Home Zone: New Approaches to Old Laws

Home-based businesses often run up against zoning rules developed in another era - when suburbs were for homes and work went to an office tower or factory.

Often the zoning issue gets jumbled in with local corporate taxes.

For example, the Los Angeles City Council last November passed a law for the first time allowing businesses in homes in residential areas of the city.

The idea was to update antiquated zoning laws.

The effect was to bring existing businesses out from behind closed doors and require them to register and to pay local taxes.

Tax zone

Writers and artists protested the registration requirement on First Amendment grounds and were exempted from the tax as long as their home businesses didn't generate too much traffic or impact the neighborhood.

Other cities hope to avoid the controversy set off in L.A., and the National Federation of Independent Businesses offers model zoning ordinances that help maintain the residential feel of neighborhoods.

"It's legitimate for zoning commissions to be involved," says Denny Harris of the Small Office, Home Office Association in Reston, Va. "If one of my neighbors starts working at home, it's none of my business. If she opens a beauty salon, maybe it's manageable," he adds. "If she starts hiring employees, it may be a concern."

The best way to avoid run-ins with town authorities is to stay on good terms with your neighbors. "Neighbors are often where zoning complaints come from," says Beverly Williams, founder of the American Association of Home-Based Businesses in Rockville, Md.

Avoiding those problems is usually a matter of talking to your neighbors about what you're doing beforehand. Discuss the advantages to the neighborhood of having you at home during the day.

Business by the book

Whatever the local laws, home workers need to learn them. Often municipalities may limit the kind of businesses allowed in residential neighborhoods. They also sometimes tax business equipment such as computers, phone lines, and fax machines.

The bottom line in dealing with local governments as well as clients is, "Don't try to play both sides of the fence," Mr. Harris says. "Don't say: 'Treat me as a professional, but tax me as if I'm just hanging around the house.' "