Can I run a business from home in Morro Bay, California?
Allowed
Yes. Morro Bay allows home occupations in any residential unit if the work stays inside the home, an attached garage or an enclosed accessory building, the house keeps its residential look, and you have no more than one non-resident independent contractor working on site. Retail sales from the home, personal services, animal services and some other businesses aren't allowed.
| Where allowed | Any residential unit, in any zone [1] |
| Where the work happens | Inside the home, an attached garage (doors closed) or an enclosed accessory building [2] |
| Non-resident workers | Max 1 independent contractor (cottage food: 1 full-time-equivalent employee) [3] |
| On-site product sales | Not allowed, except by mail, phone or internet [4] |
| Signs / exterior | No exterior indication except signs allowed under Ch. 17.29 [5] |
| Vehicles | Nothing larger than a 3/4-ton truck [6] |
| Cottage food sales cap (city code) | $50,000 gross per year [7] |
What's allowed
Morro Bay defines a home occupation as a commercial use run by the residents that is incidental and secondary to living there. The standards in Sec. 17.30.130 apply in any residential unit regardless of zoning [1]. The residential use tables don't list a use permit for home occupations; they point to this section. Family day care is regulated separately.
Operating standards
- Location: all activity must be inside the home, an attached garage or an enclosed accessory building. In a garage, keep the doors closed and don't block required parking spaces [2].
- Workers: at most one independent contractor who doesn't live there may work on site [3].
- Sales: you can't display or sell products from the site, only by mail, phone, internet or other electronic means [4]. That makes online and office-type businesses the easiest fit.
- Appearance and signs: no exterior sign of the business except signs that meet the sign chapter [5].
- Traffic: no more visitor traffic, deliveries or parking demand than is normal for the street.
- Vehicles: nothing larger than a three-quarter-ton truck [6].
- Nuisances and hazards: no noise, smells, smoke, glare or other nuisance noticeable at the lot line. Only household-type hazardous materials.
Prohibited home businesses
The code bans vehicle sales and services, animal care, sales and services, eating and drinking establishments, hotels and motels, hospitals and clinics, personal services, and retail sales as home occupations [8]. "Personal services" is defined broadly to include barber and beauty shops, massage, photographers, laundry and clothing repair [9].
Cottage food
Cottage food operations are allowed in any legal residential unit if registered as Class A or B. They may have one full-time-equivalent employee besides the household [7]. The city code caps gross sales at $50,000 a year [7]. State cottage food law sets higher caps ($75,000 a year for Class A and $150,000 for Class B, adjusted for inflation), so state law may override that lower local limit.
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Next steps
- Check that your business isn't on the prohibited list (vehicle services, animal services, food service, lodging, clinics, personal services, retail).
- Plan to work inside the home, an attached garage with the doors closed, or an enclosed accessory building, with no more than one non-resident independent contractor on site.
- Contact the City of Morro Bay (Community Development, 955 Shasta Avenue, 805-772-6267) to ask about a business license and any zoning sign-off.
- For cottage food, register as Class A or apply for Class B with San Luis Obispo County Environmental Health.
Common questions
- Can I run a business from home in Morro Bay, California?
- Yes. Morro Bay allows home occupations in any residential unit if the work stays inside the home, an attached garage or an enclosed accessory building, and the house keeps its residential look.
- Can I have employees at my home business in Morro Bay, California?
- Only a little help: at most one independent contractor who doesn't live there may work on site. A cottage food operation may have one full-time-equivalent employee besides the household.
- What home businesses are not allowed in Morro Bay, California?
- The code bans vehicle sales and services, animal care and services, eating and drinking establishments, hotels and motels, hospitals and clinics, personal services such as barber and beauty shops, and retail sales as home occupations.
- Can I sell products from my home in Morro Bay, California?
- No. You can't display or sell products from the site, only by mail, phone, internet or other electronic means. Cottage food operations are allowed if registered as Class A or B.
California state protections for home-based businesses
California has no general statewide home-occupation law. Cities and counties set the rules on employees, signs, customer visits and parking. State law protects a few specific home businesses:
Family child care homes (Health & Safety Code §1597.45):
- A licensed small (up to 8 children) or large (7 to 14 children) family daycare home is a residential use by right under all local ordinances, including zoning. A city can't require a use permit.
- Cities can't charge a business license, fee or tax for operating one, and it isn't a change of occupancy under building codes.
- Local rules may apply only if they are identical to those for other homes in the same zone, whether the home is rented or owned.
Cottage food operations (Gov. Code §51035; AB 1616, effective 2013):
- Cities and counties can't prohibit home cottage food operations. They must allow them as a permitted use or through a permit limited to reasonable spacing, traffic, parking and noise standards.
- A cottage food operation has no more than one full-time-equivalent employee besides family or household members. Class A (direct sales only) is capped at $75,000 a year and Class B at $150,000, adjusted for inflation (H&S Code §113758).
- You must register (Class A) or get a permit (Class B) from the county environmental health agency.
Home kitchens selling meals (microenterprise home kitchen operations): allowed only where the city or county has authorized them, with a permit and a limit of 30 meals a day and 90 a week (§113825).
What the ordinance says
- Sec. 17.30.130(A), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
This section applies to home occupations in any residential unit in the city regardless of the zoning designation. It does not apply to family day care, which is regulated separately.
- Sec. 17.30.130(B)(2), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
All home occupation activities shall be conducted entirely within the residential unit, within a garage that is attached to the residential unit, or an enclosed accessory building. When conducted within a garage, the doors thereof shall be closed, and the area occupied shall not preclude the use of required parking spaces for parking.
- Sec. 17.30.130(B)(3), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
A maximum of one independent contractor other than residents of the dwelling shall be permitted to work at the location of a home occupation except as otherwise allowed for cottage food operations.
- Sec. 17.30.130(B)(4), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
Home occupations involving the display or sale of products or merchandise are not permitted from the site except by mail, telephone, internet, or other mode of electronic communication or except as otherwise allowed for cottage food operations.
- Sec. 17.30.130(B)(1), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
The residential appearance of the unit within which the home occupation is conducted shall be maintained, and no exterior indication of a home occupation is permitted except signs in conformance with Chapter 17.29, Signs.
- Sec. 17.30.130(B)(8), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
No vehicle larger than a three-quarter ton truck may be used in connection with a home occupation.
- Sec. 17.30.130(C)(2)-(3), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
A cottage food operation shall not have more than fifty thousand dollars in gross annual sales in each calendar year. 3. Operator and Employee Allowed. Only the cottage food operator and members of his or her household living in the unit, as well as one full-time equivalent cottage food employee, may participate in a cottage food operation.
- Sec. 17.30.130(D), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
The following specific businesses are not permitted as home occupations. 1. Vehicle sales and services; 2. Animal care, sales, and services; 3. Eating and drinking establishments; 4. Hotels and motels; 5. Hospitals and clinics; 6. Personal services; and 7. Retail sales.
- Sec. 17.53 (Personal Services, General), Municipal Code Title 17 Division V Terms and Definitions (Ch. 17.53 use classifications; 17.54 definitions), p. 1
Personal services include barber and beauty shops, massage establishments, shoe and luggage repair, fortune tellers, photographers, laundry and cleaning services and pick-up stations, copying, repair and fitting of clothes, and similar services.
This page summarizes Morro Bay's posted ordinances as of 2026-10-05. Ordinances are amended, and individual lots can have overlays, subdivision covenants, or HOA rules that are stricter. Confirm with City of Morro Bay Community Development Department - Building Division (Building Inspector/Code Enforcement Officer 805-772-6213), 955 Shasta Avenue; Harbor Department handles waterfront enforcement (805-772-6267) before you build. Spot an error?