After the heady feeling of finally being able to decide on which business to go to, there are few reality checks you need to make. One of the more serious ones is the legitimacy of your business. Why bother? Because if you want to stay long in the industry and continue your happy days far from jail, you truly should bother in ensuring that your home-based business is legit. But what exactly is a legitimate home-based business? We examine the important points.
What makes you illegal?
First of all, let’s define what makes something illegal. When a business is considered unlawful, it:
- operates without a license
- sells illegal, unapproved or dangerous products
- sells or promotes illegal activities
- operates a scam
In general, there are only three types of home-based businesses you can start: one that you build on your own so you can work independently, one wherein you buy into an established business model such as a franchise and another where you join a structured business such as an MLM or network marketing company. Whichever one you choose, it is important to consider whether these opportunities are legitimate or not. Here’s how:
When starting your own home-based business, consider the following:
Your products or services
When you promote and sell your products and services, consider if you will be breaking any state or federal laws. Selling health supplements, for example, a very popular home-based business product, can be illegal if these supplements are not approved by a health agency. If you will be promoting these products with false claims, that is illegal as well.
Fabricating reports and studies just to increase the appeal of the products is also unlawful. Furthermore, using other people’s names, business entities, studies or reports just to promote your product will also send the police banging on your door.
Your business entity
If you will be running a home-based business, you need to obtain the necessary licenses and registrations for it. Consider local zoning and health laws, particularly those that impact your products and services. Home-based businesses are subject to certain restrictions, especially if you will have your production and inventory in the same place.
And yes, there is the matter of taxes. Make sure you’re duly registered and that you report your income.
How you earn your income
Another important consideration for the legitimacy of a home-based business is the manner with which you earn your income. For this, honesty is the best policy. Make sure you don?t cheat your customers of their money. If you sell fakes and charge for them as the real stuff, for example, can get you into trouble. So will conning people of their money, such as when you charge more than you ought to.
When joining or working with another company (whether a franchise or MLM), consider the following:
The legitimacy of the business entity
If your parent company is illegitimate, so is its business and so is yours. Before joining or signing up for any franchise or network marketing company, always check for legalities. Go to the Better Business Bureau or check the company’s legal identity to make sure it has not and does not do anything against the law. Claiming your innocence due to ignorance will not excuse you.
Its products or services
Review the company’s products or services to check if they have passed the necessary tests or are truly what they claim to be. Do the products really exhibit the quality that the company claims they have? Were there complaints about the products in the past and what were they? How serious were these claims and were there legal actions filed? What was the result? How did the company react to the complaints?
The method of sales and product distribution
Consider how the company sells its products or services. One of the most common ways of selling that you will encounter is one where they encourage you to pay a set fee to cover for your membership and some inventory. Turns out, this inventory becomes impossible to sell, either because it doesn?t have a market or its quality is suspect. In the end, you are stuck with stuff you cannot sell for a profit and end up losing your money.
Another is that all income is derived from fees paid by recruited members, a practice known to many pyramiding victims. Pyramiding is considered illegal and should you encounter a company promoting it, best go in the opposite direction.
Legitimate is fair
A legitimate home-based business encourages fair trade and all aspects that require compliance with legal and ethical requirements are covered. When starting or joining a business, always keep this in mind.
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What makes you illegal?
First of all, let’s define what makes something illegal. When a business is considered unlawful, it:
- operates without a license
- sells illegal, unapproved or dangerous products
- sells or promotes illegal activities
- operates a scam
In general, there are only three types of home-based businesses you can start: one that you build on your own so you can work independently, one wherein you buy into an established business model such as a franchise and another where you join a structured business such as an MLM or network marketing company. Whichever one you choose, it is important to consider whether these opportunities are legitimate or not. Here’s how:
When starting your own home-based business, consider the following:
Your products or services
When you promote and sell your products and services, consider if you will be breaking any state or federal laws. Selling health supplements, for example, a very popular home-based business product, can be illegal if these supplements are not approved by a health agency. If you will be promoting these products with false claims, that is illegal as well.
Fabricating reports and studies just to increase the appeal of the products is also unlawful. Furthermore, using other people’s names, business entities, studies or reports just to promote your product will also send the police banging on your door.
Your business entity
If you will be running a home-based business, you need to obtain the necessary licenses and registrations for it. Consider local zoning and health laws, particularly those that impact your products and services. Home-based businesses are subject to certain restrictions, especially if you will have your production and inventory in the same place.
And yes, there is the matter of taxes. Make sure you’re duly registered and that you report your income.
How you earn your income
Another important consideration for the legitimacy of a home-based business is the manner with which you earn your income. For this, honesty is the best policy. Make sure you don?t cheat your customers of their money. If you sell fakes and charge for them as the real stuff, for example, can get you into trouble. So will conning people of their money, such as when you charge more than you ought to.
When joining or working with another company (whether a franchise or MLM), consider the following:
The legitimacy of the business entity
If your parent company is illegitimate, so is its business and so is yours. Before joining or signing up for any franchise or network marketing company, always check for legalities. Go to the Better Business Bureau or check the company’s legal identity to make sure it has not and does not do anything against the law. Claiming your innocence due to ignorance will not excuse you.
Its products or services
Review the company’s products or services to check if they have passed the necessary tests or are truly what they claim to be. Do the products really exhibit the quality that the company claims they have? Were there complaints about the products in the past and what were they? How serious were these claims and were there legal actions filed? What was the result? How did the company react to the complaints?
The method of sales and product distribution
Consider how the company sells its products or services. One of the most common ways of selling that you will encounter is one where they encourage you to pay a set fee to cover for your membership and some inventory. Turns out, this inventory becomes impossible to sell, either because it doesn?t have a market or its quality is suspect. In the end, you are stuck with stuff you cannot sell for a profit and end up losing your money.
Another is that all income is derived from fees paid by recruited members, a practice known to many pyramiding victims. Pyramiding is considered illegal and should you encounter a company promoting it, best go in the opposite direction.
Legitimate is fair
A legitimate home-based business encourages fair trade and all aspects that require compliance with legal and ethical requirements are covered. When starting or joining a business, always keep this in mind.
By:
About the Author:
