Q: I am interested in starting a small catering business. Because I feel the business community is my primary market, would it be legally better to operate this business out of a commercial kitchen, or is it possible to start it as a home-based business?

A: First, let's separate the legalities from the marketing issues in order to make this decision. From a legal perspective, it doesn't matter whether you're serving the business community or individuals. Although many people operate small home-based catering businesses, health regulations usually require better facilities than most home kitchens can provide. Considerations may be the number of sinks available, dishwashing facilities, and refrigeration. So you may not legally be allowed to operate from home, unless you construct a whole separate kitchen for your business. You should also check with your municipality to be sure the zoning bylaws in your area allow home businesses.

Another thing to consider is income tax. Depending upon the tax laws where you live, you will probably be allowed to deduct the costs related to the use of space in your home by your business. However, in many cases, the space must be only used for your business. So you would be forfeiting the business-use-of-home deduction if your business were to use the same kitchen in which your family meals are prepared.

From a marketing perspective, you should consider the effect - if any - your location will have on your business image. Some clients may feel that your business is too new or too small to properly serve their needs because it's located in your home. For others, it may be a quality issue. And some clients won't care one way or the other. That question should be part of your market research. The best answer to the marketing aspect of this question will come from asking your prospective clients as part of your market research.