Many small businesses are set up from home, especially when they’re first getting started. Here are a few best practice top tips you need to know about running your home business.
Should I work from home?
When thinking about running a successful business from home you need to consider a number of factors.
Do I need permission to run a successful business from home?
As a sole trader you may have to inform some bodies of your intention to run a business from home through word of mouth and official documentation. See below for our business checklist:
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 for your target market, 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 your business plans if:
you intend to make alterations – such as building an extension for a bed and breakfast or holiday home
your home won’t be mainly used as your private residence but for parttime business activity
your business model involves activities that could disturb neighbours, e.g. increased traffic and visitors, noise, smells.
How will my home business 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, have a business bank account or have taken out business loans, you’ll probably need specific additional insurance. For example:
Running a pet grooming, pet sitting, or dog walking 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 (such as having a business as a personal trainer, or flower arranging), you should seriously consider having public liability insurance
If you keep goods or materials on business premises you’ll also need additional insurance and perhaps cover for goods in transit
If you run your business and keep extra money at home you may want to insure this and make sure it’s kept in a safe.
Will I need to pay business rates from a business bank account?
You normally don’t need to pay business rates, if for example you:
Only use a small part of your home to provide businesses or individuals with a service (such as those who are willing to pay for online marketing services) Sell goods such as unwanted items via post.
When you have cash flowing, you may need to pay business rates, on top of council tax, if for example you:
Have a lot of time and convert part of your property to a shop or workshop (e.g. you change your garage into a hairdressers or a gym if you are a personal trainer)
Regularly have customers or clients coming to the property and charge hourly rates such as event planning
You are a limited company and have employees working at your property
Checklist: Can I reclaim the costs of working from home?
HMRC normally allows you claim part of the running costs of your home via your business bank account. 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).