When you’re starting your business, you have many decisions to make. Some will be straightforward, and others will seem straightforward — but turn out to be more complicated.
Take your business address, for example. If you have secured an office or retail location, your business address is straightforward. It’s where your business is located.
But what if you decide to work from home? What if you are subleasing space or your current location is temporary? One business owner recently told us that she is operating out of a business location but her landlord is unreliable about getting her mail to her. “What address should I use to build business credit?” she asked — a question that many entrepreneurs, startups, and small business owners have also wondered. This article will give you the answers, so keep reading.
Why You May Want a Business Address
Using your home address for your business can open up legal liabilities and privacy concerns. Here are a few reasons why considering a business address is important.
You want to protect your privacy
Many business documents, like an application for a business bank account, will need to include your physical business address. If this address is the same as your personal address, it may hinder your attempts at remaining private since others will be able to see your street address and where you live. No one wants someone showing up at their home uninvited.
You may also want to include your business address on business cards or your portfolio, so a separate business mailing address may be smart.
It may not be legal
You’re not allowed to run a home business or home office out of every living space. If you rent your home, your lease may state that it’s not legal for you to operate a business out of your rented apartment or condo. Even if you own your home or condo, homeowners’ associations can restrict the ways you’re able to use your home. A home address might not be able to function as your office address.
Zoning laws may also restrict how you can use your home, although these laws usually pertain to things like building a separate office structure on your property, having more than a specified number of employees, and placing advertisements on your property. The zoning laws are put in place to maintain the residential feel of the neighborhood, so you’ll have to contact the authorities in your city or town to see what is regulated and what is allowed for running an office space out of your home.
You want to reduce your liability
Sole proprietors probably have to worry less about this one, but if you’re a limited liability company (LLC), or an S corporation or C corporation, you might not want your personal address to be your business address because of liability issues. Your business entity status grants you liability protections when you separate your personal life from your business completely — and this includes your business address for LLC operations.
You want to improve your professional image
Having a real street address on your website or your business cards makes you appear more professional and more legitimate, both of which are essential for earning new clients and retaining the clients you already have. Having a physical address also helps Google send potential clients your way. Because you likely won’t want to display your personal address in public, a separate business address makes sense.
What Is a Virtual Address?
If you decide you want to create a business address to use for a new business or going forward, a virtual mailbox is one option. A virtual business address provides a separate physical address to use for your business while the on-site administrators collect, sort, and give you your mail. Typically, you can choose to receive your business mail via mail forwarding, on-site pickup, or mail scanning. Pricing for a virtual address for business depends on the service and the company you choose.
Should I Use a P.O. Box for My Small Business Address?
Using a post office box for your LLC or corporation can also be a smart move. If you feel more comfortable being the only person to handle your mail, a P.O. Box address maintains your privacy and security. You can get a local P.O. Box from the United States Postal Service (USPS) by applying online.
If you’re looking for a real street address instead of a post office box number, look into the UPS Mailbox service. This service operates similarly to a P.O. Box, but UPS can send you a text to let you know when certain packages arrive, as well as provide 24/7 access rather than only having access during business hours like with a P.O. Box.
Another option is using the address of your registered agent during business formation.
A registered agent service walks you through the process of setting up a new business, and you can often use your agent address as your business address. Often this service is included in your fee.
A final choice is using the address of a nearby coworking space that you are a member of to receive your business mail.
Should I Use My Home Address?
The answer to this question depends on your situation. If you fall into any of the above categories of why you might not want to use your home address for business, you will probably want to get a business address. Even if it isn’t completely necessary for your circumstances, it could be a smart idea to protect your privacy and enhance your professional image.
There are many options for creating a business address, like a box through USPS or UPS, a registered agent’s address, or your coworking space. If you choose not to use your home address for your business mail, pick the option that makes the most sense for you.
Building Business Credit
Using a business address can help you when establishing your business credit.
Experian is one of the major commercial credit agencies and it “recommends using the address which has been used for any corporation filing, or business license filing, if either have been completed,” says Experian Sr. Product & Marketing Manager Mary Ann Strout. “This will help keep information about your business together. If these filings have not yet been completed, think about the address you will use to complete these filings or to promote your business.”
One risk is that information about a business could get merged with another business at the same address, particularly if the name is very similar. You’ll want to be very careful and consistent if you use the address of a shared office pace, for example; always include the full name of your business and the full address, including any box or suite number.
A physical address is preferred when building business credit, but it is possible to avoid using yours.
“Experian promotes physical addresses over virtual addresses, such as P.O. Boxes, if both exist,” Strout advises. “If a business plans to use a P.O. Box (or private Commercial Mail Receiving Agency), however, consistent use of that address will help maintain your business information integrity.”
I was self-employed and worked from home for many years. I used a box at a local mail service similar to a UPS store. It didn’t hinder me from building strong business credit. In fact, my business credit scores were (and still are) excellent. I was required, however, to enter my home address when applying for my Employer Identification Number (EIN); instructions from the IRS state that you must “provide the entity’s physical address only if different from its mailing address shown in lines 4a–b.”
If you’re going to use your home address as your business address, keep in mind that some localities and homeowner associations may restrict home-based businesses. Those prohibitions aside, you can build business credit using your home address.
And a lender may prefer it.
“Most business credit providers, including Funding Circle, require a physical address,” says Chris Capecelatro, U.S. director of underwriting at Funding Circle. “This is used to verify your identity among other purposes. A home address is OK as long as the address makes sense for your type of business. For example, a dental practice applying for a loan with only a home address would be atypical and require further clarification.”
Whatever address you decide to use, be consistent when you apply for credit, and update it if it changes.
“Be sure to update your personal and business credit providers if you change addresses,” Capecelatro advises. “Not only will this help ensure that they can communicate with you, but if you apply for additional credit, any discrepancies in the addresses associated with your credit history could introduce delays in the funding process.”
This article was originally written on December 6, 2018 and updated on February 8, 2023.