In some Rhode Island towns, starting a home-based business can be a bureaucratic headache.
It usually requires convincing the town zoning board to grant a variance that allows a commercial enterprise in a residential zone. Although denials are rare, the process itself can be tedious and time consuming, says Paul Caranci, director of the First Stop Business Information Center, which is under the Secretary of State’s office.
Before appearing before the zoning board, an entrepreneur must notify – by certified mail – every neighbor within a predetermined radius of the home, which often includes dozens of residences. Then the would-be business owner must advertise twice in a newspaper before he or she appears before the zoning board.
Even then, there is a chance that one unhappy neighbor might show up to oppose the zoning variance, Caranci said, despite the fact that most home-based businesses generate no traffic, noise or other disruptions to the neighborhood.
”A lot of times you have just one neighbor show up to oppose you, and the board turns it down,” Caranci said. “Now you’ve had to wait more than a month, you’re out some 300 bucks and you’re no closer to starting a business than before.”
Another option – which many entrepreneurs choose – is to start the business without registering with the city. Not only is that illegal, but it can present other problems. For instance, an unlicensed home-based business won’t be able to open a small-business account at most banks.
There is, however, a relatively simple way to avoid all that red tape: About half of Rhode Island’s municipalities have home-based-business ordinances on their books. The laws outline a relatively simple set of criteria to meet before beginning a home-based business – allowing entrepreneurs to avoid the hassles of the zoning process.
Caranci said a number of municipalities recently have expressed interest in home-based-businesses ordinances because of the growing popularity of working from home. First Stop Business Information Center provides consulting services for cities and towns that want to draft such ordinances.
”A growing number of people are looking into home-based businesses lately, because of corporate downsizing and the economic slowdown,” said Caranci, adding that older people who get laid off often look to start businesses from home. “But a lot of cities and towns are starting to realize that it can be a real bureaucratic nightmare without a home-based-business ordinance.”
Such laws provide an easy framework for entrepreneurs, but they also work in the municipality’s favor, Caranci said, giving them greater control over unlicensed businesses and adding to the town’s tax base.
Elements of individual ordinances vary, but Caranci said most contain the same basic elements:
Limits on the percentage of space in the home dedicated to the business (usually 20 percent or less)
Strict limits on signage (with many ordinances banning outside signs altogether)
Restrictions on deliveries (many ordinances limit the size of delivery trucks to the size of a standard United Parcel Service truck, for example)
Limits on number of employees (usually limited to one non-family member)
Restrictions on storing hazardous material
Ban any retail activity, which can generate traffic and parking problems.
In Narragansett, for example, owners of home-based-businesses are required to write a letter to the town’s building inspector detailing the nature of the business and the equipment used. In North Kingstown, a maximum of two non-resident employees can work from a home-based business. East Providence’s ordinance does not allow deliveries or visitors for business purposes.
While a good ordinance will include most or all of these elements, Caranci said officials should be careful to allow some flexibility in the laws. For example, a ban on all hazardous materials might create legal problems for the owner of a landscaping business who stores gasoline in his garage.
Entrepreneurs should call their city or town hall to find out if there is an ordinance on the books. Officials interested in crafting a home-based business ordinance can call Paul Caranci at the First Stop Business Information Center, (401) 222-2185.
Mike Colias can be reached via e-mail at colias@pbn.com
