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6 min read

Running a business from home

Many small businesses are run from home, especially when they’re getting started. Here’s what you need to know about running a business from your home.

Should I work from home?

When thinking about running a business from home you need to consider a number of factors.

  • The nature of your work

    The nature of your work needs to be suitable for home working – for example, running a scrap metal business from a home in a quiet residential area may not be conducive to good relations with the neighbours and the local authority. Even, what might be considered to be minor inconveniences to those who live nearby, such as frequent deliveries or regular visits from customers, can cause friction.

  • Running costs

    If your business does lend itself to home working there can be many benefits, especially when it comes to costs. Premises are usually the next biggest overhead after salary, so not renting or buying business premises can keep your outgoings down. This can be a great benefit in the early days when revenue and cash flow may be challenging to predict and manage.

  • Travelling costs

    Unsurprisingly, many people find the prospect of a 60 second commute far more attractive than an hour or so each way to and from work: a couple of hours a day equates to more than an extra day that you can spend on your business each week! You also avoid the expense of travelling.

  • Staying focussed

    Working from home is not for everyone. Some people find it hard to focus on their work, especially when there are domestic distractions such as household chores, needy children and pets.

  • A dedicated work area

    To avoid distractions it  can help to carve out a space that’s dedicated to work, such as a room, a garden shed, or a screened-off area – a practical space that when occupied by you indicates that you are ‘at work’ and not to be disturbed.

  • Keeping in touch

    Some individuals feel too isolated when working from home, but that’s much less of a problem these days when it’s so easy to keep in contact with associates, suppliers, customers and clients via email, social media and telephone.

Do I need permission to run a business from home?

You may have to inform some bodies of your intention to run a business from home. 

  • Mortgage provider – even though it shouldn’t require any change to your mortgage – if you have one – it’s prudent to let your mortgage company know. 
  • Landlord some tenancy agreements prohibit running a business from home, so if you live in a rental property you need to check your contract. As a matter of courtesy, you should also let your landlord know of your intentions. 
  • Local authority – you should only need to contact the local council regarding planning permission if:
    • you intend to make alterations – such as building an extension
    • your home won’t be mainly used as your private residence
    • your activities could disturb neighbours, e.g. increased traffic and visitors, noise, smells.

How does working from home affect my insurance?

A standard home insurance policy is unlikely to cover business activity so make sure you take out some additional insurance for things like loss or damage to office equipment or furniture. Normally this doesn’t cost much extra, and it can be covered in a combined domestic and business policy. 

If you’re doing more than simply operating an office from home, you’ll probably need  specific additional insurance. For example:

  • Running a pet grooming service will require additional insurances for care and control of animals; equipment loss or damage; liabilities and indemnities
  • If you welcome associates, clients or customers into your home you should seriously consider having public liability insurance
  • If you keep goods or materials at home you’ll also need additional insurance and perhaps cover for goods in transit
  • If you keep business cash at home you may want to insure this and make sure it’s kept in a safe.

Will I need to pay business rates?

You normally don’t need to pay business rates, if for example you:

  • Only use a small part of your home for business
  • Sell goods via post.

You may need to pay business rates, on top of council tax, if for example you:

  • Convert part of your property to a shop or workshop (e.g. you change your garage into a hairdressers or a car repair workshop)
  • Regularly have customers or clients coming to the property
  • Have employees working at your property.

To find out, contact the Valuation Office Agency (VOA), or if you’re in Scotland, your local assessor.

Contact:

  • Valuation Office Agency (England): 03000 501 501
  • Valuation Office Agency (Wales): 03000 505 505
  • Local assessor (Scotland).

Can I employ people?

You can employ people in your home-based business, but make sure that:

Checklist: Can I reclaim the costs of working from home?

HMRC normally allows you claim part of the running costs of your home in your business accounts. Use the checklist below to highlight the running costs you can claim. Login to save this checklist to your profile for future use – as you work through the list, any checkboxes that are ticked or unticked will be automatically saved to your profile. (To register to join and enjoy the benefits of membership click on the link at the top right of the page. It will only take a few minutes to create your profile).

You must be logged in to use this checklist

Login or Register

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