Many entrepreneurs start their businesses as a hobby or part-time effort they do at night, on the weekends, or whenever they can find the time. These early-stage businesses have many of the same characteristics, listed below.
- Goods and services are exchanged for cash paid to them immediately.
- Cash is used immediately or deposited into the underground business person's bank account. No separate business accounts or records are kept.
- No income is reported and no taxes are paid on business earnings. Regardless of the business's size or the amount of income, you must report your earnings to your local Revenue Authority. It doesn't matter if your business income doesn't compare to your main source of income.
- Employees are paid in cash and the underground business person does not withhold payroll taxes from the employee's earnings or pay the employer's portion of these taxes.
- "Self insurance" -- otherwise known as hope against hope -- is the primary method underground business persons use to protect themselves against something going wrong or being sued for any reason.
- A home or any other free location is the primary place work is done. Underground business persons are unaware or in knowing violation of local laws or regulations, like zoning laws that limit certain types of activities in certain areas or business licensing rules that require all businesses in the area to possess a license.
- The business is operated in the underground business person's name or in a made-up name, not an officially recognized, copyrighted, or incorporated name.