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What is a Place of Business?

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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 21 September 2016
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In a loose definition, a place of business can be any place where a variety of different business types are conducted. Hospitals and factories can be places of business, as can retail stores, offices, or schools. Any of these places run the business in which they specialize at a designated location. Many companies or corporations have multiple facilities in which they transact their business, while some companies have only one “place,” where they do their work. Individuals, whether freelance workers, owners, or partners in a business, may specify place of business, too.

One reason that physical place of business is important to understand is because locating a business in a certain place means a person has certain responsibilities and advantages. This idea is married to the concept of “principal” place of business. When companies or individuals designate a specific location, they may be eligible for benefits for doing so, or they may be answerable to certain laws or regulations that go along with being in that place.

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For the individual running his or her own business from home, one question frequently asked is whether use of all or part of the home is tax deductible. Very often it is, provided the home is considered the principal place of business. If the individual owns several offices and transacts business at one or more of them, tax deductions for a home office may not be available. On the other hand, if most of the business is conducted at home, an established home office used for administrative purposes could result in breaks on taxes. Each region has its own tests to determine if people qualify for such breaks.

Sometimes deciding where to locate a principal place of business is less about tax code and more about permissiveness of laws in a certain region. In the US, many credit card companies locate their principal place of business in a few states that have rules most permissive to credit card companies. New Hampshire is one such state that draws many credit card corporations because of favorable laws.

At other times, the principal place of business determines certain laws that might govern employee benefits. When satellite offices of a company are small, and are located outside the regions in which the company principally operates, they may all be governed by the rules regarding benefits from the state where the company has its formal address and the bulk of its operations. A company situated in Ohio might be able to limit benefits to its California employees and could possibly not grant the California employees the same employee rights given to other Californians. There is occasionally inequity and employees might have little recourse from state laws in their own states because the business they work for has headquarters elsewhere. The degree to which a business principally located in another region can ignore regional laws varies.

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