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What are the legalities of running a business from home?

24 May 2018

The digital era has revolutionised the way we conduct business. The need for large office spaces is slowly eroding as more and more employers choose to allow their staff to work remotely. As a result, the home business model has grown in popularity, with many new entrepreneurs choosing to start their business from home rather than in a business district. But what are the legal implications of operating a business in a residential area?

“Consumers need to be very careful before choosing to start a business from home. Zoning laws prohibit most businesses from operating in a residential area unless they have received special permission in the form of a temporary departure, which cannot be transferred to the next homeowner if the property is sold,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

Though it might be tempting to forgo the inconvenience of acquiring the required legal clearances for your home business, Goslett advises all entrepreneurs to go through the necessary steps in order to avoid running into trouble later on.

“Alternatively, consumers can have the area rezoned to a mixed-use zone in the hopes of getting legal approval for their home-based business.”

Before you fly into a panic about the one-desk study that functions as your entire accounting practice, you should know that most micro-businesses do not require any special permission in order to operate in a residential zone.

“Although each city has their own city planning regulations, all zoning laws are there primarily to keep the peace in suburban areas. Nobody wants to live next to a busy retail space or a noisy warehouse. So, as long as your business adheres to certain micro-business behavioural criteria, which can usually be found on your relevant city council’s website, your home business is allowed to operate without any special permission,” Goslett explains.

Examples of businesses that are typically allowed to operate in residential areas include those that belong to the service industry, such as a bed and breakfast, a small hair and beauty salon, a dentist or small medical practice, or a crèche/child care facility - only a certain number of children can be accepted though, with the key condition for all of these home operated businesses being that the dwelling must be predominantly used for residential purposes and the owner of the business must reside in the dwelling.

“It is also advisable to chat to somebody at the district planning office to make sure that you are not infringing on any regulations that govern home-based businesses. If your business is of a different nature than the above described, then you will have to visit your local district planning office in person in order to verify and alter the zoning of your property if need be. The office will be able to advise you on the process required in order to achieve this,” says Goslett.

“However, entrepreneurs need to remember that zoning is just one part of the legal process. Any home-based business owner also needs to follow through on the various legal steps involved in starting a regular business, like acquiring a business or trading licence.”

Though it might be tempting to forgo the inconvenience of acquiring the required legal clearances for your home business, Goslett advises all entrepreneurs to go through the necessary steps in order to avoid running into trouble later on.

“It is not easy to hide the fact that you’re running a business from your neighbours. If one of them takes a dislike to your residential company and lays a complaint, which happens more regularly than you might think, then you could face some serious penalties for operating a home business without the required permissions,” says Goslett.

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