Obtaining a Business License for At Home - not so easy

[D3Gilmore]

In my attempt to legitimize my at-home business and reap the benefits of being able to buy wholesale, I ran into a big snag today at the City. I want to do small at-home upholstery: patio cushions, pillows, small furniture like ottomans, chairs, barstools, side-chairs, etc., as that is what I have been doing on the side for the past couple of years and found enjoyment and profit in doing it.

Today I was told that by the mere fact I am an "upholster/sewer" the City Planner finds it hard to believe I will only do "fabric" like cushions etc.

1) I cannot have anyone come to my home to pick-up or drop off
2) I cannot house any furniture for repair
3) I cannot have any hazardous materials (like mineral spirits)
4) I cannot store anything in my garage (including supplies)
5) I cannot have an industrial machine (ie sewing machine)

Okay, I can resolve item 1. I tend to visit the clients' homes anyway - it has gotten more more business simply engaging with the client and talking about new projects on their lists.

But 2, 3, 4 and 5?????

I was told if I just did cushions, pillows and drapes, I'm okay.  Otherwise, I cannot work out of my home, I need a retail space.
I was also told by the City Planner if he went to my Facebook page he would probably see all sorts of furniture (yup), which will get me in hot water.

How can a person legitimize their business with requirements like this?

I'm not sure how to get around all these requirements.  I filed under two businessnames.  One has the word "Upholstery" in the name.  The other doesn't.  I don't want to just do pillows/cushions.  I love the art of upholstery and reviving old and meaningful furniture.

Can someone give me ideas on how to overcome these obstacles?

Currently, I have a Janome Memorycraft 7000.  It has served me well and doing well for cushions/drapery and stuff.
I haven't used Sunbrella fabric yet and was wondering if I was going to run into problems - and hoped to upgrade to a Juki along the way.  Now that I'm told "industrial machines" are a no-go.....how can I have a business??

[sofadoc]

So are you saying that all these restrictions kick in ONLY if you acquire a business license?

Sounds like you need to continue flying under the radar. Texas doesn't require a business license, so I've never had one. But I still get wholesale pricing from suppliers all over the country.

Online sellers like DIY Upholstery and Rochford Supply will sell to anyone. Their prices may not always be the lowest, but they are certainly competitive with "trade only" wholesale suppliers.

I guess you must live in an affluent town to have such strict ordinances. Many towns across the country encourage work at home businesses (even upholstery).

[D3Gilmore]

Yes, if I file for a license, I am restricted.

My local fabric supplier said if I get my license, they will give me a "Decorator's Discount" of 20% on any custom fabric orders.  I had a client today with $1880 order of fabric.  That discount to me (profit) is significant and I don't want to leave it on the table.

I can continue to get my supplies online, etc., but I'm still paying sales tax on retail prices locally.

I just figured if I formalize my business, it would create better streams of revenue over time.

[MinUph]

One way around all this D3 is to rent a retail shop and open up a real business. You might be surprised at the business it will bring in. 

[sofadoc]

One way around all this D3 is to rent a retail shop and open up a real business. You might be surprised at the business it will bring in. 

Depends on what commercial property is renting for in his neck of the woods. It might drive his overhead costs so sky-high, that he would be better off just staying at home and paying more for material and supplies.

And if that town has so many residential restrictions, commercial restrictions may be even worse.

[SteveA]

Becoming a business at home could mean an increase in your homeowners insurance - possibly inspections by officials, change in garbage pick up,  and headaches that aren't warranted if the only issue is buying materials less costly.  I would think you can work around that issue
Side business - right ?
SA

[gene]

How can a person legitimize their business with requirements like this?

I'm wondering if the question you are asking is "How can I get around these requirements?"

I would suggest following all the requirements.

First I would get all codes, regulations, rules, requirements, and laws that pertain to my work in writing. They are public documents and should be easily obtainable.

Second, I would read, understand, and follow them. The City Planner is telling me what he/she knows. And I would guess that what is being said is correct. However, I am not bound by what a government employee tells me. I am bound by what the codes, regulations, rules, requirements, and laws actually state.

In my state a tax exempt form needs to be filled out for sales tax exemption. Wholesalers need to have a copy of this form in order to not charge my business sales tax. They also use this as a reason to give me their wholesale pricing, if they have any. As sofaD said, there are wholesalers who will give wholesale discounts to some customers, and sometimes even though they are not tax exempt.

I rent a shop in an industrial park. Other business owners have told me that they can hear my staple gun firing all day long. My neighbors in the neighborhood where I live would not want to sit on their back porches and listen to my staple gun firing inside my house all day long. I would not want to sit on my back porch listening to my neighbor's staple gun firing all day long either.

It may be that your neighborhood is regulated to not allow the type of business you want to have.

Finally: Do you have commercial insurance on your house and possessions inside your house? Do you have commercial liability insurance in case someone does come to your house for business purposes and slips on the ice and gets hurt? Your homeowner insurance policy probably specifically excludes coverage for 'business use'.

And what about commercial fire extinguishers? And handicap accessability? etc., etc., etc.

Best of luck and welcome to the world of the small business ownership. It's not at all like those commercials say it is.

gene

[sofadoc]

Several years ago, I bought a used sewing machine on Craigslist. I drove about 30 miles to pick it up on a weekend. Instead of taking it to my shop downtown, I just unloaded it in my garage until Monday.

Whenever my garage door was raised, the machine was visible from the street.

Bright and early Monday morning, a city code enforcement officer was knocking on my door investigating a complaint that I was operating a sewing business out pf my home.

Our city does allow such businesses, but with a few rules. No signage. No customers coming to your home. And like Gene mentioned, no noisy machinery that would disturb the neighbors. As well as all the OSHA regulations regarding use of chemicals. So basically, can I operate an upholstery business from my home? Yes I can, but no I can't.

It has fried me a few times when I lost out on a big job to someone who could bid lower because they work from home, and skirt all the regulations. Especially when it's someone who isn't even a legal US citizen.

Many upholsterers across the country DO work from home, but I'm guessing most of them live in rural areas outside city limits.

All things considered, the requirements confronting you may not be unreasonable at all. Just the cost of doing business.

[kodydog]

Are you sure your wholesalers want to see your business license? Mine usually just want to see my tax number. My tax number is issued by the state. They have nothing to do with code enforcement. You should be able to fly under the radar and still get wholesale prices.

[D3Gilmore]

Kodydog,

This local supplier has asked for: Current Business License, Copy of Resale Permit, California Resale Certificate (if I won't be paying tax on my purchases) to get their "20% discount". 

I don't want to get into the hassle of buying say Dacron Wrap on a roll without paying tax, to have to turn around and calculate how much dacron I actually used for that client's project and then determining what % of tax to charge them.

As a sole proprietor  I can use my SSN as my tax ID I suppose.  I was trying to keep everything separate but it's getting more and more convoluted as I delve into the whole "tax" issues when it comes to buying wholesale.

[byhammerandhand]

If you want to do an LLC, you can pay a lawyer to draw up the articles, or you can do what I did.   I got NOLO press's book on LLCs (from the library) downloaded the forms from the enclosed CD, filled out a few blanks, and sent with $50 to the state, filed a copy in my office.

IRS considers an LLC a "disregarded entity" meaning underneath there is a sole proprietor, partnership, or corporation.  

You probably also want to get business liability insurance.

http://www.nolo.com/legal-encyclopedia/limited-liability-company

I moved "out to the country" last summer, but in my prior home of 20 years, there were a few regulations -- no signage, limited amount of traffic (I do mostly onsite work, so not an issue),  no work or storage in a garage our outbuilding, work limited to a % of house.  I had a friend who was on city council and had a CPA business in her house.  My neighbor ran a sign business out of his house and violated almost all these rules, but no one complained and it was not an issue.

[MinUph]

  Keith may have stumbled onto something here. If you incorporate this will become the entity that has the "business license" you can then obtain sales tax documentation and you would be all set. Seems a bit convoluted but workable in an area that sounds like it is very strict and regulated.
  Have you tried other suppliers? Maybe someone out of town with a delivery service or even shipped to you. Most will only want a sales tax document. It sounds like your local supplier is bound by the same hefty rule book as you.

[kodydog]

California Resale Certificate

Oui, California, the most regulated and taxed state in the nation. I pity you. Nice weather though.

[D3Gilmore]

Ha! Yah, that is for sure to all three of your points.

[D3Gilmore]

Thank you all for your insight and suggestions.  I think Kodydog hit the nail on the head - California is so heavily regulated that this makes small businesses impossible to exist.

I did begin researching whether an LLC is the way to go.  That process took me down a rabbit trail to the California Business & Professions Code as well as the California Corporations Code this evening.

In addition to my business license, I am required to hold a custom upholsterer's license. That would be, of course, if I could actually have upholstery in my home, which "legally" I cannot.

The bureocratic red tape is ridiculous. 

I may license to be a "sewer" of "home décor type things and continue to do my "upholstery" as my "hobby".

Thank you all again,