One of the most attractive features of going into e-commerce is the potential it holds for success with limited capital investment. In fact, the tech industry in general is rife with stories of thriving companies (some now worth billions of dollars) started in basements, garages and even closets.
However, what these stories often fail to convey is how many of those businesses were being operated in violation of zoning laws. While, it really is easy to start an e-commerce concern on your dining room table, you might want to find out if your home is zoned for an e-commerce business first.
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Why It Matters
Depending upon the nature of your business, your neighbors might decide it’s causing a nuisance in the neighborhood and report you to the authorities. At that point, you’ll feel pretty smug if you have a business license (you did get one of those too — right?) and you have done your homework to determine you’re operating within the law.
Otherwise, you could find yourself being shut down just as your business starts taking off. Worse, you could also be slapped with fines for operating a business illegally as well as evading taxes and mandated fees.
Consult Your Local Zoning Office
In an interview with Entrepreneur magazine, Christopher Hansen, founder and president of the Home Based Business Council, recommends calling or visiting your local municipal government’s offices and specifically asking to see the ordinances governing home occupations.
“Avoid the word ‘business’ at all costs,” he says. “That’s an instant red flag for zoning officials. And, be cautioned, there are more ordinances with which to comply than just zoning: There’s mercantile, vendor, fire and etc.”
Whatever the nature of your business; whether you sell electronics, cosmetics, ebooks or furniture, you should also make sure running your e-commerce business won’t also put you in violation of the terms of your lease If you’re renting your home.
Similarly, if you live in a condominium or a neighborhood with a homeowner’s association, you should also consult your Codes, Covenants and Restrictions, as well check with the association’s board to make sure doing business is OK in the community.
You Might Need a Variance
If it turns out there are indeed rules against operating from your home, ask for a special hearing to get an exception — also known as a variance. In most cases, assuming there are no outward signs of the business with which your neighbors must contend, it will be granted.
Be forewarned though, this can be a lot more difficult to achieve if the city has rules against what you’re trying to do. A variance can be quite expensive to obtain and if you get it, you’ll open your door to unannounced fire department inspections. You might also have to modify your home to include handicapped ramps, fire doors, special toilets, sprinkler systems and the like.
This is the primary reason Hansen cautions those who are interested to ask about occupations rather than businesses. The rules are far less stringent for the former.
What’s more, you could spend the money to bring your home into compliance, only to still find yourself shut down if that nosy next-door neighbor continues to complain.
Don’t Ask / Don’t Tell
The reality is some 40 percent of all American households have some form of a home-based enterprise and few of them cause problems.
With this in mind, Hansen says, “In many cases, you’d be much better off remaining ignorant, as opposed to shining the light on your home-based business. In conversation with hundreds of mayors, governing body members and state legislators, [I’ve found] they all agree: Don’t ask, don’t tell.”
How far you want to go with this is up to you. By and large though, if your business isn’t resulting in lots of people and vehicles going and coming from your home all day, no visible signage, no untoward noises or odors and no other physical changes to the appearance of your home, you should be all right.
Now, with all of that said, regardless of whether or not your home is zoned for an e-commerce business, do not construe this article to be legal advice. Its purpose is to make you aware of the law and let you decide how you will go about complying with it. If you’re unsure, consult a local attorney who is well versed in this area of the law.