{"id":5199,"date":"2016-04-04T10:47:58","date_gmt":"2016-04-04T15:47:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/home-based-businesses-overview.html"},"modified":"2026-06-04T09:01:00","modified_gmt":"2026-06-04T14:01:00","slug":"home-based-businesses-overview","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/home-based-businesses-overview.html","title":{"rendered":"Home-Based Businesses: Overview"},"content":{"rendered":"\n
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Home-Based Businesses: Overview<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last reviewed\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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A home-based business operates primarily out of the owner\u2019s personal residence instead of a commercial office space or storefront. This business structure offers financial advantages and flexibility but owners must comply with legal and zoning regulations and protect themselves from personal liability.<\/p>\n\n <\/div>\n\n\n\n

For many people, starting a business based in the home<\/a> is the ideal small business<\/span> start-up opportunity<\/a>, and thanks to modern technology it has never been easier for home-based businesses<\/span> to stay in touch with customers, consultants, and anyone else crucial to day-to-day operations and business success.<\/p>\n

Home-based businesses<\/span> offer certain freedoms and economic benefits to the small <\/span>business<\/span> owner<\/span>, but there are a number of legal issues that should be kept in mind before starting a business from your home<\/a>.<\/p>\n

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Setting Up a Home-Based Business<\/span><\/h2>\n

While there are many advantages to working from a home office<\/span> such as work-life balance<\/span>, there are many steps to creating a home-based business<\/span><\/a>.<\/p>\n

Come Up With a Business Idea<\/span><\/h3>\n

There are many types of businesses<\/span> you can start from home such as selling digital products<\/span>, dropshipping<\/span><\/a>, freelance writing<\/span>, bookkeeping<\/span>, etc. If you have an internet connection<\/span>, the possibilities are endless. You should first develop a business plan<\/span><\/a> and determine the market demand<\/span> for your product or service. In your plan, you should identify your target customers<\/span>, what business resources<\/span> you need, and how you will fund the startup<\/span> costs<\/span>.<\/p>\n

Determine If You Need a Business Entity<\/span> for Legal Protection<\/h3>\n

Many entrepreneurs<\/span> start a business as a side hustle<\/span> and a sole proprietorship<\/span>. That means they are personally responsible for any debts or liabilities for their own business<\/span>. If someone were to sue their business, the business owners<\/span>\u2019 personal assets<\/span> are at risk. By forming a legal business entity<\/span>, such as a corporation or limited liability company<\/span> (LLC), the business assets and liabilities are separate from the business owners<\/span>\u2019 personal assets<\/span>. The business entity<\/span> would set up a business bank account<\/span> and transact the business in the business name<\/span>. Business owners<\/span> should not commingle their business finances<\/span> with their personal finances.<\/p>\n

Check Property Use and Zoning<\/h3>\n

Although some city or county zoning laws<\/span> specifically prohibit operation of a business from a home or residence, many localities do allow their citizens to operate businesses out of their homes, with certain limitations (such as signage and number of employees). In some cities or counties you may be in violation of local zoning laws<\/span> if the extent of your home-based business<\/span> operations is such that the “primary use” of your home can no longer be considered “residential.” Before starting a home-based business<\/span>, be sure to contact your city or county planning or zoning department\/commission to make sure you are in compliance with all local zoning laws<\/span>.<\/p>\n

If you live in an apartment, condominium, or co-operative housing, your opportunity to operate a business out of your home may be more limited. Leases, condominium use restrictions, and other private housing agreements may explicitly prohibit you from running any kind of business<\/span> in your home. Before starting a home-based business<\/span>, speak with your landlord, condominium association, or other private housing authority to learn whether you may operate a business based in your home.<\/p>\n

Apply for a Business License<\/span><\/h3>\n

Depending on your business, you may need to apply for a business license<\/span>. For example, if you sell items on Etsy<\/span>, you may need a business license<\/span><\/a> if it is a commercial enterprise and not merely a hobby. Check your local governments for any licensing requirements<\/span>.<\/p>\n

Determine If You Need Home-Based <\/span>Business<\/span> Insurance<\/span><\/h3>\n

Contrary to popular belief, homeowners insurance policies do not generally cover home-based business<\/span> losses. Some commonly needed types of insurance coverage<\/a> for home-based businesses<\/span> include:<\/p>\n