Some successful businesses get their start in the home. Starting a home-based business offers several key advantages, including reduced overhead costs, the ability to continue taking care of family responsibilities and allowing time and money to grow a customer base before expanding into an outside storefront operation, if desired. Home-based businesses are still subject to a number of rules and regulations governing operations, however. Learn what rules and regulations apply to your home-based business to avoid legal tangles and complications.
Rules and regulations dictate what types of businesses may be run from a home depending on location. Access copies of local zoning regulations by visiting the public library, law library or city hall. Some areas may be zoned for home-based businesses not involving walk-in traffic; other neighbourhoods may permit businesses to welcome customers to their homes. Depending on zoning rules, home-based businesses may be prohibited from producing certain types of goods because of noise, pollution or safety concerns due to chemicals. Condominium neighbourhoods may have homeowner rules restricting home-based businesses, and some leases may contain rules restricting business activity in rental houses.
Home-based businesses are subject to the same types of licensing rules and requirements as businesses run outside of the home. You'll still need a business license, tax identification number and liability insurance. Some types of home-based businesses (for example, childcare facilities or auto repair) may require additional professional licensing from relevant state departments. Barbershops and beauty salons also require additional licensing.
Business rules for sanitation and safety apply to home-based businesses, so expect to invest some time and money gearing up your home to meet health standards. For example, home-based catering businesses may be required to install a separate oven and cooking area for catering cooking so that it remains separate from meals prepared for the resident family. Childcare businesses are subject to regulations for fencing, play area footage per child and other safety concerns.
Home-based businesses face additional regulations. Some rules strictly limit the number of employees to a small handful to reduce traffic or business size within the neighbourhood. Other rules may prohibit vendors from delivering goods to your home-based business, since this can also be disruptive or dangerous. Rules may restrict your hours of operation to avoid disturbing neighbours. You may also be prohibited from hanging distracting signage from your home. Businesses run from home are also affected by tax rules; certain items may be tax-deductible depending on use while other home improvements or parts of the house may be considered irrelevant to business.