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6 min read

Running a business from home

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.

  • 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 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

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).

Can I employ people for my home business?

When starting your own business from home and you begin to make employment decisions, 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 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).

 

 

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