From the Nolo eCommerce Center
Be sure your chosen location allows your type of business.
Legally speaking, it’s far less important whether a certain spot is a good one for your business than if it’s properly zoned for what you plan to do. The first thing to remember is that you should never sign a lease for a business space without first knowing that you’ll legally be able to do business there. (One exception to this is that it’s okay to sign a contingent lease, with a clause stating that the lease won’t be binding if you don’t get zoning approval.) Being forced to move your business is a headache enough, but not nearly as catastrophic as being held liable for payment on a lease for a space that you can’t use.
As you may know, local zoning laws (often called ordinances or land use regulations) prohibit certain activities from being conducted in particular areas. For instance, a nightclub wouldn’t be allowed to operate in a district zoned for residential use. Sure, only a fool would try to open a disco on a quiet residential street but there are less obvious zoning no-nos that you need to observe.
Zoning ordinances typically allow certain categories of businesses to occupy each district of a city or county; mixed commercial and residential uses might be allowed in one district while another district allows heavy industry and warehouses. So if you open your small jewelry-making business in a space zoned for commercial use, you could be in for a real headache if zoning officials decide you’re a light-industrial business not allowed to operate in a commercial district.
Besides regulating the types of businesses in certain areas, zoning laws also regulate specific activities. Depending on your area, you might be subject to laws regulating parking, signs, water and air quality, waste management, noise, and visual appearance of the business (especially in historic districts). And in addition to these regulations, some cities restrict the number of particular types of businesses in a certain area, such as allowing only three bookstores or two pet shops in a particular neighborhood. Finally, some zoning laws specifically regulate home businesses.
One of the key things to understand about zoning laws is that more often than not, they’re enforced for the sake of the other people and companies in the neighborhood (this is particularly true of home-based businesses). While some areas are strict about their zoning laws, most of the time you won’t have a zoning official knocking unannounced on your door unless neighbors have complained or you’re in flagrant violation of the laws. Since enforcement is often triggered by complaints, it’s a good idea to get to know your neighbors and develop good relationships with them.
In most areas, zoning laws are created and monitored by city and county planning departments. Look under “planning” or “zoning” in the government section of your phone book.
For answers to zoning questions, never rely on what the previous occupants of the space did. Don’t assume that you’ll be allowed to do a certain activity simply because the previous tenants did it. For all kinds of reasons, some businesses get away with zoning violations, even for long periods of time. Typically, however, new occupants are scrutinized more carefully than already existing businesses. It may not be fair, but it’s common for a new business to be told it can’t do what an old one had long been doing.
It’s also possible that the previous tenants, without violating the zoning rules, were doing something that is no longer allowed in the area. For example, the previous occupants could have had a zoning variance (an exception to zoning laws) for their particular business – one that won’t apply to you. And lots of times zoning laws change, but businesses that are already in a space are allowed to keep doing what they were doing, even if the activity violates that new zoning law (a system referred to as “grandfathering”). When a tenant with a grandfathered exception leaves and new occupants come in, the new business will normally have to abide by the new law.