Starting a business from home: 7 things you should know
Starting a business from home is a popular option for many businesses. Generally the costs will be lower, you can avoid travel expenses and you have the freedom and flexibility to work the hours you choose in an environment that you create yourself. These tips highlight things to consider when setting up your home business:
1. Start-up costs: You will need to buy, lease or rent the equipment for your home office and any materials you need for the service you are supplying. Common costs include a computer/laptop, broadband access, mobile phone, desk/chair, business cards and stock if you are supplying products.
2. Workspace: It is important to create a dedicated work space - it allows you to work without distraction and close the door on work at the end of the day. It will also allow you to deal with clients in a professional manner, resist demands from other members of the household and keep work equipment separate from home equipment. You must also carry out a health and safety risk assessment to identify any possible hazards to yourself, workers, visitors and other members of your household.
3. Planning permission: If running your business from home means that the use of the building changes, or the activities that you undertake have an effect on the area where you live, you may need to apply for planning permission from your local council. For example, changes could include increased traffic near your property caused by your business operations or the need to make structural alterations to your home.
4. Tax considerations: Working from home can affect your tax situation. Your business will be able to claim tax relief on domestic bills for the areas of the house used for your business. If your business is VAT registered, you may be able to claim back VAT on articles you buy for business use. If you have set aside a room solely for working in, you'll have to work out if there's Capital Gains Tax to pay if you sell your house.
5. IT requirements: Many home business owners depend on technology to keep in touch with suppliers, partners and contacts. Access to email and the internet will support you with these activities.
6. Record keeping: Keeping accurate records is important as you may incur penalties for not taking reasonable care with records and tax returns. Keep invoices and receipts to show what you have bought or sold relating to your business. If you are employing others, you must keep records of their wages, tax and National Insurance you have deducted and paid to HM Revenue & Customs (HMRC). Keeping bank statements and building society books is vital, especially if you don't have a separate business account.
7. Networking: Online networking allows you to build and maintain business relationships. You can use social media platforms like Twitter and LinkedIn to keep in touch with other business owners and identify new customers. This will alert you to business development opportunities and help overcome any feelings of isolation you may experience as a home business owner.