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Baby Boomers are Starting a Home Business - Part 2

May 8th, 2017
These are some of the issues Baby Boomers must consider when launching a home business. Part 2 includes topics such as insurance, zoning, obtaining permits, building a team of professionals, knowing when to pull the plug.

Baby Boomers are Starting a Home Business - Part 2
Michael Goldman

Baby boomers working from home have a number of issues to consider during the course of launching their business.

Here are more of the issues Baby Boomers must consider when launching a home business. 

Part 2 - Insurance, Zoning, Obtaining Permits, Building a Team of Professionals and Knowing When to Pull the Plug.

Other equally important concerns will be covered in Part 1 of this article.
Baby Boomers are Starting a Home Business - Part 1

Baby boomers working from home have a number of issues to consider during the course of launching their business. 

In Part 1 one this article, we looked at topics such as entity formation, protecting confidential information, employees vs. independent contractors, and contracts with third parties.  

Here are more key steps toward making a home business a success:

When Daisy became tired of her commute to the high-end salon in the city, many of her long-time customers followed her as she set up shop in her house in the suburbs.  Now she continues to cut and style hair from home.

You need to check with your homeowners’ insurance agent to see whether operating your business from your home affects your policy, or whether you are not covered for liabilities that arise from the business’ activities at the premises.  Depending upon the activities at your home, you may need to buy additional coverage (generally very inexpensive) to make sure that your premises’ liability will extend to acts arising in the course of your business. 

Your auto insurance policy also may need to be updated if your amount of business-related driving is beyond what you had reported on your insurance application.  In addition, many small business owners are surprised to find out that there is relatively inexpensive liability insurance (which can include defective product or errors and omissions coverage) for their type of business.  Such policies usually cover your legal fees if you are sued by a client or customer for a product defect or negligent consulting advice.

Coach Mark retired from his job as gym teacher at the local high school and launched a home business as a personal fitness instructor.  Word spread that the popular teacher was offering kickboxing classes and weight training sessions, and before long the street in front of his house was lined with clients’ cars.

If you are using your home office merely for phone calls, file storage, and a place for you, alone, to work, your home business is unlikely to raise any zoning concerns.  However, if your home business involves visits from others (customers, colleagues, employees, contractors, etc.) or entails more than the occasional shipment of materials or products, you may actually have a zoning problem.  Local zoning ordinances govern the use of property and are designed to protect the health, safety and general welfare of the greater community. 

For the same reason that zoning normally does not permit industrial buildings in single family zones, zoning also may limit what non-residential activities a person can do in his or her home. Therefore, you should not spend a lot of money fixing up your basement or home office to accommodate employees, a satellite tower, and an expanded parking area (installed on what used to be a part of your grassy lawn) without knowing whether you first need a zoning permit.  Between nosy neighbors, the building department (for permits), the tax assessor and competitors, the local zoning officials generally know everything that is going on in town.

If you are having frequent visitors or the FedEx truck knows its way to your house without a driver, you should not expect to be able to keep your business use secret from the zoning authorities for long.  If you are in violation, the municipality can have the right to impose a cease and desist order.  It can be expensive to challenge or comply with cease and desist orders. If you are unable to challenge or comply, the monetary fines, demolition costs, etc. can be expensive and time-consuming. And, such cease and desist orders can be embarrassing as they are frequently reported in the newspaper and the local online news. 

Therefore, if your business involves having regular visitations at your house or lots of deliveries and shipments, consult with your attorney before plunging forward.

Obtaining Permits:
Evelyn was shocked to learn that she would need a building permit to change an electrical fixture in the attic room she used for jewelry making. “Inspectors will come out to make sure you have not tried to hang a heavy rotating ceiling fan from a box meant for a lighter, stationary fixture,” she was told. 

You might not anticipate that permits are needed for projects such as sign installation, sheds or accessory structures, fences and walls over 4-6 feet in height and demolition work.  Changing windows to doors, moving plumbing fixtures to different locations, moving an interior wall, altering a driveway, or replacing roof shingles (even shingling over an existing roof) all require permits.

If you are just hanging wallpaper or painting the walls, of course, you don’t need a permit.  Nor do you always need one for changing a toilet or sink and replacing it with the same item in the same space. One rule of thumb: anything requiring a dumpster requires a permit. 

Your business is an investment. If your project does not comply with the codes and standards adopted by your community, the value of your investment could be reduced.

Building a Team of Professionals:
After a long career in retail sales, energetic Bonita returned to her first love, children, and opened a daycare center in her home.  While she was delighted with her little charges, the legal considerations, insurance intricacies and bookkeeping demands quickly overwhelmed her.

Every self-employed person should assemble a team of professionals to assist in their respective areas of business.  These professionals would normally be a lawyer, accountant, commercial insurance broker, and IT consultant.  With liability protection, tax advice, insurance and technology covered, you can then focus your energies on what’s really important:  sales, increasing your expertise, and networking. 

Knowing When to Pull the Plug:
At first Jonathan seemed to be turning a healthy profit by selling antiques from home, online. Soon, however, it became apparent that he had far overspent on his inventory and marketing campaign and was incurring more debt each month.  An unexpected hospital stay sent him into a financial tailspin. 

Declaring bankruptcy is a wrenching resolution for most people, necessitating uncomfortable and typically unpopular decisions such as abandoning the dream of a home business.

Most cases filed by individuals fall under Chapter 7 of the bankruptcy code and involve people experiencing a crisis that prevents them from meeting their financial obligations.

Fear of their financial affairs becoming public is common, but bankruptcy proceedings are not published and rarely involve a court appearance.  Many individuals fear, also, that they will lose everything they possess in a bankruptcy, but that is not the case; many assets (such as the debtor’s home, most household goods, engagement and wedding rings) are exempt and can be kept by the filer.

Those filing under Chapter 7 also may retain their retirement accounts, social security payments and other government-subsidized benefits. Properly funded college accounts for the debtor’s children are also beyond the reach of creditors in Chapter 7. Personal injury claims and payments also can be protected with proper planning.

While there are many protections for filers, some discrimination against those who have filed Chapter 7 does exist: Private employers can refuse to hire a person who filed for bankruptcy. Landlords can refuse to lease to a Chapter 7 debtor.  Private colleges can deny transcripts. There are other issues that may arise and it would be a wise move to determine all the benefits and drawbacks before deciding to file.

A home business can be a wonderfully rewarding pursuit, both financially and emotionally.  It can provide a baby boomer with years of fulfilment and can fund a comfortable retirement. Once the myriad legal issues are considered and appropriate safeties are put into place, baby boomers are free to turn their home business into a booming business.  

Michael Goldman is an attorney with the Connecticut-based law firm Goldman, Gruder & Woods, LLC. 
He can be reached at 203-899-8900 or

Goldman, Gruder & Woods represents individuals, employers and employees in matters related to business, real estate, employment, education, criminal, litigation and health care laws.   Its attorneys believe that the best and most economical client service is achieved within a smaller firm with few barriers between client and principal. The firm, with a focus on smaller or closely-held businesses, has offices in Norwalk, Trumbull and Greenwich.

Article by:
Michael Goldman

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