When launching a business, most entrepreneurs focus on startup costs, taxes, marketing, and location. Few probably add zoning laws to their research efforts. However, overlooking this step could result in breaking the law.
Zoning should be a significant consideration, especially for home-based businesses. In specific neighborhoods, it's illegal to operate from a residence. Before you print your business cards and set up shop, it's essential to know your location's zoning regulations.
Zoning laws and how they work
Zoning laws, or ordinances, provide rules about using a piece of land or property, as well as the maximum size or occupancy allowed. These are the main types of zoning laws:
- Residential: Covers homes, and while you can run a business out of your home, specific locations have restrictions.
- Commercial: For business operations, and can include subsets, such as retail or office.
- Industrial: For a business that performs certain types of operations, such as manufacturing.
- Agricultural: For farming.
Some properties can have more than one zone, such as commercial/residential, which means the owner or renter has two options for its use.
Restrictions you need to know
Zoning laws include usage and issues like noise, parking, waste management, the appearance of a building, and building features, such as the number of doors or bathrooms. For example, in a commercial zone, an establishment may be restricted to a certain number of parking spaces.
A home-based business may require a license issued by your city or county. You may also need to follow certain guidelines, such as hours of operation. And if your property has a homeowners association, you may have restrictive covenants that provide additional regulations. These laws protect the rights and property value of your neighborhood.
“Zoning laws involve granular details," says Jim Pendergast, senior vice president of altLINE, the commercial lending division of the Southern Bank Company. “You'll need to account for onsite as well as any off-street parking, your waste and recycling plans, entryway staircase conditions, and even [Americans with Disabilities Act]-compliant private and public signage stationed on your business' impending property. All this takes time and lots of formal documentation, as well as fees to inspect and submit each review."
How to check your local zoning
Ordinances are usually controlled by your city, town, or county. Check with your local planning or recorder's office to understand the zoning laws for the property you're planning on using. You may find the information you need on their website.
Pendergast recommends first researching neighborhood and city-specific ordinances. Then look at regulations at the county and state level. “It can all start to feel a bit like a Russian nesting doll of regulations," he says.
Even if you're renting a property used previously as a business, you need to make sure the current zoning laws match your use. In some cases, a company may have a variance, which allows the occupant to use the property in a way in which it isn't zoned. The variance won't automatically transfer to a new renter, so it's vital that you know the regulations before you sign a lease.
You have two options if your small business' space isn't up to current code and zoning regulations, Pendergast says.
“First, you can apply for a contingent lease, which sets a deadline for the property's rezoning process," he says. “Second, you can apply for what's called a conditional use permit from your city council or governmental planning and zoning department. Understand that a conditional-use permit comes with strict parameters that may not suite your business' vision in the long term."
The time you spend researching zoning laws will be a good investment. You don't want to start a business only to have it shut down by your city because you've violated zoning ordinances. If you're not sure, contact a local attorney who has zoning expertise and can help you make good decisions right from the start.
Find out more about Starting a Business