Legal ramifications of virtual business
From a home office standpoint, there are several legal issues to consider. First, is your home in an area zoned for business? What type of business can you operate from your home? Check out your local zoning ordinances to make sure you don't have to get any special permits or licensing, or have any restrictions on what you can do from your home. For example, if your business requires clients or customers to come to your home then parking may be an issue. Check it out before you get too far into things.
There are also the obvious tax issues of operating a business (or simply working) from your home. If you want to claim a home office, the IRS has stiffened the requirements to the point that you can't use that space for anything other than your work. So, if you're working from your dining room table then you probably can't take that home office deduction. There are some exceptions (like for home childcare, etc.), so contact your tax accountant or attorney to find out the law as it pertains to your situation.