Zoning, Laws, and Taxes Affecting Your Home-Based Business

Zoning laws that relate to your home-based business

Zoning laws may be determined by your city or your county, and you should familiarize yourself with these laws so you will be able deal with any issues that may arise. First, you need to determine if your home-based business will have employees or walk-up trade. If not, the zoning questions may never arise. Home-based businesses that deal with the public or have non-family-member employees that work out of their home are more likely to have issues with with zoning laws. Before you start your business, get a copy of your local ordinances from your city or county clerk’s office, the city attorney’s office, or your public library.

Usually the problems arise when neighbors complain, and the zoning boards are required to deal with the complaints. If employees and customers are going in and out of your home, making noise, or parking by the neighbors’ homes, your neighbors will probably bring this to the attention of the zoning commission. Also, your hours of operation may also be an issue if you are open early in the morning or late at night and you disturb your neighbors. If your biggest problem is your neighbors, try talking to them about your business ahead of time to help allay their fears. If you meet with resistance from neighbors, you may be able to negotiate a resolution.

The amount of space your business is uses in your home usually cannot be greater than the actual living area. This is called “space percentage,” and it can lead to a zoning issue. Also, the type of merchandise you are selling may also be restricted in a residential area if you are using chemicals or other items that have an unpleasant odor. Most zoning laws allow a nonpolluting home businesses, as long as any home containing a business is used primarily as a residence and the business activities don’t negatively affect neighbors.

You may also be in breach of zoning laws if you post a sign for your business in your yard, and you should read up on signage laws in your area before you post a sign. You may be able to find other business owners in the area who have similar zoning issues, and you can organize a local business campaign to try to change your zoning laws to make them more favorable to home-based businesses.

In many cities and counties, if a planning or zoning board rejects your business, you can appeal or request a variance from the city council or county board of supervisors. You are more likely to succeed if you have the support of all affected neighbors and other businesses in the area. Because of the prevalance of home-based businesses, some communities are working to amend ordinances that prohibit home-based businesses entirely to allow “traditional home-based businesses” that are unobtrusive.

In an effort to protect residential property values, most subdivisions, condos and planned-unit developments create special rules called Covenants, Conditions and Restrictions (CC&Rs) that govern many aspects of property use. When you purchased your home, you received a copy of the CC&Rs, and you should read them carefully to be sure that you are allowed to operate a business in your home. Rules pertaining to home-based businesses are often significantly stricter than those found in city ordinances and they are more zealously enforced. If you violate these homeowner’s restrictions, the homeowner’s association or property management company could obtain an injunction to stop the business activities, and you could be facing stiff fines.

Legal issues affecting home-based businesses

The first thing you must do is establish a business entity for your new venture. You need to take this vital step for your business to protect yourself from liability issues. You will also need to apply for a business license before you start selling anything if your state requires one. If your state does not require a license, you may be required to have a reseller’s certificate. Research your state’s business laws and get the proper license or certification.

Many home-based business overlook their need for insurance. Unless you are covered already, you will need to provide your own health, dental, and life insurance. You will also need liability and business property insurance to protect your business and its assets if an accident or other unexpected event affects your business. If you have employees working in your home-based business, you must consider whether you will provide health insurance for them. Also, research the OSHA standards to determine if your home-based business is subject to them.

Tax laws that govern your home-based business

Your tax situation will change when you start your home-based business. Because new tax laws are passed every year, you need to hire a good accountant to be sure you are compliant. Even if you have done your own taxes for years, owning a business means that you will need different tax forms and schedules. It is well worth the cost of a good accountant to be sure that your deductions are viable and that you are paying the correct amount of tax.

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