Planned communities and condominiums often have their own detailed rules affecting home-based businesses. Typically, these rules are stricter than local zoning ordinances.

Is it legal to run a business in your home? The answer depends on where you live and what you do. To understand how this works, let's start with the case of Bob Mullin, (Metropolitan Development Commission v. Mullin, 339 N.E.2d 751 (Ind. App. 1979), whose plight made its way into the lawbooks. Bob ran his insurance business from his two-bedroom home in Indianapolis. He thought he was on safe legal ground. After all, unlike in some cities, the local zoning ordinance allowed people to use their homes for "home occupations". As long as a home was used primarily as a residence, it could also be used for "professions and domestic occupations, crafts or services". The ordinance specifically allowed homes to be used for such occupations as law, medicine, dentistry, architecture, engineering, writing, painting, music lessons and photography. Also, people could use their homes for such businesses as dressmaking, tailoring, hair grooming, washing, ironing and cabinetmaking. So why not an insurance business?

Bob Mullin used his living room as a reception room and office, complete with a secretary's desk and filing cabinet. He put his own desk in the dining room in place of a dining room table. The photocopier stood in the kitchen next to the stove and refrigerator, and he converted one of the bedrooms into an office.

The zoning board took Bob to court, claiming he'd gone too far. The Indiana Court of Appeals agreed. The court ruled that it was okay for Bob to conduct an insurance business at home, but that Bob's usage was excessive. The business had taken over the house to the point that the primary use was no longer residential. The court told Bob to cut back or close down.

This case demonstrates but one of the many ways that local zoning ordinances can have a devastating effect on a home-based business. The good news is that by learning the law and using discretion, you may find that zoning isn't a real problem for your business.

Excerpted from the "Legal Guide for Starting and Running a Small Business" by Fred S. Steingold
Click here for more related information and products.