Community Rules and Regulations

Of course, it's not enough to look only at your own home — you also need to consider your street, neighborhood, and community. Not all areas welcome home-based businesses, and some actually prohibit them. The latter is becoming rarer as self-employment grows in acceptance. Before you even think about a home-based business, you need to check your licensing and operating requirements. Launching a business that doesn't conform to these requirements is not an option.

Most community concerns over home-based businesses involve potential nuisance factors for neighbors: increased traffic, noise, unsightly equipment, and even environmental hazards. Be prepared to counter these with the advantages: home-based business owners can deter theft and vandalism simply by your being around when other people go off to work.


Most communities are divided into a varying scale of uses, from residential to commercial and industrial. You need to know where your home falls on that scale and what your specific category allows you to do in your home: Zoning regulations often place limits on numbers of employees and signage, for example. Although that information is on file at your municipal or county office, you can increasingly find it on their Web sites, too. A quick Internet search or phone call may be enough to fill you in.

Don't forget to check home-based business rules with your co-op board and your condominium, community, or neighborhood association, as well. Some of these — particularly in planned developments such as mature living communities — will limit the business activities allowed in your home even more stringently than the local government does.

Even if your area isn't zoned to allow home-based businesses, you can request a variance, which would give you permission to proceed. A variance acknowledges that the rules don't always make sense in every situation, and that a low-impact home business (which has no noise, few or no in-person customers, and no environmental hazards) might be welcome despite the rules. The variance process can take extra time, and sometimes involves posting notices in local newspapers, so build that into your planning process.


Even if your home-based business conforms to the zoning in your neighborhood, you may need a license to operate it. In some cases, this is as easy as applying for a permit to operate a home-based business: You'll probably just need to answer some brief questions about the planned business activities, and the number of employees or visitors who might be involved.

Some areas, however, require you to obtain a full license. This is especially true of self-employed building contractors, where you may need to prove liability, insurance, and workers' compensation coverage in order to be approved. Again, check with your local municipality or county office.


Zoning regulations usually specify whether you can place a business sign outside your home (in many residential zones, you won't be allowed to), and how large the sign can be, where it can be placed, and whether it can be lighted. Make sure you know what's allowed, so that you can assess whether it meets your needs.

Some communities don't allow home-based businesses to advertise their street address in any way at all, even on a business card. You can get around that by renting a mailbox and using that as your business address — although keep in mind that courier companies will need a physical address for deliveries.


If your customers or employees will be coming to your home, you'll need to provide parking. Again, this is a zoning issue, which may require you to provide a minimum number of spaces or limit you to a maximum number. Remember that parking needs to be safe: well-lit, away from high-traffic areas, and with good visibility to protect both drivers and pedestrians.

Tax Issues

Income taxes are dealt with in Chapter 20, but the key issue for most people is that in order to claim a business-use-of-home deduction, the office space needs to be used exclusively for the business. There may be other consequences, too: In some cases, the business use of the space may trigger a tax liability when the home is sold — your accountant will be able to discuss these with you.

Your local municipality may also want its share of your profits, either in the form of property taxes (if your home office increases your home's value, your taxes may increase as well) or local business taxes. Do your research ahead of time to ensure that you're prepared for the expenses.

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