Home-Based Business: What Licenses and Permits Are Required?

Make sure you know what licenses and permits are required before you start a home business.

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If you are starting a home-based business, you must consider any licenses and permits that are required prior to starting your new venture.  The types of licenses and permits you will need depend upon the nature of your chosen field or industry.  You may even have to obtain more than one permit or license to carry out your planned business activities at home.  Here are some key licensing and permitting issues to address before establishing your home-based business:

  • Review your local zoning laws.  Your interest in your new home-based business may not match up with existing local zoning mandates.  Most localities enforce zoning laws that regulate what kind of activities can be carried out in different sections of a town, city, or county.  Research local zoning laws to see if you can operate your planned business from your home and in your neighborhood.  With a home-based business, your neighborhood may be restricted solely to residential purposes or may not allow your type of home-based business.  For example, you may not be able to operate a café in your home kitchen or fix cars out of your home garage.  There may be other areas designated under local zoning laws for these purposes that may be located outside of your neighborhood.  If local zoning laws do not permit your type of home-based business, contact your local zoning commission or board to determine if you might be able to obtain a zoning variance or waiver that will allow you to legally operate your new home-centered venture.  Contact your local zoning board or commission for more information about applicable zoning laws.
  • Check your HOA, deed, or lease restrictions.  Aside from local zoning laws, your neighbors may be worried that your home-based business may create added traffic and noise, parking problems, unsightly signage, and distracting lighting that will impair their ability to enjoy their own homes.  In many neighborhoods, your condo, co-operative, or homeowners’ association may have instituted additional deed covenants that limit or prohibit home-based businesses.  Similarly, if you are renting property, your lease may include restrictions on home-based businesses to protect the interests of other tenants.  Even if these limitations are in place, explore whether or not you may apply for permission to run your home-based business from your neighborhood association or rental agency.
  • Seek proper permits for your commercial sign.  A commercial sign may help to direct your customers or market your home-based business to the public.  Prior to spending any money on a sign, determine what permits and rules apply to commercial signs in your neighborhood.  In many communities, you may need to apply for and obtain an applicable permit before posting a commercial sign.  This permit may also spell out further limitations, such as the sign’s size, placement, wording, materials, and lighting on your property.  Get in touch with your local zoning board or commission for rules and restrictions on signage.
  • Obtain a general business license.  Regardless of the type of home-based business, most cities and counties will require new businesses to obtain some form of general business license. If you plan to sell goods or services from your home, this general business license may be referred to as a reseller’s or tax certificate.  This general business license permits an entrepreneur to legally undertake commercial activities within the boundaries of an existing town, city, or county.  Seek out your tax collector’s office for more information about business licenses and tax certificates.
  • Apply for relevant professional or industry licenses.  Some industries or professions will require specific licenses to operate particular home-based businesses.  You may need to demonstrate that you have achieved certain educational degrees, training certificates or work credentials in order to qualify for such licenses.  These additional licenses may be mandated to help protect the public from shoddy, dangerous, or unprofessional conduct.  For example, if you plan to operate a day care center from your home, you will likely have to be licensed before opening to ensure full compliance with government regulations and industry standards.  In addition, if your business may impact the natural environment, you may need to obtain other permits to ensure compliance with applicable environmental laws and regulations.  Depending upon your field, check out your state’s licensing agency or industry organization for more details.

If you are interested in starting a home-based business, visit the U.S. Small Business Administration’s site for its assessment tools on whether a home business may be appropriate for you.

Updated by: , J.D.

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