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Homebased Business 101

Starting a business from home is your dream. So how do you make it happen? Here are all the basics you need to know to get your homebased business going.

Whether your ambition is to run a homebased business or to grow your enterprise beyond your home as soon as cash flow allows it, starting at home is a good choice for you. Two out of three companies begin in a spare bedroom, garage, basement or sometimes even a bathroom. That's how companies as diverse as Apple Computer, Baskin-Robbins, Electronic Data Systems, Hallmark and Purex began. Of course, the Internet makes operating a virtual company from home more feasible and popular than ever. If you want to hang your shingle at home, either permanently or temporarily, here are some things you must consider:

Can You Work From Home Legally?
Most cities and many counties have zoning ordinances that limit, to one degree or another, whether you can operate a business from home. While many communities have modernized their zoning ordinances to recognize that a computer-based business isn't like a noisy auto body repair shop or an odorous hair salon, others prescribe limitations that may ban or handicap certain kinds of businesses. Here are some common activities communities' zoning codes may restrict:

  • Increased vehicular traffic, both moving and parked on the street
  • Prominent signs
  • Employees not related to you who are working in your home
  • Use of the home more for business than as a residence (determined by percentage of space used for the business)
  • Selling retail goods to the public-sometimes limited to specific hours
  • Storing dangerous amounts or kinds of materials inside or outside your home

If you're planning to launch your business from home, the first thing to do is to check out what commercial activity your city or county allows. This is becoming easier to do, as many communities are making their codes available on their Web site. You just need to know what the zoning classification is for your home (that is, R-1, R-2, R-3, etc.)-you can find information at your city or county zoning office.

While many people blithely ignore zoning, a complaining neighbor can throw a real kink in your business plan with a cease and desist order. So find out what you're allowed to do, and get along with your neighbors. With their support, you may be able to get a waiver of restrictions, called a variance or conditional-use permit.

Also, some people choose to rent a private mailing box with a street address to use as their official business address. If you do that, be sure your city doesn't make a physical inspection of the business premises before granting a city business license.

While you may not have a zoning problem, if you rent or belong to a homeowner or property-owners association (which all condominium and co-op owners do), you may find even harsher restrictions on operating a homebased business. Homeowner agreements are often harder to change, but often so many members are themselves working at home these days, the restrictions are sometimes not enforced.

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