House Bill 917, the Home-based Opportunity Freedom Act, passed in the House of Representatives yesterday. The bill would both explicitly establish that arbitrary regulations and fees cannot single out home-based businesses.
As people harness the power of new technologies and leverage opportunities for growth, small business owners have been able to build home businesses that can provide supplemental or even primary income. In many cases, home businesses eventually expand and grow to full-scale operations with offices, warehouses, and dozens of employees.
In addition to the immediate benefits for small businesses, many of these small businesses eventually become mid-sized companies or even multi-billion dollar corporations. For example, Amazon, Hobby Lobby, Microsoft, Google, Dell, Disney, and a host of other large companies, started small in garages, houses, apartments, and dorm rooms.
Many local governments often wax eloquent about the need for economic growth and business expansion. Yet, those same governments often impose regulations that are a direct barrier to business even starting in the first place. The need for a friendly regulatory environment is stronger than ever before.
A study conducted by the Center for Growth and Opportunity at the Utah State University found that many cities and local governments have zoning laws, permit fees, and a tangle of other regulations that make launching a home-based startup all the more difficult. According to another report on the issue from the Cato Institute, 18 states have passed laws reducing such burdens on home-based businesses. Such laws have helped home-based business models ranging from music lessons to cottage food sales.
Mississippi does not have a law protecting home businesses, and the effects have shown. For instance, the City of Jackson prohibits any increase in traffic due to a business being in the home. Thus, an increase in traffic caused by customers picking up cottage food could be viewed as a violation of the rules. The city also prohibits a home business from having any employees other than family members. Could this prohibit an attorney working from home from hiring a paralegal or a real estate broker to hire a secretary? A plain reading of the rules would conclude that both scenarios have a prohibition as well.
But Jackson does not stand alone with burdensome regulations. The City of Ridgeland has a rule that a home business may not occupy more than 25 percent of the total floor area of a home. This begs the question of why the arbitrary 25 percent number was the standard (as opposed to 20 percent or 30 percent). In the City of Nettleton, home businesses are not permitted to have more than five customers per day. In the City of Tupelo, there is an explicit prohibition on any mechanical work from home, such as small engine repair. The City of Cleveland states that "the dwelling floor plan shall remain unaltered from that appropriate with a household." However, the city has no specific definition of what would be "appropriate with a household," which makes enforcement arbitrary. In addition to these specific regulations, many cities also have an extensive application and permit process for home-based businesses.
The time has come for Mississippi to remove such arbitrary restrictions. According to 2016 pre-pandemic data from the Small Business Administration, approximately 50 percent of all small businesses were already home-based. In the wake of greater familiarity with working from home brought on by the pandemic, in conjunction with many starting their own businesses, the evidence suggests that these numbers have only increased since the pandemic. It's time for Mississippi to step up to the plate and enact policies to protect home-based businesses from excessive local regulations. It should not be a crime or a privilege to practice entrepreneurship in your home. This legislation would ensure that Mississippians are protected from government intrusion as they pursue opportunities through home-based businesses.