A place of business can be any location where business is conducted, and the physical location can have legal and tax implications. The primary place of business can determine tax deductions and laws that govern employee benefits. Companies may choose to locate in certain regions for permissive laws.
In a loose definition, a place of business can be any location where various types of business are conducted. Hospitals and factories can be places of business, just like stores, offices or schools. Any of these locations run the business they specialize in at a designated location. Many companies or corporations have multiple facilities in which they transact their business, while some companies only have one “place” where they do their work. Individuals, self-employed, business owners or partners can also specify the business location.
One reason why it is important to understand the physical location of businesses is because locating a business in a certain location means that a person has certain responsibilities and advantages. This idea is married to the concept of the “primary” place of business. When companies or individuals designate a specific location, they may be entitled to benefits for doing so, or they may respond to certain laws or regulations that accompany staying in that location.
For the individual who runs his own business from home, a frequently asked question is whether the use of all or part of the home is tax deductible. It often is, as long as the home is considered the primary place of business. If the individual owns multiple offices and conducts business in one or more of them, tax deductions for a home office may not be available. On the other hand, if the majority of business is done from home, a home office used for administrative purposes could result in tax breaks. Each region has its own tests to determine if people qualify for these ranges.
Sometimes deciding where to locate a primary place of business is less about the tax code and more about the permissiveness of the laws in a given region. In the US, many credit card companies locate their main place of business in certain states that have more permissive rules for credit card companies. New Hampshire is one of those states that attracts many credit card companies because of favorable laws.
Other times, the principal place of business determines certain laws that may govern employee benefits. When a company’s satellite offices are small and located outside the regions in which the company primarily operates, they may all be governed by the benefits rules of the state in which the company has its formal address and most of its operations. An Ohio-based company may limit benefits to its California employees and may not grant California employees the same rights as other Californians. Occasionally there is inequality and employees have little recourse to state laws in their own states because the businesses they work for are based elsewhere. The degree to which a company located primarily in another region can ignore regional laws varies.
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