Zoning and Your Home Business Location

How To Choose Your Business Location

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Every business needs to consider zoning. Whether you are setting up your business in your home, buying or building a new office or warehouse facility, zoning will be a factor.

Key Takeaways

  • Zoning determines whether or not a piece of property can be used as for commercial, industrial, residential, or other purposes.
  • Zoning laws will affect how tall a building is allowed to be, as well as other architectural features
  • You should check with your city or county to see if you need a permit to run your business from home

What is Zoning? 

Zoning is the process of planning for land use by a locality to allocate certain kinds of structures in certain areas. Zoning codes also include restrictions in different zoning areas, such as height of buildings, use of green space, density (number of structures in a certain area), use of lots, and types of businesses.

Zoning codes and permitsregulate land use, protect property values, and remove incompatible uses from residential areas. 

Types of Zoning

As you look for business locations, keep in mind the different types of zoning you may encounter. Knowing how a property is zoned can help you avoid problems and give you information to help you seek changes.

First, note that within each type of zoning there are sub-categories. In Residential zoning, for example, you might find different zoning codes for single-family dwellings, four-plexes, or larger apartment complexes. The designations for these subcategories vary by community.

Here are the major types of zoning in the U.S.:

Residential Zoning

Residential zoning is for individual family units or groups. It includes single-family homes, duplexes, condominiums, trailer parks, and apartments. If the building you want to use for your business is zoned "residential" you will need to get a variance to use the property for business purposes.

Commercial and Industrial Zoning

Commercial property includes almost everything that is not residential, from offices to retail stores, to shopping malls and strip malls, to bars and nightclubs. Most professional offices are zoned commercial.

Industrial zoning is for manufacturing and warehousing operations.

Historic Zoning

Historic zoning is used for buildings are areas that have historic value. Many of these properties are designated as "historic landmarks" by the National Register of Historic Places. If you want to use one of these properties for a business, you will have to adhere to the requirements for changing and using these properties.

Agricultural and Rural Zoning

Agricultural and Rural zoning regulate land used for farms and ranches, limiting the non-farm use.

Flood Zones

Many coastal areas have flood zones, at various levels, from low risk to high risk. If you are located in a higher risk flood zone, you may be prohibited from building in that area, or you might have to get flood insurance in order to build.

Other Zoning Restrictions

But zoning isn't just for the type of building or the type of business that is in a specific area. Zoning regulations also restrict other details. For example, you might find restrictions on: 

  • Buying land for a new building: Local communities often have land-use plans, and you want to be sure your land isn't earmarked for some specific purpose. There also may be zoning restrictions and environmental restrictions on the use of the land.
  • Placement of the building: Some zoning restricts the distance of the building from the curb or other lot lines. These are sometimes called setbacks.
  • Signage: Some cities restrict the type, size, and placement of signs. Even McDonald's has to bow to these requirements. 
  • Location of utility lines. 
  • Size and height of buildings: Some localities restrict high-rise buildings. Washington, D.C., for example, has a restriction on the height of buildings that was passed in 1910. Originally, buildings couldn't be higher than the Capitol, but this restriction was amended later. 
  • Use of the building: A Victorian home might fit in with the neighborhood, but if it's used for a bed and breakfast, this may violate zoning regulations of the city.

Zoning and a Home Business

Zoning laws are set up by cities to protect property owners and to maintain the value of their property. The owners of property with higher value don't want disturbances, extra traffic, or unsightly buildings next to their valuable property. 

If you are setting up a home-based business, you need to be aware of zoning requirements for your area and home-based businesses need to be aware of zoning requirements for the specific locality. In some cases, depending on your business type, you may not be able to locate your business in your home. For example, if you have a business that has customers coming to your home, that may not be allowed by the city or town. 

Before you locate your business in your home, check the zoning requirements of your location. You may need to get a variance to allow you to operate your business from home. 

How to Get a Zoning Permit or Variance

Before you locate a business anywhere, including your home, check with your city or town to see if you will need a zoning permit or variance. The process usually involves filing an application, having it reviewed by a local board, and sometimes taken before city or town council. The process for a home business may also involve polling current residents to get their approval. 

Frequently Asked Questions

Is It Legal To Run a Business From a Residential Property?

That depends on the business. If running a business from your home does not negatively impact your neighbors and does not affect the character of the neighborhood, you may be able to run a business from your home. You'll need to check your local zoning regulations to be sure.

Can a Tenant Run a Business From My Rental Property?

As long as the tenant is following local zoning laws and is adhering to the rules set out in the lease, they are generally permitted to run a business. Landlords may want to offset potential liability by having insurance requirements and stipulating that the business must have all necessary permits and certifications. You may also want to consult with a lawyer so there aren't any unwelcome surprises.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. FindLaw. "Land Use and Zoning Basics."

  2. HomeUnion. "Can You Run a Business From a Rental Property?

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