House Rules

Make It Legal

Your home may be your castle, but don't assume you can do anything you want in it. Many municipalities have ordinances that limit the nature and amount of commercial activities in residential areas. Some prohibit homebased businesses altogether. Others allow homebased businesses but restrict signage, traffic, employees, commercial vehicles and noise.

"Cities are just starting to recognize homebased businesses as legitimate business entities," says Sean Fitzgerald, managing director of Destination Irvine, a public/private economic development program in Irvine, California. Fitzgerald recommends finding out what, if any, ordinances are in place regarding homebased businesses before applying for your business license; you may need to adjust your plan to be sure it complies with these laws. Call your local city hall's general information number and ask to be referred to the appropriate department--usually the planning and zoning department, or perhaps the business and occupational licensing office.

If you're unhappy with local regulations, Fitzgerald says, get involved in the local political process and work to change the rules. In the meantime, you may be able to get around the restrictions by applying for a variance with your zoning commission. The key is to be flexible and use common sense. It's only fair to run your business in a manner that won't negatively affect the neighborhood. "Be aware you're in a `Do unto others' situation," Fitzgerald says. "Don't do things you wouldn't want others to do."

In rural areas, there may be no restrictions at all. When Givhans, South Carolina, residents David Campbell and Glenn Turner started C&T Small Engine Repair LLC in Campbell's garage, they were far enough out in the country that there were no ordinances restricting the type of business they could run.

Once you've confirmed that you can indeed start the business of your dreams in your home, check with your insurance agent to be sure you either have or can get the insurance you need. Many homebased entrepreneurs learn the hard way that traditional homeowners policies cover their businesses inadequately or not at all. Fortunately, the insurance industry has recognized the opportunity in insuring homebased businesses, and many companies are creating new plans targeted to homebased entrepreneurs.

Sit down with your insurance agent to analyze exactly what your potential risks and liabilities are, as well as the cost and type of coverage available, before you begin investing in business-related furnishings and equipment. (For more on insurance, see "How To: Insure Your Homebased Business" in the May 1998 issue of Business Start-Ups.)

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