Are you legally allowed to run a business from home? [sc name="pod_ad"]By this point in the Definitive Guide To Starting A Home-Based Design Business series, you’ve determined that you want to start a home-based design business, you’ve written your business plan, and you’ve figured out your workspace situation at home. If you haven’t done any of that, go back and listen to Part One and Part Two of this series. Now that the ball is rolling, and you’ve figured out precisely what you want to do and how to go about getting it all started, it might be a good time to see if you are allowed to run a business from home. Legal restrictions. Are there any restrictions that may prevent you from starting your home-based design business? Depending on where you live, there may be certain rules and regulations in place dictating what is allowed and what is not allowed when it comes to home-based businesses. Some municipalities and communities require all home-based businesses to have a business license. Some require a home occupation permit, and some may require a regulatory license depending on the business model. Contact your local government to see what licenses and permits your business requires. These licenses and permits cost money and, in some cases, may take time before they are approved. Some of them are one-time fees, while others must be renewed on an annual basis. All permits and licenses are tax-deductible as a business expense. On top of the licenses and permits, you must check if there are any municipal or even neighbourhood by-laws that may prevent you from running a home-based business. For example, the neighbourhood I live in has a by-law preventing me from seeing clients regularly in my home. Something else to look into is whether or not you might require license and permits from nearby municipalities. For example, if you live in one municipality but regularly commute to a nearby municipality to do business, you may require a license in both places. No employees. Many municipalities have by-laws prohibiting home-based businesses from having employees other than family members residing in the home. In most cases, this won’t be a problem for a home-based design business. However, if you are starting as a partnership or want to hire a salesperson or anybody else, you may not be allowed to depending on where you live. I suggest you contact your local municipality to find out exactly what you need to run your business in your area legally. You can also contact your local business center and your chamber of commerce for their advice as well. Employment Contract. If you are starting your home-based business on a part-time or casual basis while you work another job for someone else, be sure that your main job doesn’t have restrictions against employees owning or working at another business. If you signed a contact at your current employer, review it and make sure nothing in the contract prevents you from moving forward. Insurance Another thing to think about is insurance. Both on your business and your property. Your home insurance premiums may increase if you are operating a business from your home. And some insurance companies may void your coverage altogether, so be sure to check yours. Some municipalities require proof of insurance before issuing you any business permits. When reviewing your insurance policy, consider increasing your liability coverage. This protects you should anyone come to your home for business purposes and are hurt while on your property. You may be thinking you don’t’ need extra liability coverage because you don’t plan on having clients over. But what about delivery people? If you order a new printer or computer and the delivery person slips and falls on your steps, and your insurance company discovers they were delivering goods for your business, they may decide not to cover you. Also, as a sole proprietor, you are personally liable for all debts. If you order a $10,000 print job and your client fails