Monday, February 18, 2013

The "sharing economy", home-based business, Internet, and local regulations: more turf protection?

Christine MacDonald gives an interesting perspective eon the “sharing economy” in the Washington City Paper , February 15-21 2013, titled "Share Madness", here.

While she discusses car sharing (Car2Go, ZipCar) and bike sharing, even offering rooms in homes to rent through a service caked “Airbnb” ( website link).  There will be social critics who say that is is a desirable development that can increase “social capital” and make people better prepared to deal with disasters (by being able to house others with little notice), as has happened, after hurricanes Katrina and Sandy, or even after wild fires (even on Malibu). 

MacDonald pointed out that commercial residence sharing is technically illegal in Washington DC, and points to a problem in the past that many entrepreneurial businesses ran into problems with zoning and the need for “business licenses”.  John Stossel, when he reported for ABC 20-20, pointed that out in the past.  In Charlotte NC, a woman’s cookie backing business was shut down because she didn’t have a commercial kitchen (and a similar result would happen in the District).  In Kansas, a beautician specializing in African Americans was shut down until she got a cosmetology license.  And in some New Jersey towns and (back in the 1990s), in Chicago, Los Angeles, and even Philadelphia people have been fined or sued by city governments for writing for publication or running websites (even non-commercial ones) without a “license”.

 A case with a rabbi in New Jersey was particularly ridiculous.  Some of these problems occurred early in Internet history, when larger companies feared competition from individual;s with no overhead – a motive that could have been part of the explanation for the push for SOPA and part of what Aaron Swart’s work was all about.

In Virginia, just about anyone who runs a site is well-advised to report his computer equipment (which devalues quickly) on his personal property tax form, and in most counties there is a home-based business tax, although usually there is a large exemption (like $10000).  The safest thing is to file it.  

Another tip for small business:  always set up a separate corporate structure if you have any significant income from it at all. (See Book Reviews blog, Feb. 12, 2013, review of Mike Young's book "Internet Law".) 

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