Understanding Zoning, Licensing, and Permits

No matter which governments — federal, state, or local — have jurisdiction in your particular place of business, you can bet that they all have something to say about how, when, and where you can — and can't — run your business. Working your way through the maze of government regulations can certainly be one of the most confusing aspects of doing business, but it is critical for your success in the long run. When sufficiently motivated, most government agencies and departments aren't the slightest bit shy about issuing fines, imposing penalties, and closing down offending businesses.

Zoning

For some reason, many homeowners — particularly ones who live in quiet, residential areas — don't much like the idea of having a busy business move in next door. Just the thought of a constant parade of customer cars coming and going at all hours of the day or night, the clatter and noise coming from a makeshift appliance-repair shop out in your garage, or the vision of partly assembled cars littering the driveway, is enough to send many homeowners into a fit of concern (and even anger). And, indeed, when people buy their homes, they generally expect to get some measure of peace and quiet along with them.

Zoning laws are, among other things, the government's favorite way of trying to keep residential areas residential and business areas business — making everyone (well, almost everyone) happy in the process. And, in general, zoning laws do work. After a citizen makes a complaint, most jurisdictions follow an established procedure to determine if a business owner is breaking the rules or not — taking action only when necessary. Unfortunately, however, the very zoning laws that attempt to ensure that someone doesn't decide to build a coal-fired power generation plant across the street from your house are also the same laws that may restrict (and in some cases prevent) your ability to start a business in your own home.

Here are some of the categories of rules that zoning laws may impose in your particular city or county:

  • Advertising signage

  • Parking and vehicle traffic

  • The percentage of your home devoted to business

  • The number of people you employ, and the jobs you employ them to perform

  • The use of hazardous materials and chemicals

  • Noise, smoke, and odor

So, what can you do if zoning regulations make your Home-based business illegal or are so restrictive that you can't operate your business effectively? Try one of the following approaches:

  • Request a variance. Government agencies and departments routinely grant variances to rules and regulations. Often, you only have to fill out a short form. In other cases, your request may have to be publicly heard before your city council, zoning board, or other body. Check with your zoning or planning department to find out what options are available to you.

  • Fight city hall. In some cases, you may have no other choice but to take action to change the rules or regulations that restrict your ability to start and operate a Home-based business. A variety of approaches are available to you, from buttonholing your district's council member to lobbying for legislative change to filing a lawsuit. The exact action you take depends on your community's political environment. If you have any friends, relatives, or business acquaintances who have had to take on city hall, ask what worked for them.

Licensing and permits

Which business licenses or permits does your Home-based business need? It really depends in which city, county, and state your business is located. Ask questions, starting with your city and/or county government. Describe the kind of business you have in mind, and a friendly worker will likely direct you to the appropriate forms and requirements. After you check with your local government, contact the state and federal agencies that apply to your business.

Some of the most common licenses and permits include the following:

  • Business license: This is the standard permit to operate a business locally, and it is required of most every business, no matter how large or small.

  • Home occupation permit: If your community restricts Home-based businesses, you need one of these.

  • Miscellaneous local permits: Contact your local Chamber of Commerce to see if any other business permits are required.

  • Police permit: Some businesses require police clearance or permit. You may also need a police permit if your business has an alarm that generates a police response when it goes off.

  • Food permit: If your business makes or sells food, don't start cooking without it.

  • Seller's permit: All businesses that sell taxable products in states with sales tax (there are just a few that don't have sales tax) need one of these. The definition of taxable products varies from state to state.

  • Building permits, fire certificates, and zoning permits: Check with your local planning department for restrictions on the kinds of business activities that can be conducted in your home. Some localities, for example, restrict Home-based businesses that operate in residentially zoned communities from having customers come to the place of business.

  • State occupational licenses: Certain occupations (for example, doctors, lawyers, general contractors, day care providers, and so on) require a special license. Check with the state agency regulating consumer affairs.

  • Federal export licenses: If you want to export goods to another country, your business will be subject to all kinds of federal regulation. Get more information on this from the Department of Commerce. A number of optional certifications can help in some situations: You may want to look into being certified as a small business, minority-owned, woman-owned, or a disabled-veteran-owned enterprise.

Contact your local Small Business Development Center or other local economic development organization for guidance on these local and state and federal issues — you'll be glad you did!

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