Following a huge swing in favour of remote work, many people are now not just seeking a hybrid working system but also branching out on their own by running a business from home. Realising how well you can connect to other professionals and potential customers online is inspiring many to go in on transforming their home into their place of business.
So many people fear the upfront costs that come with the already risky move of starting a new business but running a business from home seemingly offers a way to remove one of the larger expenses. As laid out by the home business piece by Shopify, as you live there and are already paying your mortgage, there are fewer overheads and potential tax deductions. Still, there are several things that you should consider beforehand.
Am I legally allowed to run a business from home?
If you own a home outright or are in the midst of paying the mortgage off on your property, it is legal to run the business from your residential property. You will probably need to consider other areas if you look to transform the bulk of your home into the business, such as if it’s becoming a shop, but the main elements that may get in your way are if your mortgage deal doesn’t allow it or if your property title has any restrictions. If you live in a council house, you’ll need express permission to use your home for your business. Similarly, if you’re renting, your landlord will need to give written consent to you running your business.
Do I need different insurance to run a business from home?
If you’re a sole trader who strictly runs a business from your computer on the internet, such as with videos or articles, your home or contents insurance will often be sufficient to cover any losses. However, as this isn’t guaranteed, it’s always good to check your plan. If you’re storing a lot of stock or customers are invited to your home for the purposes of business, you’ll need different insurance deals and, most likely public liability insurance. Should you get to the point where you want employees coming to your home to do work, you’ll also need to look into getting employer’s liability insurance.
What tax implications do I need to consider to run a business from home?
If you’re part of a partnership or you’re a sole trader, you can include any of your business costs on your Self Assessment tax return. As detailed by the Gov.UK post for home businesses, an appropriate portion of your utilities, phone, and internet costs can be claimed as expenses. However, if the Valuation Office Agency has given you a rateable value for the business part of your home, you may have to pay business rates for that section of the property.
How much space do I need to run a business from home?
This completely comes down to the space that you think that you need to run your business efficiently and comfortably. For some, a small office will suffice as they spend the day on their laptop, and so other rooms become viable. However, if you think that you need more space for storage or perhaps have seen your business take off, you may want to consider a larger home and use the Trussle mortgage broker website to find the best deal for you. As your home serves two utilities, both a place to live and a place to earn, making sure that it suits both is key. So, perhaps moving to a more relaxing location or somewhere with larger rooms is necessary.
It’s certainly an appealing prospect to many, but before you commit to running a business from home, investigate each of the above points to see if it’s right for you.