Running a 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.

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.

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:

• 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.

To find out more about business law, 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).

When starting your own business from home and you begin to make employment decisions, make sure that:

• If they work at your home (as opposed to elsewhere) you find out whether you need to pay business rates (see above section)
• You carry out health and safety risk assessments
• You carry out all that’s required of you as an employer, e.g. meet employment law requirements, have the right contracts, carry out health and safety risk assessments, make sure that you have buildings insurance and the correct accounting software etc.