Even if you work out of your home, most cities and/or counties require you to have a business license and/or permit. Check with your local government municipalities to find out what the requirements are for where you live. Depending on where you live, you should be able to get this understanding from your local courthouse or townhall.

Zoning may also be an issue. Municipal ordinances can be very restrictive about what types of businesses are allowed in a residential district. This also applies if you plan on putting up a sign outside of your home. Again, check with your local government municipalities to find out what the requirements are for where you live.

In addition, depending on how your home doing business is structured--as a sole proprietorship, partnership or corporation--there can be forms to document with the state. The legal structure affects taxes and the liability of the owner and the home business, so its important to follow the appropriate procedures. Contact your states Department of Revenue for filing fees and knowledge.

If you plan to operate your home business under a title other than your own, you will have to register a fictitious title with the county--usually referred to as a DBA filing (Doing Business As). The exceptions to this regulation are corporations and partnerships doing business under the umbrella of the corporate or partnership name.

As a home business owner, you could be required to document estimated taxation returns and pay estimated taxes quarterly. If you have employees, you also have to submit taxes withheld from employee paychecks. Here are some of the taxes you could be responsible for:

Employment taxes -- Federal income taxes, Social Security and Medicare, federal unemployment and state income taxes.

Federal self-employment taxation --Required by those who work for themselves to cover Social Security and Medicare contributions.

Sales tax--Each state requires a sales tax number for any business involved in selling tangible items. Sales taxation is collected, reported and paid to the state either monthly or quarterly.

Unemployment insurance tax -- You are required to pay federal and state unemployment taxes if you have more than one employee on the books for at least 20 weeks in a calendar year, or if they have paid more than $1,500 in gross wages in a calendar quarter.

Again, check with your states Department of Revenue for more information.

A home business qualifies for all of the same tax deductions regular businesses do. In the eyes of the IRS, the only difference between most home businesses and Fortune 500 Companies is their size, and the fact that home businesses might also deduct many household and living expenses.

Owning a home business will entitle you to deduct thousands of dollars in every day expenses. After all, why pay more in taxes than you have to?

Listed below are just some of the items you are allowed to deduct:

* Your car and car expenses.

* Your mileage.

* Your home computer, printer and other office equipment.

* Your home. If youre not a homeowner, you are allowed to deduct the area where your home office is set-up.

* If youre a homeowner, you can deduct a portion of your property taxes and utilities.

* Your travel expenses.

* Your restaurant meals, entertainent, dinner parties.

* You may pay wages, taxation free of cost, to two of your children, if they are involved with the business.

* You might deduct your families health insurance.

NOTE: To qualify for the above taxation deductions, you must be actively working your home business.

In closing, since taxation laws are continually changing, I highly recommend you consult with your accountant or taxation advisor to learn more about applying the aforementioned deductions to your home business.