, and other office equipment in addition to a valid, legal business address.
As explained above, you must register an LLC using a valid, legal street address. To meet those requirements, you can use the address of your registered agent, a USPS street address, a virtual office, or a coworking space. Which you choose depends upon your budget and your other business needs.
A USPS street address is likely to be less expensive than the cost of a virtual office or coworking space, but it won't provide services beyond an address that you can use to register your LLC and a place for mail delivery.
Opt for a virtual office if your business requires any of these services:
Coworking space is less expensive than renting your own offices, but it still allows you to present a professional polished image to clients and others.
Consider a coworking space (and make sure its offerings meet your needs) if you want:
An internet search will turn up many companies that provide virtual offices or coworking spaces in your community. It's a good idea to compare not only prices but also the services each offers and to check with current customers to inquire about their satisfaction with the services.