Legal Considerations of Doing Business at Home

March 22, 2017

One of my coworkers (thanks Taylor!) recently shared an interesting article with me: YouTubers Face Fines, Possible Eviction For Making Videos From Their Home. Since I often help clients start new business ventures, many of whom begin operating out of their home, this story was particularly interesting to me.

In short, the article describes a situation where a group of friends lived together and professionally make YouTube gaming videos and vlogs – one of the residents has nearly a million subscribers on his Channel. The residents of the house received a visit from their county code enforcement official, who said that the group was allegedly in violation of a zoning restriction that prohibited a certain number of unrelated people living in the same residence.

In addition, the group was allegedly running a business out of their house without a license and if they didn’t either stop operating or obtain a business license, they could be subject to fines of up to $136 per day.

While the definitions of what constitutes “doing business” can vary from jurisdiction to jurisdiction, in Cobb County, Georgia, filming and uploading YouTube videos can constitute doing business and requires a business license.

So what lessons can be learned from the above situation?

If you’re planning on operating a business out of your home, you should do your homework and ensure that the type of business you are planning to operate is allowed and that you have taken all of the necessary steps to conduct business there.

Here’s a list of several issues you should look into before starting your business at home:

1. Will my business activity violate local zoning ordinances?

Zoning ordinances for residential neighborhoods often contain very specific language regarding permissible home occupations and restrictions on certain activities. You should contact your municipality to determine whether your business needs any special approvals such as a special exception or a variance, or if your business activity is permitted as a matter of right. Frequent issues include use of signs and advertising, traffic and parking for customers and commercial vehicles.

2. Will my business activity violate any contractual restrictions, such as leases, homeowners or condominium association documents?

In addition to zoning requirements, you may be subject to various contractual restrictions based on whether you own or rent a home, and/or if the property is a part of a homeowner’s association or a condominium association. The documents that you agree to, such as deeds, leases, and association documents, may contain specific prohibitions on certain types of business activities.

3. Is a business license required for my business activity?

Just like Cobb County, Georgia in the above example, certain jurisdictions require a business license to operate a business. You should check with your local authorities such as the municipality and county, as well as state and sometimes federal government to determine if a business license is required for your planned business activity.

If you need help determining whether a particular business activity is permitted where you live, you should contact a local attorney to assist you in evaluating the options and deciding on the best path to achieve your business goals.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and regularly advises business owners and entrepreneurs on starting businesses, day to day operations and long-term planning.