That is a great way to add value to your property and will really help you when it comes time to sell. You will definately need zoning approval and building permits. They are not very difficult to obtain and not very expensive. Easiest way to get some more free information is contact the city and ask for the zoing dept.
When you do get all the required permits and make it a legal addition, you will be increasing the square foot of living space which will add tremendouse value to your property. If you don't get the permits it will come baclk to haunt you when you sell. Also, make sure you are using a reputable, licensed contractor and be sure to ask for references!