We know of many successful entrepreneurs who started their business from home. Steve Jobs from Apple is perhaps the most famous example. I have given advice to many people in the UK looking to start their business from home.
The first thing you need to be aware of is that you can’t start just any business from home in the UK. Most types of businesses in the UK need to have a special licence to operate, or at least a local registration in the Borough Council. You may also need permission from your mortgage provider or landlord to run your business from home.
There are two other issues which I believe are the most important ones when deciding to go ahead with a home start-up. The first is: you must make sure that you apply for insurance even though you will be running your business from home. Home insurance may not cover your business. You must have separate business insurance to cover stock, computers, furniture and other business assets. You also must make sure that customers will be insured when visiting your premises. The second issue is that you need to check whether you need to pay business rates rather than council tax on the part of the property that you use for your business. If you are not sure you can contact the VOA (Valuation of Office Agency) telephone: 03000 501 501 (England) to check.
And don’t forget about small business rate relief if your property has a rateable value of £12,000 or less. Most home businesses are exempt from paying business rates because of the small business rate relief.
One of the main problems about running a business from home is the health and safety issue. The UK local authority takes the health and safety issue very seriously. Imagine you want to start cooking at home to launch a takeaway business. Food business premises must be registered at your local authority environmental health service before you are due to open. You must make sure you know what you are allowed to do at home and what you are not. Someone from the local authority could even come around and inspect your kitchen to see if it is fit for purpose. I have a few clients who had to set up a kitchen separate from their house kitchen in order to set up a business. Another good piece of advice is to separate business and personal life, especially in cases where the entrepreneur has children living in the same space. You will also have to show that you understand the principles of good food hygiene, health and safety, and fire arrangements.
To start up an office from home is a different story. I remember when I started up my accountancy practice from home ten years ago. There is a tax advantage when starting up from home: you can claim a proportion of the costs of things like rent, council tax, heating, lighting, phone calls and broadband.
The number of home businesses has increased dramatically with the growth of the internet and easy access to broadband. At the same time, many people nowadays prefer to meet virtually via Skype rather than in person.
Listed below are some advantages to starting up from home:
Rental expenses (financial benefit): Renting a commercial or office space in the UK (especially in London) is not cheap. It is worth trying to start up from home. If this works very well and it becomes necessary to move to commercial premises, you can move to bigger premises as long as the business can afford the costs. If you don’t want to expose your home address you can use your accountant’s address as your registered address with Companies House and you can also have a virtual address with a company which offers virtual addresses, telephone answering and even mail forwarding. Regus is a company which I have been working with for many years and even though they are not the cheapest, I still like them.
Savings on travel time and costs: If you live near your working place that’s fine, but if you live far away you may need to reallocate up to 2 or 3 hours per day to commute. Imagine what you could do if you saved 3 hours per day!
Quick breaks during the working day: In most of the workplaces I have been to, I could not find any area for employees to take some time off and relax. If you are working from home, perhaps you can also enjoy some quick breaks during the day. However, you must make sure you have the discipline to separate business and personal life.
Work/Home Balance: Some people like to have a good balance between work and personal life. That said, I know many people who start up from home and cannot separate one from the other – they are interrupted by their children and family so often that they have to make the decision to move to an office space.
Increased productivity: …but not in all cases. Some occupations and businesses don’t require work in groups and are easier to manage at home. Some people also enjoy working from home and don’t care for the busy office environment. You must know clearly which group you are in and if you like or dislike working with a team of individuals.
What are the disadvantages to working from home?
Separate business and personal life: For some people is very difficult to keep work and home-life separate, and there might be domestic distractions and interruptions. Some people can be distracted easily. If you can deal with the distractions, that’s fine. Some people get very stressed when they are trying to concentrate on their work and are constantly distracted or interrupted.
Being lonely (sense of isolation): I know some people who always need to be around and in contact with other people and businesses. I am one of them. What about you? Do you need to be around other people or don’t you care?
Working long hours: You can save commute time when you start up from home, but in the end you work harder and you may end up working long hours. Make sure you balance your working pattern.
Security: Some people don’t feel safe working from home and they feel even less safe if that means visits from clients in their home, especially new clients they have not met before.
My final two pieces of advice would be to first, make sure that you look professional as an individual and your business from home also looks very professional. Nobody wants to have a business meeting in a dirty home kitchen or around ten dogs in a dirty living room. Second: Make sure you don’t bother your neighbours if you deal with clients at home.
If you have any questions please send me an email at [email protected]
