The outstanding resource Business.gov asks a critical question of all home business owners: “Are you breaking any zoning laws if you operate a business out of your home?” The answer--“It depends.” As that site notes, with home businesses comprising approximately half of all U.S. businesses local governments are attempting to accommodate this trend by making residential zones more home-based business friendly.
That said, it is incumbent on the business owner to assure that the entity complies with all of the applicable federal, state and local licenses. A good starting point for your inquiry is the Business.gov Search. As this investigation can be fraught with legal jargon, it is recommended that you consult with a trained professional to facilitate your search. In addition, other areas to be mindful include, state matters such as labor regulations, incorporation, annual registration, franchise registration, as well as any applicable county and city health department requirements (for food businesses). This excludes state and federal tax-related compliance issues such as obtaining a Federal Employer ID Number and registering with your state department of taxation.
This covers a lot of regulatory territory but it is very manageable with a good check list, supplemented with a little guidance from a trained professional.
According to SCORE.gov, "most city, county and state governments require business owners to obtain business licenses and permits. In some instances, the federal government may also require you to secure special licenses or permits, depending on your kind of business." There are various permits that may be necessary for your home-based business:
If you'll be purchasing wholesale merchandise for resale, your state will probably require you to register for a seller's (sometimes called a reseller's) permit or sales tax permit. Usually your State Franchise Tax Board agency grants seller's permits.
If you plan on remodeling or building a commercial space, check local building codes to find out if you'll need to get a building permit. Make sure as well that your business space is in compliance with other local ordinances, such as access and facilities for the disabled, so that your business is eligible to receive the other permits you will need.
If you'll be preparing food as part of your business, you'll also need to get a health permit. Call the governing health department to research the requirements, then make sure you are in compliance and arrange for an inspection.
Don't sign a lease without first checking that the space is properly zoned for the use you have in mind. Some cities require that all new businesses get a zoning compliance permit before they open. You can research this through your local library, planning department or zoning board.
Home Occupation Permit
If your business is home-based, many local governments require that you obtain a home occupation permit. The cost is usually a flat fee or a percentage of annual receipts from your business. Call your city hall and ask them for zoning information in your area. (Also check with your building's management (if you rent) or the local homeowners association).
Home Business Zoning Laws
Business.gov provides a series of items to consider in relation to the zoning and licensing of your prospective home business:
"Home based businesses make up roughly half of all U.S. businesses. Over the last decade or so, there has been broad movement by local governments to adopt provisions that would allow home-based businesses in residential zones. In the past, most local zoning laws either restricted the type of businesses allowed to be conducted in residential areas or banned commercial activity entirely unless the business received an exception or variance.
Current zoning codes still have a number of restrictions on home based businesses.
Physical Changes and Visibility - Zoning codes often prohibit exterior physical changes to the home for the purposes of conducting business, prohibit outside business activities, storage, or displays, and/or restrict or prohibit signage or commercial vehicles
Traffic - Most zoning codes restrict the numbers of visitors to a home-based business, restrict the number of employees working in the home or prohibit employees altogether, and/or restrict business parking or require that additional parking be provided.
External Effects - Most zoning codes restrict or prohibit nuisance impacts (e.g., noise, odors, glare), and/or prohibit use or storage of hazardous materials.
Business Activities - Many zoning codes prohibit certain types of businesses in residential areas. Most zoning restrictions are the same across a city, township or county. In some cases, zoning restrictions may exist for different types of business within residential areas. Also, in some jurisdictions complying with zoning restrictions may include applying for a permit. For example, in Montgomery County, Maryland anyone who operates a home-based business which generates more then five visits to the site per week, or who provides a non-resident employee, must register his or her business.
Make sure you have a basic understanding of local zoning ordinances. Zoning laws are determined by your city or county government. Find out which government agency enforces your zoning laws, and learn the specific laws that apply to operating home based businesses. Use the state and local search engine to find zoning ordinances in your community.
Employer Identification Numbers
According to the Internal Revenue Service (IRS), some home businesses may be in need of Employer Identification Numbers:
"An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online. This is a free service offered by the Internal Revenue Service. You must check with your state to make sure you need a state number or charter."
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