Last Updated on September 3, 2020
If you’re planning on starting a new business or running one entirely from the comfort of your home, you need to follow specific standards and policies. One of the requirements for running a home-based occupation is the possession of a home occupation permit.
Overview: What is a Home Occupation Permit?
A home occupation permit allows you to legally establish or enact limited business operations from within your home. Residential use of running a home-based business is usually within most cities’ codes, but your processes are not considered legal until you actually have a permit in hand that was issued by your city.
Commonly Permitted Home Occupations
While every county will have slightly varying rules, restrictions, and regulations, most will be generally similar in terms of home occupation permits.
For example, the city of Richfield, MN, defines a home occupation as “any gainful occupation or profession compensated in monetary payment or in kind.” It also goes on to describe home occupations as a transparent ancillary operation of the household, meaning that the building’s primary use is for residential purposes.
Some common occupations you will see frequently permitted include, but are not limited to, the following uses:
- Domestic Crafts (cooking, preserving, dressmaking, etc.)
- Real Estate
As we mentioned earlier, there are many states or counties that have their own rules and guidelines as to what is allowed or not, so it’s critical that you research your specific area for your home occupation permit.
Common Restrictions for Running a Home Business
Most towns, cities, and counties have different zoning districts across various homes and businesses. With these districts come restrictions that might force a small business owner to change or limit their daily operations.
The following are a few examples of common restrictions that you might encounter as a home business operator.
All home businesses require a home occupation permit, but you might also need to have a business license to operate out of your home. The cost can range from a one-time fee to a percentage of your business’s income.
If you live in an apartment complex, it’s critical that you notify your landlord or property manager about your business activities. Your apartment building might have additional specific rules for this kind of work, so it’s better to be safe than sorry.
Some small business owners try to operate under the radar because it’s just less of a hassle. For instance, maintaining child care operations out of your home when you’re already a stay-at-home mom may not seem like a business endeavor, per se.
It’s definitely not uncommon for someone to run an unofficial daycare, serve as a local seamstress, or sell baked goods from their home without officially registering as a business. However, doing so poses the risk of getting caught and having the business (and your income) shut down, so your best bet is to complete the proper procedures.
Parking, even off-street parking, can be tricky when it comes to running a home business. Depending on the nature of your business, you may have clients or customers visiting your home. Not only might this become bothersome to your neighbors, but it may actually be prohibited.
Some communities will enforce restrictions concerning the number of cars you can have parked near your home at once, or even the type of vehicles on your property. For example, if you run a small construction business out of your home, you may be limited on the types of equipment and machinery you park on your property.
Likewise, as a growing business, you may find that your current parking situation is not conducive to your line of work. However, adding parking to your property could also fall under your area’s restrictions.
Advertising is a common area in which home business owners can run into trouble. Your community may feel strongly about maintaining the integrity of your neighborhood. While some towns may not even notice if you put a small sign outside of your home, others might enforce strict codes preventing you from doing so.
Like with all else across home occupation permits, you’ll have to check with your local authorities. If you have connections in a smaller neighborhood, you might be able to get away with some minor advertising.
Noise can be an issue when operating a home business in a small neighborhood. In fact, noise complaints may be the reason your small home business was discovered by officials in the first place.
If you’re running a daycare, a pet grooming service, or an automotive garage, you run the risk of receiving noise complaints from your neighbors.
Due to the desire to maintain a particular atmosphere in the neighborhood, your area may have specific restrictions in terms of the amount of noise your business can generate.
How to Obtain a Home Occupation Permit
As with all else, each state, county, or city will have small nuanced differences in their application process. However, it’s generally the same process:
- Review any restrictions that might exist in your residential zone. You may find right off the bat that you cannot operate your specific type of business from your home in your county or town, which renders the following steps unnecessary.
- Contact your local authorities, including the Building Department, Fire Department, Zoning Administrator, City Council, and Municipal Building Office to verify that your home occupation aligns with all building, fire, and city codes.
- Reach out to your local Sales Tax Division to check if you will also need a Sales Tax License.
- Fill out your local Home Occupation Permit Application. As mentioned above, you will need to locate the application for your specific city or county, as each will be different. You may also be required to pay an application fee.
- Contact your local government officials or homeowner association with any further questions.
- In some cases, a public hearing may be required before a permit is approved.
After you have obtained your home occupation permit, you can begin business operations from within your home.
If you live within a private neighborhood that has a homeowner’s association, it’s important that you check with your governing board and documents to determine what you can and can’t do.
Generally, most home businesses are okayed by HOAs, as long as they do not violate rules concerning traffic, parking, or signage. HOAs work hard to prevent nuisances, so if you plan to operate a home business that includes many deliveries, client visits, or employee comings and goings, you might run into some problems with neighbors and board members.
Overall, most homeowner’s associations’ biggest concerns have to do with increased traffic. A private community typically tries to avoid busy roads and noisy traffic, so any business that is going to impact the quiet streets could render it prohibited.