• Business license. Most towns require a license to conduct business. You can apply for one at the town hall (some areas have a department for licenses) and, once licensed, you will receive a certificate to frame on your wall. You also will be charged an annual fee for renewal of the license and your B&B will have to be inspected annually. This can include health inspections if you have a pool, hot tub, full-service kitchen, or bar. There also might be inspections by an electrical inspector from the fire department to test smoke alarms and make sure fire extinguishers are in place; and a building inspector who will ensure that exits aren’t blocked and that your general maintenance and upkeep is acceptable (no broken boards, and so on). If the inspectors find anything amiss, most likely they will require you to fix the problem and be inspected again before they’ll sign off on renewal.

• Building permits. If you’re constructing a B&B from scratch, you plan on major additions, or even if you build a fence, you’ll need to file for a building permit. Each permit involves a fee. Before you head down to the town hall, call to find out what documentation you’ll need for a casual meeting with the member or members of the building department. You’ll likely need to leave copies of blueprints or plans with them for review. Your property might need to be inspected, and planning or zoning committees also might need to review your plans before a permit is issued. Issuing building permits enables towns to keep an eye on property improvements and to reassess them accordingly during tax time. Most areas don’t require a permit for fixing an existing structure but it really depends on your level of reconstruction and the structure of the town’s codes. If you buy from a respected real estate agent with commercial real estate knowledge, much of the licensing and registration legwork should have been done by your agent. If you don’t buy through an agent—or even if you do—hire a real estate lawyer to follow through on the legalities.

• Fictitious name. Why, surely you can’t mean that! Yes, we do, and don’t call us Shirley. When you register your business name you file for a “fictitious name” statement with the county clerk. It doesn’t mean that you register your business under a different name. Filing a fictitious name statement is for B&Bs that have a name separate from the owner’s given name (such as Hideaway Cove Inn). If you do use your own name for the business (“Sue Ellen’s B&B,” for example), you’re exempted from registering.

• Public works requirements. The public works department is concerned with traffic and adequate access to buildings. Some public works departments are very strict about limiting the amount of off-street parking per guest room, the existence of a sidewalk, your curb cuts, and the width of your driveway. Check with public works before you buy a property that has no parking at all!

• Historical society or review boards. Some towns have boards that go beyond planning and zoning to manage changes in residential and commercial property. These boards will have guidelines on signage, fencing, house color, and consistency in architectural style. If your property is a historical landmark (or you think it should be considered one), it might need to be inspected and reviewed before it’s officially recognized as such.

• Fire codes. Some of the requirements you might encounter in your area to bring your building up to code are hard-wired smoke detectors with battery back-up, exit signs (possibly lighted), fire extinguishers in strategic areas, sprinklers (mostly required only with new construction or major renovation), legal exits, and fire doors. Your fire marshal should supply you with fire safety brochures, a must-have for any business. A fire code violation can result in fines if you don’t have it corrected, and could hold up your license renewal until the problem is fixed. Fire codes are becoming extremely stringent everywhere, especially with new construction and remodeling. Improvements to fire safety in an older building can be used as a bargaining point when you’re seeking zoning approval or variances. In more densely populated areas, additional benefits include lowering the risk of burning down the neighborhood, insurance breaks, and better sleep for you.

• Health department. These people make sure that your staff and your operation (primarily food service) are fit enough to serve the general public. Inspection by the health department is extremely important. If you fail, you might be able to operate (with a probationary time period to get your act together); but do yourself a favor: Save your reputation and get it right the first time. Health departments typically will check your kitchen and bathrooms for cracks in the walls (which allow unwanted pesky critters in); proper ventilation; and washable floor, wall, and ceiling surfaces. If you offer a full breakfast you might be required to purchase a convection oven and commercial dishwasher. Depending on your operation, you might even need to get a food handlers permit. You’ll also need to educate your staff on proper food handling and cleaning procedures. Check with your municipal or (if there isn’t one) county health department for specifics on their guidelines so you’ll be ready for an inspection. State health departments can be very rigid and have been known to make unexpected stops. Find out what your state and county guidelines are so you can be prepared.

• Seeing signs. Restrictions on the size of signs and their height from the ground are common.

• Regulations on food service. Because most B&Bs are zoned in residential areas, you might not be allowed to serve any meals to nonguests, or might be restricted to serving only breakfast. The purpose of these restrictions is to prevent excessive noise and traffic in residential areas. Cooking facilities in guest rooms also might be prohibited.

• Owner-occupied rules. In some towns, to be classified as a B&B, you will need to live on the property. You might be able to circumvent this rule by hiring a live-in manager and notifying the town of his or her name.

• Limits on guests and how long they stay. The number of guest rooms might be limited, as well as how long guests can stay. These restrictions are put in place to distinguish B&Bs from boarding houses and other rental units.

• Renovation considerations. Some towns will not allow renovations that would rule out restoring a house to its original use as a single-family residence (usually determined by the number of kitchens in the building). Once again, local codes come into play that might affect your renovation and the future sale of your B&B.

• Room tax permit. If you’re “selling” the use of rooms in your house, in other words operating a B&B, your room charges will be taxed by the state. You’ll need a room tax permit so that you can add this tax to your guest bills.

• Sales tax permit. If your state has sales tax and your property is zoned for selling products, most likely you’ll need to obtain a permit to collect sales tax on anything other than rooms that you sell to your guests. Talk to your accountant about the best way to keep track of sales tax and when to pay it (monthly, quarterly, or yearly). The more tourism your town has, the quicker you’ll be able to find out what’s required (from another local B&B, for example).

• State employer tax I.D. number. If you have employees, states also collect taxes in the form of an “unemployment insurance tax.” The state employment office will issue you an employer number automatically. You’ll need this at tax time when you report payroll.

• Worker’s compensation. This may be required, depending on state or local codes. See “Must-Have Coverage and Then Some,” later in this chapter.

• Liquor license. States require one if you serve hard stuff and beer and wine (some states have a separate beer and wine license, which is easier to get because they assume you’re serving food).

• Get inspected. Even if they’re not required, building, fire code, and health inspections will prove to the insurance company that you’ve taken steps to protect your business. Ask your agent what you can provide for the insurance company (inspection reports, for example) to get good coverage at a lower premium.

• Prevent injuries. Buy some carbon dioxide detectors, heat sensors, and smoke alarms for every room (these will be required anyway). Heat sensors and smoke alarms are typically required to be hard-wired by an electrician, particularly if you do a major renovation. Putting fire extinguishers in each room is an excellent idea, especially if you have an older house, and they’re very affordable. Put handrails in bathtubs and showers, non-skid material under rugs, fix broken or loose steps, remove snow and use salt to melt ice on pathways, put baby gates at tops of stairs (if you accept young children), install emergency lights and motion lighting outside, and use double-bolt locks on all outside doors.

• Prevent liability. Before you offer services that can put guests in dangerous or precarious situations, such as offering use of your mopeds or picking up guests at the airport or train or bus station in your personal-use vehicle, talk to your agent to make sure you’re covered for personal injuries to your guests. You probably won’t be, and you’ll need to buy extra coverage or a really good umbrella policy. Also have guests who use mopeds, for example, sign a disclaimer (ask your agent about the language to use). Don’t feel bad about doing this—if they rented them somewhere else they’d have to sign a waiver anyway. But don’t rely on insurance or a disclaimer as your only means of protection: Make sure those mopeds, horses, or snowmobiles are safe for use in the first place!

• Train your staff. Teach your staff the proper way to lift heavy objects (from the legs, from the legs!), and how to practice safety in the kitchen and when operating machinery. Don’t expect them to be familiar with safety practices, even if they’ve worked at other B&Bs. If anything happens to an employee while on the job, Worker’s Compensation will cover their expenses, but your insurance rates will rise as a result. Plus, what happens if an employee causes injury to a guest by failing to practice safety? Most likely you—not the employee—will be sued. Not familiar with work safety practices? Contact the U.S. Department of Labor’s Occupational Safety and Health Administration at www.osha.gov for more information.

• Food spoilage. Especially if you are an inn or offer more than one meal, this is a good extra. During an extended power outage, you might lose a few hundred dollars in food, depending on what you have in your fridge and a separate freezer.

• Products coverage. If a guest gets food poisoning on your property and it is not your fault, but the fault of the producer of the tainted product, products coverage will protect you. This should be included in your basic coverage.

• Personal liability. Although the term implies physical damage to you, it actually refers to emotional injuries such as slander. Personal liability also protects you in case you stumble onto a naked guest, or overhear a private conversation (invasion of privacy), or a staff member walks into a room without knocking (unlawful entry). You’ll most likely have a certain amount of coverage in your basic policy.

• Protection from Mother Nature. If you live by the coast, get flood insurance. If you live in California, get protection against earthquake damage. Mudslides have occurred in your area? Tornado country? You’ll be thankful you’re covered for these unforeseen happenings when the forces of nature release themselves on your property.

• Ordinance or law replacement. If you decide to rebuild after loss of property due to fire or “Act of God,” you’ll need to renovate in compliance with ordinances (once again). This extra coverage helps pay for work done to get your building up to code. Some towns might require you to update the building according to new fire and building codes that require adding such things as a sprinkler system or new plumbing. These costs might not fall under ordinance replacement coverage and will come out of your own pocket. This coverage is strongly recommended for older buildings that are not up to code: Things that you don’t anticipate can cause you great expense.

• Excess liability. This is extra coverage put into use when your regular liability coverage runs out. Usually referred to as an “umbrella policy,” this coverage kicks in when your regular coverage is maxed out.