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A Guide to Starting your Business From Home

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Many of us would relish the chance to put our skills and ideas to work in our very own business, not to mention the opportunity to ditch our daily commute. So then, what’s stopping us taking the next logical step and going it alone by running your business from home?

With rates of self-employment and the number of home workers both at a record high, it seems more of us than ever are deciding to make the shift. Whatever our occupation, there’s no doubt that tech is a big driver of this trend. The fact that we’re better connected than ever means that it’s what we can do, rather than where we’re doing it, that’s important.

So can it really be the case that all you need to succeed as a home-based entrepreneur is your toolkit, smartphone and laptop? Well, not quite. But it’s certainly doable. This guide aims to point you in the right direction for getting your business on the go.

Is working from home the right thing for me and my business?

As always, start with your objectives before considering whether a home-based business is the best way of achieving them. With this in mind here are two concerns common to many entrepreneurs at this stage:

“I want to do things my way…”

Especially if you have multiple commitments to juggle the idea of starting up from home may seem ideal. Remember that the challenge of balancing family and career doesn’t automatically disappear if you’re home-based. Yes, it’s easier in practical terms to jump from one to the other, but you’ll almost certainly want to keep at least some element of routine, in order to separate work from play. What working from home can offer is scope for flexibility in this routine.

“I want to get up and running, but funds are tight…”

The truth is you’d really love a fully serviced office in a prime location, but it just isn’t an option yet. Commercial property doesn’t come cheap and neither do the overheads associated with it. Working from home can allow you to get up and running quickly and easily, without commercial rent eating into your start-up funds and revenue.

You may still need to invest in new equipment though, and then there are the costs associated with operating from home (phone bills, heating, electricity etc.). From day one get into the habit of good bookkeeping by keeping all receipts, it will make things easier when it comes to completing your Self Assessment tax return or company accounts if you decide to trade as a company. For sole traders who are home workers, the HMRC’s system of simplified expenses helps to make things much easier.

Structuring a home-based business: how do I give the right impression?

It’s very common to start off as a sole trader and for this, you’ll need to register as self-employed. This is quick, easy and you can do it online.

Depending on your clientele you may be concerned that giving a residential address as your business address could look slightly ‘amateurish’. And then there’s the privacy issue, do you really want to publicise your home location to all and sundry? Here are a couple of ways to help deal with this:

  • Operating as a limited company. Going about it in the right way and setting up a limited company ought to be a quick, straightforward and inexpensive process. Having that ‘Ltd’ assignation after your name helps to convey the fact that you mean business, regardless of the fact that you’re working from home.
  • Consider a registered office address service. When you start a limited company you specify a registered office address to which all official correspondence from Companies House and HMRC is sent. Our Registered Agent Address Service enables you to use our address instead of your own home. We then forward on all correspondence to you. In this way, your home address is kept off publically visible official documents. Given that we are based in the City of London with a reputable business postcode, this can also help to give your business a reassuringly corporate and well-established feel.

Adapting your home: do you need permission?

Setting up a PC and phone in your spare room is one thing, converting a garage into a workshop could be another…

The UK Government’s Planning Portal provides essential reading for anyone who intends to operate a business from home. It recommends that you ask yourself four questions before you start:

  • Will your home no longer be used mainly as a private residence?
  • Will your business activities result in a marked increase in traffic and/or people calling (think in terms of delivery vans for instance)?
  • Will your business involve any activities unusual in a residential area?
  • Will your business disturb your neighbours at unreasonable hours or create other forms of nuisance, such as noise or smells?

You need to avoid the situation where you get a home-based business up and running only to find you’re in breach of the rules. If in doubt consider contacting your local authority to get a Certificate of Lawful Use. You should also check before you make any physical changes to your property to ensure compliance with any building regulations.

Bringing in ‘outsiders’: employees and customers

Home workers can take on employees. For this, you’ll need to register as an employer. As with all employers you’ll also have to keep payroll records and will probably need to operate PAYE. Employers’ Liability Insurance is another legal requirement and, regardless of where those employees will be working, you are still under a duty to provide your employee(s) with a safe working environment. Get in touch with an insurance broker before you take on staff for essential guidance on any adjustments that might be needed to make your home safe for staff.

Safety on your property

If you invite customers to your home, e.g. for music lessons or physio sessions, you are under a common law duty to take reasonable steps to ensure their safety on the property. There’s no legal requirement to take out insurance for this, but nevertheless, it’s extremely advisable. For one thing, it offers peace of mind and those insurers should also be able to give practical advice on what to do to minimise the risk of accidents happening.

Get further information on how to grow a home-based business by browsing our help centre for hints and tips. Wondering how much it would cost to form your company today? Have a look at our company formation packages to learn more.

For further information head to our help centre.

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