But fail to follow local zoning ordinances, and your small business could fail before it even begins.
There’s no shortage of laws for small business owners to follow. In fact, we can think of quite a few.
If you’re a small business owner who’s dedicated a room in your home to your startup and are ready to open up shop, there are a few more for you to consider, says business attorney Christine A. Reuther, a shareholder at McCausland Keen & Buckman in Radnor, Pennsylvania. If your company is among the 52 percent of small businesses that are based in private homes, you’re subject to zoning restrictions and need to follow these steps before you start a business.
Check with local authorities.
Your first stop is your local municipality’s (or county’s, for rural areas) website to seek information on land use and zoning. A business owner should look for two things, Reuther says: local business taxes and zoning regulations. If the regulations aren’t clear or aren’t fully listed, visit the zoning or land-use department—or, in a small municipality, a municipal administrator and code enforcement officer. When meeting officials in person, “ask them to identify existing written guidance or provide advice in writing,” Reuther says. “That way, there is some basis for later challenging any sort of subsequent local action that would threaten the business.”
Review the ordinance.
Zoning information is typically detailed in an ordinance, which divides the city into districts where different types of buildings and activities can be located. Using the ordinance and zoning map, determine which district your home is in, then look at the stipulations: The ordinance could prohibit business operations, allow certain types of businesses, or limit business-related items such as signs and on-street parking.
If the zoning code prohibits a business in your district, don’t give up: “There are often ways of obtaining zoning approval for the use,” Reuther says, “such as filing a variance application.” If the zoning code permits home-based businesses, you’re subject to the ordinance requirements and any other generally applicable ordinances, which relate to nuisances such as noise, trash and on-street parking. If the zoning code is silent about home-based businesses and the business will be invisible to neighbors (e.g., a consulting business in which there are no employees and all work other than computer or Internet related functions are performed offsite), there is little likelihood that zoning regulations regarding businesses would be enforced.
Ignoring an ordinance prohibiting a business, Reuther says, could lead to a cease-and-desist order. At best, this will cause a disruption to clients while you relocate your business; at worst, you’ll be shut down.
Get the OK from non-governmental agencies.
In addition to your city, other organizations—such as homeowners’ associations and co-op leases—may affect your ability to work from home. Reuther suggests that prospective home-based business owners review the deed for their property, the association’s bylaws and any owner’s agreement or cooperative lease that could outline prohibitions to operating a business from your home. The association’s board members can also provide guidance.
Make nice with the neighbors.
So you’ve opened your business, and everyone’s happy—except your neighbors. If there are no zoning or contractual restrictions, they have little recourse unless you’re violating other generally applicable local ordinances. But in small municipalities, neighbors can go to the local government and seek a change in the law.
“Most of the time, neighbors complain because there is something in particular bothering them,” Reuther says. “For example, a person who teaches piano out of their home may have music—not necessarily well played—emanating from the property throughout the day and into the evening.” If noise is the issue, she suggests soundproofing the room or limiting business hours; if parking is a problem, arrange off-site parking for clients. If your business significantly increases traffic in your neighborhood, it may be time to consider taking the next step: moving to an office.