You are allowed to build a larger shed, which is a popular choice if your plans involve more than just simple storage. You will, however, need a permit. For most sheds between 120 and 750 square feet, a simple STFI permit is all that's needed. If your shed is larger than 750 square feet, is built in an environmentally critical area, or has beams that span more than 14 feet, you'll need a Construction Addition/Alteration Permit, which requires a full design review by the city prior to construction. If you want electrical service in your shed, you will also need an electrical permit.