Starting a Home Business Legally
Plenty of small businesses start at the house because of the convenience and the low start-up fees. The process of setting up your home office is essentially the same as if you worked out a commercial building. However, before you start running you business out of your house, beware of restrictions. The biggest issue that home business owners run into are zoning restrictions. This article outlines the basic steps to start your home business legally.
Take the same steps you would take in setting up any business.
Your home business is essentially structured the same as any regular business. You need to write a business plan that outlines the business goals and how you plan to reach those goals. You will still need to find the financing to launch you business (which you should have outlined in you business plans) and get the financing. You also need to determine the business entity of your company. Do you plan on being a sole proprietor, a corporation, an LLC, partnership, etc.? You need to register your DBA name and get approval on all the permits and licenses that your business requires. You also need to file for a federal tax ID number and any reseller license if applicable. A good place to review all these steps and get help on each one is from the SBA website.
Research zoning restrictions
Luckily, local zoning laws have eased up in the recent years so chances are you will be able to run certain types of businesses from your home. However, there are still restrictions and laws you must abide by in order to legally run your home business. You can find out more by downloading this publication on home-based businesses.
- Check to see if you are allowed to have a home office: Go to city hall and find out the zoning of your home. There are some areas where a city may not allow any business to be conducted. The first step is to find out if you are even able to have a home office.
- Register your business: Most local city ordinances require you to register your home business with city hall. There may be some qualifying factors that trigger registration, like the number of customers you get or the type of business you are conducting. You should go to your city hall and find out if you need to register your home office.
Determine specific zoning restrictions and abide by them:
Types of businesses – Although cities often allow home businesses, they restrict the types of businesses allowed. These restrictions are around for obvious reasons. Cities wouldn’t want you to run a manufacturing business out of your home because of the pollution and the noise. Check to be sure if you are allowed to run your type of business out of your home.
Traffic – Your city’s main priority is to ensure your business does not interfere with the look and feel of a residential area. This means there may be restrictions on number of customers or clients allowed to visit, the number of employees you are allowed to have at your home office, and even parking restrictions if you have too many people coming by your home business.
Noise/pollution/external factors – Again, city government wants to be sure your business doesn’t interrupt the residential vibe so there are always restrictions on activities that may affect the area. There will always be noise and other pollution restrictions. Common sense tells you to be courteous to your neighbors, but also check to see what these restrictions are so you don’t get penalized.
Physical appearance and changes – Your home business is just that – your home. It is not meant to have the look and feel of a commercial business. The city (along with your neighbors and HOA) doesn’t want you to try to make your home look like a commercial business. There will be restrictions on signage, types of vehicles allowed to park around your house and other exterior displays restrictions. Be wary of these restrictions - one of the drawbacks of having a home business is you usually cannot physically advertise it on the outside of your house.