The Internet has opened the door for a generation of home-based entrepreneurs. In the rush to put up a website and start selling to customers, many entrepreneurs forget the permits and legal filings they may need. Even the most basic home-based business will usually require some kind of registration and compliance with local regulations. You don’t want to start your new business by breaking the law.
The good news is that it’s fairly simple to discover the rules that affect you. Here’s where to look, and what to look for.
The three most common requirements that home-based business owners overlook are:
- Registering their business name
- Obtaining a home occupation permit, if required
- Complying with their homeowner association’s rules
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Register Your Business Name
If you haven’t incorporated your home-based business (or formed an LLC), odds are that you are using a marketing alias for the business. Your name may be John Smith, but you present yourself to the world as “SmartTech IT Consultants.” Typically, you’ll have to register this alias as your “doing business as” or “DBA” name with your county clerk’s office or your state.
The reason for registering your DBA is to allow the public to discover who runs a business, so that owners can be held accountable for their actions. The general rule of thumb is that if you’re simply “John Smith or “John Smith Painting”, the public can see who you are and you don’t have to register your DBA alias. “Smith Painting” or “Smith & Sons,” on the other hand, doesn’t identify the person well enough so you would have to register.
Search your state’s website to see how to register a fictitious name. Sometimes publication in a newspaper of record is required also. By neglecting this you are probably violating state law – not a good start for a new business.
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Check For Home Occupation Permit
Regardless of your business type, you may need to apply for a Home Occupation Permit where you live. County law often requires this. It’s good practice to start at the state level as your first check.
Your state website is your one-stop source to drill through all your requirements based on your trade and location and if your business requires specialized licensing, this is definitely the site to check. It shouldn’t take many clicks to get to your state’s Permits & Licenses section.
If it’s not obvious at the state level that you need to register simply as a home-based business, go to your municipality website. Search for “home occupation permit” or “home business permit.” If you draw a blank after a search, your town probably doesn’t require it. If a Home Occupation Permit is required in your locale, you should be able to get your permit for a small fee.
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Check Your Homeowner Association Rules
As a home-based business if you are a part of a homeowner association (HOA) they may have rules about running a business out of your home. The HOA rules are a binding contract you signed when you bought your home. Check your CCR’s – the Covenants, Conditions and Restrictions – for commercial enterprises in the home.
If you’re a renter, check your lease for conditions placed on working from home. Regardless of HOA or lease restrictions, also look at your local codes. Even if your municipality doesn’t require a home occupation permit, it almost certainly has various other conditions.
Typically a home is in the zoning designation called Single-Family Residential. Many towns have established very specific regulations for a home-based business in this zoning, and your city website will reveal them under Permits or a search for “home-based business.”
Why should your HOA or landlord care about your home-based business? The concern is that your business activity may impact your neighbors. If you have clients who visit and park their cars on the street, if you have employees, if you manufacture or receive deliveries or make noise or pollution, all these things matter and will be regulated. Quality of life and home property values are at stake, so check the rules and steer clear of trouble.
Stan Huser is the founder of SunDoc Filings, a California-based company that helps entrepreneurs with their business filings in any U.S. state. A pioneer in document filing and retrieval, Stan started his first company in 1979. You can find Stan at SunDocumentFilings.com or on Twitter @SunDocFilings.
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