A home-based business offers additional income without the burden of owning or renting a separate piece of property. Several multinational companies, including Amazon, Microsoft, and Disney, started in their founders’ homes.
This business model is nothing new, but it has steadily grown in popularity as technology has made entrepreneurship more accessible through e-commerce sites.
If you are interested in starting your own business at home, here are three things you should keep in mind.
Is it legal?
Localities have strict zoning laws regarding home-based businesses, with most restricting large business operations in residential areas. The presence of other home-based businesses in your neighborhood doesn’t mean it is legal. Make sure to research the laws in your city or state before starting your business.
If your local zoning laws don’t permit home-based businesses, contact the zoning commission or board to find out your options. In some cases, a public hearing will be held to determine nearby residents’ opinions on the matter. If you pass this stage, you obtain a zoning variance or waiver that allows you to operate a business from your home.
Is it allowed by your HOA?
In addition to zoning laws, you need to check with your neighborhood’s Home Owners’ Association (HOA). They often establish additional deed covenants that restrict home-based businesses to reduce additional noise and traffic in the area.
Review your home’s lease or deed, its FHA loan or mortgage contract, and other documents that might hinder you from taking on this business endeavor. If you find limitations, research potential ways to obtain a special permit. Some HOAs allow home-based businesses when they don’t disrupt the neighborhood’s peace.
What are the licenses and permits?
Once you’ve secured the necessary permission from the local zoning board or commission and HOA, it’s time to apply for the appropriate licenses and permits.
General Business License
Considered as a basic license, it allows you to engage in business activities in your town or community. You can approach your local tax office to apply for this license and other tax certificates.
Professional or Industry License
Certain industries and professions require home-based businesses to apply for a license before commencing operations. Examples of these businesses are daycare centers, legal services, financial advisory services, and hairstyling services. Approach your state business office to determine if you need this type of license and how to apply for one.
Commercial Sign Permit
Many locales also require home-based businesses to obtain a permit for their commercial signage. This permit will instruct you on the size, wording, material, and placement allowed for your signage. Approach your local zoning board or commission to apply for a commercial sign permit.
Starting a home-based business is a good way to test your entrepreneurial skills without the additional pressures of a traditional business model. Still, it doesn’t mean you can be negligent about the legal paperwork and permits. By familiarizing yourself with the requirements, you can protect your business from the repercussions of a technical error, such as not having the right licenses or permits.