The Bottom Line: Set to freelance? Check out the rules, costs first

Moonlighting - State, county and city rules for home operations come with fees attached

Think you're ready to moonlight or freelance your talent? You'll want to factor in the costs of working from home.

In this blog posting I'll break out the respective costs for home businesses in one Oregon county, Clackamas County. A suburb of Portland, it includes the towns of Lake Oswego, West Linn, Wilsonville. All of these entities -- cities, county, state -- have home-based business rules and registrations. These should provide a good example of the kinds of fees and permits you'll need, whether you're looking to work as a writer, building contractor, hairdresser, party consultant or anything in between.

State of Oregon: Any time you're not using the "legal real and true name of each owner" in the business' name, you must file with the Secretary of State's Corporation Division for one of three options: an assumed business name, also known as a "doing business as" (dba) name; articles of incorporation; or articles of a limited liability company. Cost in Oregon is $50.

"Incorporating in Oregon is just one page, Form 111," says Twila Coakley, Oregon's business registry section manager. "If the (business) name is available and that form is completed, then we process the document."

The Corporation Division's Web site, FilingInOregon.com, walks you through questions to pinpoint other licensing requirements.

Clackamas  County: In unincorporated Clackamas County, some home businesses need $250 home occupation permits.

"If you work only over the phone, have no employees and operate from a small portion of your house -- where no one outside can tell you're running a business -- you're exempt," says Mark Green-Hite, a county planner. "But if you're a major home occupation, with up to four or five employees, vehicle trips to and from and using a garage or shop, then you're required to file."

Permits can be denied based on zoning or failure to meet requirements such as compatibility with residential uses.

The planning department also may request a change-of-occupancy permit for structural uses.

TriMet District: You'll be levied a transit district excise tax for most businesses within Clackamas County, including freelancing. The tax is .006418 multiplied by gross self-employed earnings as reported on your federal tax return.

"If all of your earnings are outside the [transit] district, you would not be required to file a transit return," says Penny Raths, TriMet's transit self-employment coordinator. But anyone who does any business in the district will be taxed.

TurboTax and other tax software programs prompt users for the TriMet tax, but do-it-yourself filers may be in the dark.

"If you haven't filed, we charge interest from the due date of the return until it's paid, and penalties," Raths says. "But we do make exceptions."

Lake Oswego: Anyone doing business in Lake Oswego needs a city license unless exempted by state law. Fees are $75 for enterprises with one to three employees and $105 for four to 10 employees, including owners. The license is valid for one year.

According to Andy Gulizia, assistant city planner, home businesses must not alter the residential use of the neighborhood, can't have employees other than family members and can't use more than 25 percent of the dwelling.

"If there are parking requirements triggered by the use, then those would need to be complied with as well," Gulizia says.

West Linn: West Linn requires a business license and a home occupation permit for home-based entrepreneurs. License fees start at $30 for one to two employees, including owners; $45 for three to five employees; and $60 for six or more employees.

"If you're doing business out of your home and you're getting calls to the home for your business, then we consider that making revenue within the city so you're required to have a business license," says Sandy Leitzel, a city accounting clerk.

The home occupation permit is a flat fee of $100 as of July 1. Applicants must agree to conditions that include storing materials and equipment indoors, not altering the home's exterior or yard; loading and unloading only during certain hours; and limiting deliveries and customer trips.

Wilsonville: License fees are $50 a year for businesses expecting annual net income of less than $12,000 and $100 a year for businesses expecting more than $12,000. There is an additional charge for each full-time employee or equivalent.

Nonprofit entities are exempt from fees but must apply for licenses. Wilsonville accepts Metro business licenses.

Overall, the cost of working from home is minor compared to its potential benefits. The forms you need usually can be accessed online, and in just a few weeks you could have the green light.

-- Jennifer D. Meacham is "The Bottom Line" business and personal finance columnist for The Oregonian newspaper. Send your bottom line questions to her at info@jennifermeacham.com.

BONUS RESOURCE BOX: Click here for links to the forms and applications you'll need to apply for any of the above licenses or permits.

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