Is it legal to have a business in your home?

The question has two sides — is it legal to have a business in your home OR are you running your business legally?  The second questions deals with what you have to do to run your home business without getting in trouble with some government agency, but the first question asks if you are allowed to even have a home business in the first place. 

Answer:  It depends.  Don’t you love lawyer answers?   

Whether you are allowed to have a business depending upon two factors:  

1. Your location.
2. Your type of business.

Your Location:

In some cities, towns, and municipalities, business are not allowed except in areas that are zoned for business.  Your home or apartment, which is likely zoned residential, is determined to not be an appropriate place for a business — and some places have a bright-line, strict rule of no home businesses allowed, except for certain listed exceptions.  To determine if this applies to you, check out the website for your town (if they have one) or check out your local zoning rules, to see if there are any rules or regulations regarding businesses run in a home or residential zoned area. 

I actually don’t recommend calling a zoning or city official as a first step.  Why?  Because many bureaucrats will say "no" as a safe answer, even if there is a way around the rule.  You should first get an idea of the rule yourself, before you get a government opinion.  If you are having trouble getting a hold of the rules, contact your local Chamber of Commerce, who will likely have copies of the local regulations.  But don’t rely upon their opinion as law, since they are not your attorneys and could be wrong (or more or less conservative than you). 

if you are not allowed to have a home business, you have three options: 

1. Ignore the rule and run your business so they won’t find out.  For example, rent a post office or UPS store mailbox for mail and packages, get a virtual phone number or business cell phone instead of a separate business line, do not see clients in your home, and do not have signage outside your home. 
2. Rent a virtual office.  Even if you work 99% at home, you can rent a virtual office for a few hours a month, so you have a business address, receptionist, and official place of business that is zoned commercial. 
3. Appeal the decision.  You may go before a government official or zoning board to get approval for your business.  In some places, this is the norm.

Your Type of Business

Your area may have rules forbidding your type of business.  For example, here in San Jose, California, it is illegal to have a furniture refinishing business in a home or garage, due to the potential fumes and toxic chemicals.  It may be illegal to have a business where clients visit your home, or where you have employees in your home.  It may be illegal to have a manufacturing business in your home (including crafts or custom products), or a catering or other food service business. 

You will check the same zoning rules for most of the regulations, but there may be state or federal regulations that apply.  For example, there are federal rules against certain a businesses where employees or independent contractors make products inside their homes. 

Most of the time you can operate a business in your home — the challenge is running it so the government stays out of your business.  More about that in upcoming posts! 

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