Wake up, roll out of bed, walk down the hallway, and clock in. This has become the routine for many workers nationwide who have worked from home since the beginning of the COVID-19 pandemic. Not only are a larger number of people working from home, but a larger number of people are renovating their homes into true office spaces, taking “working from home” to another level. With any attempt to change one’s property and surrounding land, the allowances and restrictions are governed by the applicable zoning ordinance, whether it be of the local borough, township, county, or state. For anyone with dreams of building a new office, designing a work-structure for the backyard, or paving a driveway for customers to use, there are guidelines and rules that may hinder these ambitions. Amongst many considerations and decisions you’ll make about working from home, be sure to investigate whether or not your property is approved for home occupation.
What are “home occupations”?
A home occupation is generally defined as any occupation or profession conducted for gain in a dwelling. Zoning ordinances across the nation have varying definitions for an “at-home business” or “home occupations”. Alongside these different definitions, there are varying classifications of these home occupations between zoning ordinances. The backyard structure that you are going to use to sell your home-made garden gnomes may be a “permitted use” in one township, a “special exception” in another, or it may be prohibited altogether in the neighboring township.
These different classifications all depend upon factors written in your township’s zoning ordinance, and for many homeowners, the hardest part is understanding what they can and cannot do on their own land. Some local ordinances even have different definitions of at-home businesses that have sub-categories within the definitions themselves. It can get confusing very quickly.
Does my home occupation need a permit?
The first question you need to consider is what permits are required. Many zoning ordinances require permits for any home occupations that would “extend the use” of land from its original use to something more impactful to the property and surrounding neighborhood. The determination of whether a use of land becomes a home occupation that requires permits is often swayed by the answers to the following questions.
Does the proposed home occupation:
- Create more traffic in the neighborhood;
- Hire employees;
- Display a sign on the property advertising the occupation;
- Cover an impermissible amount of square footage;
- Increase noises and disturbances within the neighborhood;
- Require the use of hazardous materials;
- Operate noticeably outside of the hours of 9:00 AM – 5:00 PM;
- Alter the physical appearance of the property in ways impermissible to the township; or
- Affect the property or surrounding areas in other bothersome ways?
Zoning boards will often hold public hearings as a part of the process in determining whether a proposed at-home business or home occupation is valid under the applicable ordinances for so-called “special exceptions”. These hearings can be long, complex, and emotionally charged. While in the process of considering if a home occupation is right for your property, it is prudent to hire an attorney to ensure a smooth process from start-to-finish.
Do I have to pay taxes on my at-home occupation?
While determining whether an at-home occupation is right, or even legal, for your property, you must remember that all worries are not gone once you receive permission from the local township.
Another factor to consider if you are preparing to start a business out of your home is the possibility of the business being taxed. Before you make the decision, you must determine which taxes apply to your property with the inclusion of a home occupation and then determine if you could afford to pay them. One tax to look out for is the Business Privilege Tax (BPT). The BPT is based upon a business’ total receipts. The BPT may apply to your at-home business based upon the business’ location, size, and model.
Remember, different townships treat these taxes in different ways. If homeowners-turned-home-business-owners are not aware of taxes such as the BPT, they could be months into use of a permitted business from their own home, and have their successes taken out from under them by taxes they did not anticipate. It is best to know what you are getting into before you are being asked to pay taxes on that fancy new at-home workspace.
Legal support for home occupations
If you find yourself in the position of beginning the journey of working substantially from home, reach out to our Real Estate, Land Use & Development attorneys in Allentown, PA about finding ways to make sure you are doing so legally and effectively.
FLB Summer Associate Maxwell Allanson-Dundon contributed to this blog
