Do Your Plans for a Home Business Comply with the Laws in Your Area?
Are you thinking of starting a home business? Do you know whether you can do so legally in the neighborhood you live in? Before you invest a lot of money in inventory, supplies and equipment, make sure that your ability to operate your business will not be impacted by zoning laws, bylaws, or restrictions imposed by the local Home Owners Association. If you live in a condo, or if you rent, there may be further limitations imposed by the condominium association or by your lease.
Zoning and Bylaw Restrictions
1. Residential Zoning.
If you live in a neighborhood that is zoned for residential use only, your proposed business could be illegal. Zoning laws are passed to limit the movements of a business' staff, customers, suppliers and business activities in order to protect the rights of residents and limit noise, traffic and the potential security risks that may arise from those activities.
2. How zoning laws and bylaws can affect your business.
- There may be a limit on whether employees can work in your home (as opposed to contractors).
- There may be a prohibition on any business that increases traffic or causes competition for parking spaces.
- Depending on the nature of your business, you may be in violation of municipal noise bylaws.
- If the product or output of your business generates fumes, odors, smoke, or lots of trash or debris, or if it involves the use of toxic or hazardous materials, you could be in violation of numerous laws and bylaws.
- Zoning laws in some areas may even prohibit you from posting a sign on your home advertising your business.
3. Do your homework.
Before you start on your business venture, LEARN ALL YOU CAN ABOUT YOUR ZONING LAWS. You may find that making small changes to your business plan will allow you to comply with local zoning standards. You will then be able to get the required approval, permit or authorization you need.
Community Association Restrictions
Many communities have restrictions that limit or prohibit home businesses in general. But in some cases you can get approval for a business that does not require employees or suppliers, and does not have customers coming and going, which dismisses any traffic and parking issues. Find out if you require the approval of your community association, and whether or not your proposed business is allowed by the HOA Declaration. The HOA may impose certain restrictions on your business, such as off-street parking, limits on signage, or a limit on the number of clients or students that the business is allowed.
Lease and Condo Restrictions
If you rent your home, check your lease. Many leases and rental agreements contain a standard provision stating that the premises are to be used for residential purposes only, and prohibiting the tenant from operating a business in the premises. If you live in a condominium, you will face similar restrictions imposed by the condominium bylaws or CC&Rs. Read them over thoroughly to determine exactly what the restrictions are, and what recourse you may have.
There May Be a Way to Work It Out
1. Zoning laws or HOA bylaws. you may be able to apply for a variance, but you will need your neighbors' agreement to do this. Talk to your neighbors, explain what your business plans are, and see if you can get the neighbors onboard. Be aware, though, that applying for a variance can be a long and expensive process, and there are no guarantees. Cooperate fully with the zoning authorities and with your community association. Provide them with all information, and comply with any and all restrictions and requirements imposed.
2. If you rent, discuss your plans with your landlord. He/She may be agreeable to amending the lease to allow you to operate your business. In the case of a condominium, meet with the condominium association to see whether they might consider granting approval for your business.
3. Set policies for use of public areas. Prepare a clearly worded set of written rules for employees, suppliers and customers as to where and for how long they can park. It's a good idea to have written rules governing other behavior as well, such as trash disposal, smoking areas, etc. - anything that can be seen or heard by other residents, and that may become a point of contention.
If you're selling a product, you may be required to obtain a vendor's license, and you will have to collect any applicable sales tax and GST/HST. You may also require a business license. Depending on the type of business, and especially if you have employees, this may involve an inspection of your home to determine if it meets local health and building and fire codes. If it's not up to code, you will have to make whatever repairs or renovations are required in order to meet those standards. Failure to comply with any of those requirements would put you in a non-compliance situation.