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By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last reviewed October 31, 2022
This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw’s team of legal writers and attorneys and in accordance with our editorial standards.
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One of the first decisions to make when deciding to start a small home-based business is choosing the business location. You could operate out of a co-working space, rent an office/studio/workshop, rent a building, or work from home. Each location has its advantages and disadvantages.
For a sole proprietorship, one of the greatest advantages of working from home is that you are already paying for that space. The additional cost of working from home may be minimal. Depending on how you use your home, the IRS may let you write off home office expenses on your income taxes (Schedule C for self-employed persons). And of course, there is the added benefit of no travel time to work!
This article talks to entrepreneurs and small business owners about the issues to consider before deciding to start a home-based business. An honest assessment of the questions below should help you answer the big question: “Should I operate a small business out of my home?"
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If you just look at the dollars, the decision to house your start-up business at home may seem obvious. You want to save money. But unless you have the right type of home, the right kind of business, and the right temperament, the cost to your personal and family life could be considerable.
Start your decision-making process by taking an honest look at the reality of working from home.
Think through your workday and your workweek. Exactly how will you spend your time?
Visioning your workday in this way should help you identify potential problems or needs of your new home-based business.
If your answers to the questions above provide a green light for starting a home-based business structure, let's move on to the practical questions about operating your business. Answer as honestly as possible. These are issues over which you may have little control, and which can cause your business to fail quickly.
Let's look more closely at zoning restrictions that could affect a home-based business. While some municipal zoning laws prohibit operating a business from home, most jurisdictions allow home-based businesses. There may be some limitations.
For example, there may be a limit on the number of parking spots that can be used, or on exterior signage for the business. There may be a requirement for handicapped parking spots. It's important to check with your county or city's zoning department to make sure you are following your local zoning laws.
If your home is part of a "common interest" development (like a condominium or HOA community), there are rules and regulations in place to preserve a peaceful neighborhood and prevent conflicts among the neighbors. Covenants, conditions, and restrictions (CC&Rs) dictate the types of activities that are permitted and prohibited.
While neighbors may have a concern about increased noise and traffic from a business operating in a residential area, covenants that try to restrict unobtrusive home-based businesses can be legally challenged as unjustified restrictions on the right to be gainfully employed.
When You own a business, it's important to comply will all the relevant laws and regulations. If you would like help to start your business, talk to an experienced business organizations attorney.
Looking to start your own business? Use FindLaw's DIY forms to get a legal business entity set up in minutes.
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