Avoiding the Zoning Trap

Even if your neighborhood's not zoned for business, you can still run a legal e-commerce or mail order business out of your home. Find out how.
5 min read
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A reader sent in the following question to me recently in regards to running a business out of their home:

"A number of gated communities in my area are making new rules that prohibit people from buying and selling stuff on eBay out of their homes. Their argument is that there are too many UPS trucks going in and out of the development each day picking up the eBay parcels. Is it legal for them to do that?"

While it sounds like these communities are going about it in a very heavy-handed way, the short answer is "yes." It's perfectly legal for a gated community, condominium association or residential subdivision to ban residents from engaging in commercial activities within its boundaries.

And it's not just gated communities that can do this. Prepare for a shock: Every business that operates out of someone's home is, technically, an illegal business.

Now you're probably saying to yourself, "Wait a minute! There are at least five people on my block working from their homes. The IRS allows you to take a deduction if you operate a home based business. How can you say they're illegal?"

They're illegal because just about every city and town in the United States has adopted a zoning ordinance, dividing the community into residential, commercial and other zones. Unless you live in a progressive community that allows "mixed use" zones, virtually every zoning ordinance prohibits the operation of a commercial business--with a few time-honored exceptions such as family dentists and visiting nurses--in a zone designated as "residential."

So why are so many people working out of their homes without getting into legal trouble? The answer has to do not with the law but with its enforcement.

Every community with a zoning ordinance has established a planning board or zoning board that oversees the zoning law, grants exceptions (called "variances") from the ordinance and so forth. But I'm not aware of a single community that has adopted a special police force to make 100 percent sure people aren't running businesses out of their homes. You've never had any government official knocking on your front door asking you if you're operating an illegal business, have you?

As a practical matter, if you're operating a business out of your home, you usually won't get into hot water with your local zoning authorities unless your neighbors turn you in. And when will your neighbors turn you in? When you're conducting business in such a way that you're "changing the residential character of your neighborhood." Maybe the local kids can't play stickball in the street because they're too busy dodging the UPS trucks going to and from your home office. Or the neighbors are being kept awake at night because of the loud noises or foul odors emanating from your basement. You get the idea.

What the gated communities are objecting to isn't the operation of a home based business per se, but rather the increased vehicle and truck traffic that business is generating. And the courts will probably back them up.

So how can you operate an eBay, e-commerce or mail order business out of your home without getting into legal trouble?

Simple. First, find out if there's a UPS Store, Mailbox IT, Navis Pack 'n Ship, or other franchise in your area offering "private mailbox service"--there almost certainly will be one. These franchises will provide you with a "private mailbox"--essentially a post office box that has an actual street address (such as "123 Main Street, # 456").

Next, if you expect to have lots of inventory delivered--and by lots, I mean more than a few items at a time--find the nearest self-storage facility (you can find the ones nearest you at www.selfstorage.org ) and rent some storage space for your inventory. Because the mailbox outlet and the storage facility are both located within your community's commercial zone, they don't violate your local zoning ordinance. Therefore, your business won't either.

Then sign up for a private mailbox--the average rental is around $300 per year--and use your mailbox address as your only mailing address for all shipments and correspondence to your suppliers and customers. Keep your inventory at the storage facility, and make sure all incoming shipments are dropped off there, or pick them up at the mailbox outlet and bring them to the storage facility. Use your home only as the "executive office" where you post your eBay auctions or work on your e-commerce site, keep your business records and pack your boxes, though most mailbox franchises will do that for you as well, for a fee.

Then once or twice a day--no more than that, please, especially if you live in a gated or other closed community--visit your storage facility, fill your car with your outgoing shipments, drive them down to your private mailbox address, and have the postal service, UPS or FedEx pick them up there.

One last thing: Don't tell the neighbors what you're up to. Every neighborhood has a Gladys Kravitz (for you Bewitched fans) or a Martha Huber (Desperate Housewives) who just can't keep their noses out of your affairs. If your business isn't too visible and isn't interfering with their lives, most neighbors will adopt a "don't ask, don't tell" policy. After all, they probably don't want you finding out about their home based business . . . at least until you bump into them at your local private mailbox outlet.

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