When starting a business from home, there are a lot of factors to consider. We have broken down the top things to think about when getting started.
What does it mean to run a business from home?
Running a business from home means that your business is registered to your home address; this comes with various legal implications and tax responsibilities. For example, depending on the nature of your business, you may need specific permission from your landlord, mortgage provider or local council.
If you are making changes to the property in order to run your business, you may need to seek planning permission. Regarding taxes, your council tax bill might change but you may also be able to claim certain tax allowances on business expenses.
How to start your own business from home
Have a business plan in mind
Before starting out, you will need to be clear on the type of business you are looking to start. Run comprehensive market research to determine the size of your business, your competitors, rough pricing guidelines and target audience.
Take an especially close look at those who are running similar businesses from home and learn about their home business set-ups. You may be able to seek valuable advice from someone who is running a similar business from home – not only could they offer expert advice and tips, there may be potential for future collaboration or referrals.
Once you understand the market, you should put together a business plan. Business plans make you accountable for any actions you take and any company expenses but it also sets out a timeline and clear business objectives which can keep you focused when starting out. Not only that, but a clear and comprehensive business plan will be invaluable if you are wanting to receive funding in the future. It shows investors that you know your business inside and out and will help you make well-founded decisions and forecast for the future.
One part of your business plan that is imperative is knowing where you need money today, or if you can use savings and then reassess further down the line. Think about at which points you will need to invest and start planning in advance how you will be raising the funds.
Prepare your home
Think about how you will be running your business from home at a logistical level. For example, what room will you be based in? How do you plan to separate your home and work spaces? Will you be inviting clients or customers into your home? Is your home ready to receive customers? There are many things to consider when setting up your business from home.
Once you have decided how and where you will be operating your business, you will need to make sure that your home is business-ready. If you are needing to modify your property in order to run your business, you may need to look into planning permission. Depending on the changes needed, it is possible that you need to contact your local council or government; always check what is stipulated in your local guidelines.
If you have a mortgage, you should let your mortgage provider know that you are planning to run a business from home. Similarly, if you rent, it may be worth contacting your landlord to let them know. It is also worth updating your home contents insurance in order to run your business responsibility; for example, your existing policy may not cover stock so if you are planning to keep stock at home, you will need to update or change your policy.
Depending on the nature of your business, it might also be worth alerting your neighbours, especially if they will be impacted by any noise and disruption. If you are expecting many visitors, for example, it might be worth letting your neighbours know in advance and keeping them on side.
Register your business
As part of registering your business, you will need to establish your home address as a professional business address. If you are not willing to do this, you can also sign up for a virtual office address rather than update all of your details if you plan on moving in the future.
Before starting your business, you will need to contact and register with HMRC. Additionally, if you are setting up as a limited company, you will need to inform Companies House.
If you are turning over £85,000 or more, you must be registered for VAT, something which can be done at any time.
In order to protect your business, even when working from home, you should make sure to have intellectual property protection in place. This will make sure that your intellectual property, including brand, name, trademarks, patents and designs are properly protected.
Insure your home business
Setting up proper insurance for your home business is crucial, especially for certain set-ups.
Think about the type of home business insurance you will need. For example, public liability insurance should be a standard for anyone whose home business involves customers visiting the home. This type of insurance will protect you in case anyone is injured or your property is damaged as a result of the business.
If you are designing, selling or supplying any products or goods, you may need to take out product liability insurance which will protect you against any claims for personal injury or property damage as a result of these products.
Any home businesses offering services, information or knowledge should take out professional indemnity insurance. This will protect you in the case that you have a claim made against you for error or negligence.
If your business involves employing other people, you should take out employers’ liability insurance as a standard.
There are many different types of insurance that may or may not be relevant depending on the nature of your business. For certain home businesses you may want to look into stock insurance, vehicle insurance, contents insurance, and business interruption insurance. In some cases, you may also need to check your existing building insurance to see that you are property covered.