When it comes to encouraging job growth, government might want to avoid the type of overregulation that drives new businesses out of business. It’s a lesson Raleigh city officials could stand to learn.

The CEO of a Raleigh startup that was written about in The News & Observer on Monday was visited by a city inspector on Tuesday who told him he was breaking city rules by operating the business out of his North Raleigh home.

Justin Miller, whose company Deja Mi has released two smartphone apps since forming more than a year ago, said the zoning inspector informed him that he had 30 days to find another office or he would be cited for illegally operating a business with employees in a residential neighborhood. The N&O story said Deja Mi’s 13 employees work out of the basement of a North Raleigh house and included photos of Miller and other employees working in the basement. It didn’t provide the address or identify Miller as the home’s owner.

The incident is awkward for city officials who have been making a concerted effort to assist startups and brand Raleigh as a place for technological innovation.

“Here we are trying to create an image of being business friendly, especially to technology companies – in my mind that is unacceptable,” said Raleigh City Councilwoman Mary-Ann Baldwin.

An anonymous caller complained about the setup to an administrative assistant in Mayor Nancy McFarlane’s office on Tuesday, and that complaint was forwarded to the city’s zoning enforcement division. McFarlane didn’t return a call seeking comment on Tuesday.