It’s becoming commonplace to run a business from home. It is frequently too early and small for new businesses to sign a lease. A shift to remote work is occurring in well-established businesses. Others, on the other hand, have started from scratch with no plans to open an office.
It can be difficult to decide where to set up shop for a business without an office, regardless of the motive. Where should a business be based if it has no physical location—no office, no co-working area, no headquarters—to operate from? What is a principal office?
For more specific information, keep reading.
What Does A Company’s Base Of Operations Actually Mean?
We must first comprehend what it means for a company to be based somewhere before we can address the issue of how to handle a company without an office.
Wherever their offices are located, traditionally, businesses consider the principal place of business address.
This loose definition is not far off from set legal precedents — in the case of Hertz Corp. v. Friend the United States Supreme Court unanimously ruled that a company’s principal place of business is “its nerve center, i.e., the place where its officers direct, control, and coordinate the corporation’s activities”.
According to the US Supreme Court, a business is based where its officers and workers are employed. And in most businesses, this is the office.
Where Is The Main Office For Businesses Without Offices?
Like most legal decisions, this one makes sense in theory but falls apart in practice. How can a company with no office have a “nerve center”, if officers, directors, managers, and employees are distributed? Slack, email, and the internet are the nerve center.
Despite the possibility that later decisions will change this definition, it is obvious that under the laws in place at the moment, it is difficult to answer where a business with no physical location is headquartered.
Stable regards a business as having its base of operations at the address that has been registered with the IRS or the State.
This definition enables the complex geographic, operational, and legal nuances of particular organizations to be reduced to a single location—a business address—in the world.
Conveniently, both the public and private sectors have valued a company’s address. Most third parties that a business interacts with require a business address, including the IRS, states, and banks.
We’ve found that businesses can use their business address as a reliable stand-in for their physical location when questioned about it.
Which Physical Location May I Use As The Address For My Main Place Of Business?
It can be challenging to actually locate a physical location to use as a company business address, especially if you want to base your business in a place you are unfamiliar with.
We’ve seen companies use a range of creative physical locations for their business addresses:
- Co-working spaces
- Lawyers’ addresses
- Friends’ homes
- Registered Agent addresses
- Residential addresses
- Virtual addresses
Of course, you can choose the specific location for your business address, and frequently, this decision depends on where you want to actually base your business.
Corporate Office
The main office or headquarters of a corporation will be located there. The main decision-making hub for the company will be in this office. The CEO and other executives will keep their offices in this building. The corporate office of a corporation will frequently be subordinated to other offices. The corporate office will provide them with guidance and policies. A corporate office does not have to be in the state of incorporation, in contrast to a registered office.
Registered Office
Unlike the members who own and manage it, a corporation is regarded as a distinct legal entity. The laws of the state they are in that govern corporations must be followed, and those laws mandate that the corporation keep a registered office.
An office that has been registered with the state, which serves as the Registering Authority, is known as a registered office. When a business starts, it must be registered with the Registrar of Companies/Competing Authorities. All of the company’s legal records will be kept in this physical office in case a lawsuit calls for them. The location where any process serving will take place is also here.
According to state law, the registered agent must be physically present at this address during regular business hours to receive mail on the company’s behalf. Before a company can be incorporated, the registered office must be established and must be situated in the state of incorporation.
Principal Place Of Business
The primary location where the business is operated will be the principal place of business. They are present here along with the management of the company and standard business books and records. A company must inform the U.S. of its physical location for business. Cabinet of the Secretary of State.
Taxpayers who work from home must demonstrate that their home office serves as their primary place of business, according to additional special rules. This must be demonstrated in two ways.
- The space inside the home that has been designated for the business must be used only for its operation and management.
- There must be no other place where the company’s operations are in any way replicated.
You are entitled to certain tax deductions if your home is your main place of business. This can include utility costs that are specifically allocated for use in the business area of your home, as well as rent and mortgage payments.
Your exact location will affect both the company’s legal proceedings and the tax problems. The jurisdiction in which legal disputes will be heard will directly depend on where the company is physically located. According to the Supreme Court of the United States, the principal place of business is the location where the corporation’s officers will oversee and direct all business operations.
In many cases, the company’s physical location serves as both its headquarters and its office space for board meetings and executive offices.
An illustration of a principal place of business that serves as the headquarters would be a single store retailer where the goods are sold, the inventory is kept, and the managers and staff are trained.
Conclusion
It can be difficult to comprehend what it means for a business with no physical location to be based somewhere and how to go about making that choice. Because of the very nature of what it means for a company to have no physical presence, there is still uncertainty even though legal precedents have been established.
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