A Person’s Home May Be Their Castle, But If It’s Also Their Office, They May Need a License
When I think of home occupations or home offices, I normally think of day care businesses or maybe lawyers or therapists that have offices in their homes. I usually assumed that telecommuters who are salaried employees of a company would not need a home occupation permit or home business license. But recently, I’ve discovered that this assumption is erroneous.
For the uninitiated, a home occupation permit and a home business license are usually two separate things. Home occupation permits are zoning related and usually involve some sort of zoning approval that the home office does not conflict with the uses permitted in a particular area. These permits are usually a one-time deal and do not need to be renewed unless there is some major change in the use of the home. A home business license is essentially a tax imposed upon conducting business in the particular municipality and usually must be renewed. Some municipalities do combine the two in some fashion – i.e. as part of the home business license issuance procedure, the zoning department puts their stamp of approval on the use of the residence as a home office.
I recently worked with a company that had acquired the operations of another company and was absorbing some of their employees, including employees who would be working from home, either managing other employees or setting up sales calls to commercial customers. These were salaried employees who did not store any inventory in the home and who basically just used their telephones and computers to conduct business. A full third of the municipalities that we researched required some type of license for these “home offices”. Now some of these municipalities required that the company obtain a business license because having an employee working from home was construed as the company “doing business” within the municipality – these requirements, although not the norm, were not surprising. However, there were municipalities that required that the individual obtain a home occupation permit. These municipalities were in five different states so I couldn’t chalk it up to some strange local pattern. I spoke with many of these authorities personally since I wanted to determine why a salaried employee would need to go through this process. For the most part, it appears that these municipalities were using this as a revenue raising measure or because they were concerned about maintaining their residential areas – or sometime both. In one county in Tennessee, the homeowner/employee had to actually file a request for a special variance that had to be approved by the Zoning Board at their monthly meeting. When questioned about this, the zoning official confided that in the recent past, there had been a dominatrix that had tried to operate her business out of home and as a result, everyone – even salaried telecommuters – now had to obtain zoning approval. Talk about one bad apple ruining it for everyone!
All of the officials that I spoke with were very pleasant and patient with my questions. So much so, that I felt comfortable enough to ask how they enforced these requirements as it would seem fairly easy for telecommuters to fly beneath the radar. The answers I received were varied but one of the more interesting answers involved business cards. Patrons of local delis or restaurants sometimes put their business cards in a jar by the register in order to win a free lunch or other prize and the code enforcement personnel check those cards which often have the employee’s personal information on them in order for the restaurant to contact them in the event that they won. I guess one lesson there is that there really is no free lunch.
*The information contained herein is intended for informational purposes only and does not constitute legal advice and is not intended to constitute advertising or solicitation for legal services.