Principal Place of Business
Definition - What does Principal Place of Business mean?
The IRS requires that all businesses, regardless of size, state where their books and financial records are held and where the upper management go to work physically. This place is determined to be the principal place of business. It is a federal law that all companies must report this information. A determination was made in 2010 that stated the definition of "place" in this sentence must be considered as singular. Companies with many offices must choose one in which to designate the principal place. This is normally based on where the board of directors and upper management meet.
Justipedia explains Principal Place of Business
This clarification is made in order for companies to claim expenses that are related to that section of business. In order for a person who works from home to prove that their home is the principal place for business, they must prove that the area the work is done in is used for the exclusive purpose of working and that there is no other place that the person physically performs that work.
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