In many cases, operating a business from your home is not legal. Laws in most cities and towns in the U.S. and most developed countries severely limit the locations and under what conditions businesses may operate. But if every illegal home business in America were shut down, millions of businesses would be impacted, the economy would grind to a halt, and the country would fall into a massive recession, with ripple effects sending tens of millions into joblessness.

Running a Business Out of Your Home Is Part of the Fabric of American Commerce

But that doesn’t mean that town bylaws and zoning created by zealous and anti-business politicians can’t make your life miserable and in some cases shut down your business.

Many localities do not permit any businesses to be operated in residential neighborhoods without a specific variance, which many zoning boards are very reluctant to grant except under extenuating circumstances. Often, variances are only given after an extensive public hearing, including invitations for presentations of objections by all nearby residents.

Just because there are already some businesses operating in your neighborhood does not mean that your neighborhood is zoned commercially or that you will easily obtain a variance. Many businesses currently operating in residential neighborhoods were “grandfathered in,” meaning that they were in operation before the zoning laws took effect and were therefore almost automatically granted variances.

Most towns and cities have various zoning districts allowing different types of homes and businesses. Usually in any one town many businesses have successfully obtained variances allowing an exception to zoning in their district, but there are plenty of other businesses that did not successfully receive variances. There are still other businesses that did obtain variances but only after agreeing to certain changes in their plans (such as a smaller building) or limits on their operations (such as no business after 9 p.m.).

So what you might first want to do is to determine whether your planned business can be legally operated out of your home. If it can’t, then you need to make a decision. Should you proceed anyway? Should you try for a variance? Or should you try to operate quietly under the radar and take your chances?

Local government officials do not inspect homes to see whether you have a small business office tucked away in a small corner of your house. However, if a neighbor complains, then the building inspector is obliged to enforce the zoning ordinances. Furthermore, hanging out even a small sign, having commercial vehicles on the property, putting in additional parking spaces, or having a lot of client or employee traffic is likely to trigger a complaint even if you have friendly neighbors.

If your business is going to involve heavy truck or car traffic, then you also need to consider the safety of your neighbors. I remember one business property I considered buying in a residential neighborhood in South Boston had a commercial variance, but the variance prohibited any truck traffic after 2 p.m. in the afternoon because of the potential hazard to children attending a nearby school.

Takeaways You Can Use

  • Home-based small businesses are a crucial part of American society.
  • Investigate town bylaws and zoning regulations carefully.