Working From Home: The Legal Requirements
April 4, 2018 |
You’re getting the education you need to start your career, and you’d like to be able to work from home. Before you start, make sure you know the legal requirements within your field for working from home.
These legal requirements can include licensing, registration and taxes. Requirements can be imposed by your state, some by your county and/or city, and some possibly by your community. Let’s look at what requirements might exist and how you can go about making sure your business is set up properly.
State Business License
The first step is getting the license to practice your profession in your state. Mortgage brokers, insurance agents, home inspectors, real estate agents, and appraisers all need state licenses in order to work. In fact, the opposite is also true: you can’t work in those fields unless you are licensed. For example, it may be against the law for real estate agents to receive commissions without having a valid license. This includes at the time of the contract to sell and at the time of the closing.
Home Occupation Permits and Fees
The next step is finding out if your state allows you to work from home. In some states, certain professionals are allowed to work only from their registered business location. In Florida, if you are a real estate broker, your home can serve as your registered business location only if you designate one enclosed room to conduct business with customers. In Colorado, every residential real estate broker must have a brokerage practice available to the public, unless the broker works for another broker. In Ohio, real estate brokers must have a definite place of business in the state.
However, even if the state allows you to work from home, your county, town or community association may prohibit or limit it. The town of Tolland, Connecticut, allows “minor home occupations” as long as the business has a zoning permit. The town regulates home occupations so neighborhoods retain their residential character, as well as avoid noise, traffic, nuisances, and other effects of commercial uses.
Your county and/or city may require you to pay occupational license or business tax fees, even if you are working from home. In Volusia County, Florida, you must pay those taxes to both the county and the city, if you are within an incorporated city. In other states, those taxes must be paid directly to the state. The State of Ohio advises new business owners to check with their local zoning authority to determine if local zoning laws permit their type of business.
Further, note that municipalities define home businesses in different ways. The Home Occupation Provision of the Columbus Zoning Code defines the term “home occupation” and sets forth what is permitted in the city of Columbus. In Springfield Township, Ohio’s zoning code appears to exclude real estate agents from its definition of a home occupation, only including those who do not require a state or local license.
Community or Homeowners Association Approval
If you live in a planned community or condominium, you may be subject to a declaration or other legal document. This could affect your home business. Some communities prohibit all trade and commercial activities and any other activity that may annoy or be a nuisance to other owners.
However, other communities allow occupants to use a portion of their home for an office. As long as the activities conducted do not interfere with neighbors and do not result in the house becoming more of an office than a home. In addition, the association may require written approval for the use. Some of the activities associations do not like include frequent visits from the public. Therefore, even if you are permitted to have a home office, it may be prudent to have another location for meetings, such as a coffee shop or executive office space.