Legal Restrictions on Home Businesses | Wolters Kluwer
Federal, state and local governments impose rules and restrictions on running a business out of your home.
One of the main considerations you must take into account when contemplating whether you should run a business out of your home is whether any laws bar, limit, and regulate the type of businesses that can be operated in a residence. Let's take a look at the obvious and not-so-obvious restrictions federal, state and local governments impose on home businesses. Cottage industry regulation The Department of Labor, under the federal Fair Labor Standards Act (FLSA), can restrict work done at home in order to enforce the minimum wage laws. Employees producing certain types of goods are protected and violations of this regulation can result in civil and criminal penalties as well as being forced to shut down the home workplace. State law also may restrict the hiring of employees and outside contractors if they work out of their homes. Check with your state's Department of Labor to see if there are any rules relating to this issue in your state. Zoning regulations The main rationale behind prohibitive or restrictive zoning laws is to maintain the residential character of a neighborhood. On the flip side, it is often illegal to live in some commercially zoned areas where you are running a business. Local zoning laws can impose many types of restrictions that will affect your ability to maintain a home business. Some localities restrict the right of property owners to build separate structures. There may also be restrictions on how much of your home can be used exclusively for your business. Local zoning laws can limit the number of employees you are allowed to have, or may not allow you to have any employees working in your home. Advertising and parking restrictions. Some local ordinances prohibit advertising signage to maintain the residential character of neighborhoods. Many communities also have parking restrictions that could seriously impact your ability to conduct business. Restrictions on the amount and type of vehicular traffic in residential areas can also be an issue. Environmental restrictions. Noise, smoke, and odor can all be subject to zoning rules. Certain types of equipment are prohibited due to environmental concerns. The disposal of chemicals, hazardous substances, etc., may also be regulated by zoning. Permits and business licenses. You may need a home-occupation permit or a business license to have a home business. The cost is usually a flat fee or a percentage of annual receipts from your business. How do you obtain the information you need regarding zoning laws that could affect your home business? There are several ways to go about this, some more anonymous than others: Your local zoning rules may be available online. You may also be able to get information from non-government sources such as the local chamber of commerce, local industry associations, and trade groups.
Perhaps an easier, although less anonymous, way to get zoning information is to contact your local planning department or zoning board. They are usually accessible through your county offices if you live outside city limits or through city hall if you live within city limits.
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