Your local planning or zoning department has probably established zones for stores and offices (commercial zones), factories (industrial zones), and houses (residential zones). In some residential areas -- especially in affluent communities -- local zoning ordinances prohibit all types of business. In the great majority of municipalities, however, residential zoning laws allow small, non-polluting home businesses, as long as any home containing a business is used primarily as a residence and the business activities don't negatively affect neighbors.
Read Your Local Ordinance
To find out whether residential zoning rules allow the home-based business you have in mind, get a copy of your local ordinances from your city or county clerk's office, the city attorney's office, or your public library. (Many cities also make their ordinances available online -- check your city's home page to find out.)
As you read the ordinance, keep in mind that zoning ordinances are worded in many different ways to limit business activities in residential areas. Some are vague, allowing "customary home-based occupations." Others allow homeowners to use their houses for a broad list of business purposes (for example, "professions and domestic occupations, crafts, or services"). Still others contain a detailed list of approved occupations, such as "law, dentistry, medicine, music lessons, photography, or cabinetmaking."
Ask the Planning Department
If you read your ordinance and aren't sure whether your business is okay, you may be tempted to ask for a meeting with zoning or planning officials. But it can be a mistake to call attention to your home business plans until you are sure that you'll meet the requirements. One way to cope with this problem is to have a friend who lives nearby, but who doesn't plan to open a home-based business, make detailed inquiries.
Appeal If Necessary
In many cities and counties, if a planning or zoning board says that you can't run your business from your home, you can appeal -- often to the city council or county board of supervisors. While this can sometimes be an uphill battle, it is likely to be less so if you have the support of all affected neighbors.
You may also be able to get an overly restrictive zoning ordinance amended by your municipality's governing body. For example, in some communities, people are working to amend ordinances that prohibit home-based businesses entirely or allow only "traditional home-based businesses," to permit those that rely on the use of computers and other high-tech equipment.
Planned Development Rules (CC&Rs)
In an effort to protect residential property values, most subdivisions, condominium complexes, and planned unit developments create special rules -- called covenants, conditions, and restrictions (CC&Rs) -- that govern many aspects of property use.
CC&Rs pertaining to home-based businesses are often significantly stricter than those found in city ordinances. As long as the rules of your planned development are reasonably clear and consistently enforced, you must follow them. Because many planned developments enforce their rules more zealously than municipalities do, it's essential that you make sure your home-based business is in full compliance.
For all the plain-English legal and practical information you need to get your business off the ground and running, get Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo).