Removing Regulatory Roadblocks to Home-Based Businesses

An excerpt from Growing Iowa's Economy - A Blueprint for Free-Market Solutions

A Des Moines Register headline from September 2020 posed a question that is already being answered in the affirmative: As working from home becomes routine, will others follow? It’s not just large corporations in Iowa’s biggest city that have shifted where their employees work, but employers of all sizes in every corner of the state have developed flexible and remote work options. Just three years ago, 13 percent of Americans were working from home. At the height of the coronavirus pandemic in 2020, that number had grown to nearly one third of Americans. It is natural to assume that out of necessity or opportunity, a similar trend has occurred among entrepreneurs.

While offices of all sizes sit empty across the country now, working from home is not a new phenomenon. It is a widely accepted fact that Apple Computers was a business that started in the garage of its founder, Steve Jobs, back in the 1970s. Not everyone working from home intends to launch the next tech giant, though. For years, Iowans have operated businesses that offer child care, or piano lessons, or haircuts out of their homes. While these smaller home-based businesses (HBBs) may never grow to rival Apple, collectively they make a big impact on their local economies and an equally large impact on the customers they serve.

There are different reasons for launching a HBB. For some entrepreneurs, these businesses begin as a way to pursue a passion or to generate a second income and that work is most easily done from home, allowing them to balance their existing personal and professional responsibilities. For others, they simply view their garage or spare bedroom as a more cost-effective, and often temporary, option than leasing commercial space. Others still may simply not have any other choice but to launch their business from home, as they are shut out from traditional sources of capital that would otherwise be available to a main street business. For those entrepreneurs, HBBs are the best route to pursue growth and financial freedom.

As Iowa’s economy continues to grow past the impact of the pandemic, it is important for HBBs not to be left behind. In fact, precisely because of the flexibility working from home offers, HBBs could play an important part of getting more Iowans into the workforce. Unfortunately, most HBBs face a patchwork of local regulations and licensing requirements that can restrain their growth and put them under a continuous threat of fines or closures.

The focus of local government regulation on a community should center on public safety. To ensure that individuals can start a home-based business without battling regulatory roadblocks, state policymakers could establish guidelines that will encourage entrepreneurship, while protecting public safety. This would also create a uniform network of guidelines for home-based businesses.

Some of these guidelines would include exempting home-based businesses from regulations if they:

  • Employ less than three nonresident individuals.
  • The business does not cause parking or traffic issues within the neighborhood/community.
  • The business is not the primary purpose of the home.
  • The business cannot be visible from the street.
  • The business must be compatible with residential uses.
  • The business must comply with all city and county health and safety regulations.


Arizona refers to these as “no impact” home-based businesses. Arizona has passed model legislation for other states that creates these uniform guidelines. The law exempts home-based businesses that are “no-impact” if they meet the above criteria. Under this reform, local governments would still be able to regulate public safety measures such as building codes, fire codes, and environmental concerns such as noise and pollution.

Removing regulatory roadblocks to home-based businesses will encourage greater entrepreneurship and create more opportunities for economic growth in communities across Iowa.