Running a home-based business comes with its advantages, like a two-minute “commute” to the office each morning. You also have the freedom and flexibility to design your own space and control your environment more so than if you were renting.
But small business owners should be aware of several challenges that can arise from working from home. First of all, a standard homeowners’ policy likely won’t cut it—especially if you meet with clients, delivery people or partners at home. You’ll need general liability insurance to protect your business, even if it operates out of your garage, home office or spare bedroom.
Second of all, it’s not always as simple as setting up shop in your neighborhood and calling it a day. Many residential zones have rules and regulations in place governing the do’s and don’ts of running a business. Let’s look at some of the possible restrictions.
Every area is different. If you live in a quintessential cul-de-sac without a commercial storefront in sight, you may have more hoops to jump through to operate your business—called “covenants, conditions and restrictions” (CC&Rs). If you live in a mixed residential/commercial area, zoning laws may be laxer. The only way to know for sure is to check with your local planning office.
As the U.S. Small Business Administration outlines, you will likely face several different types of restrictions in keeping with code:
− Physical changes to the appearance of your home - signage, business-related exterior modifications, outside storage, etc.
− Traffic restrictions - number of visitors, number of employees allowed, commercial-related parking
− Nuisance restrictions - noise, smells, appearance, storage of certain materials
− Business restrictions - the nature of the business may be outright prohibited
The moral of the story is that you should always check and double check local zoning regulations before you launch or grow your business. All it takes is one complaint from a neighbor to land your company in hot water for breaking potential rules. Step one, according to Entrepreneur, is calling or visiting your local municipal building to learn about various zoning rules. But don’t be too eager to drop the “b-word,” as outright mentioning business could garner a negative reaction from officials right off the bat. Instead, go with “home occupation.”
Asking for an Exception
The good news is that you can often appeal to the city council or a board of supervisors or even work with a governing body to amend restrictive ordinances if the decision does not go in your favor the first time around. Co-operation is key; make sure you’re always operating within the lines and working with authority figures to figure it out. Doing business in secret is a surefire way to face steep penalties or closure.
And, of course, a huge part of running a home-based business is doing it by the books. Just because you work from home (maybe even in your pajamas) doesn’t mean that you can skate by without insurance coverage, legal permits and incorporation fees!
Need to establish baseline protection for your small business, whether home-run or commercial? Get started comparing general liability insurance policies with CoverHound.