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Running a business can be tough at the best of times, but running a business from home comes with its own unique sets of challenges that all need to be addressed and considered before as well as after setting up your home business. 

There are also numerous implications with regards to when it comes to selling your property, claiming expenses and filing tax returns, specifically pertinent to home-run businesses.

In addition, unlike when running a business from dedicated business premises, the insurance you may need to consider will vary and your roles and responsibilities throughout the business’ lifetime will also vary and change as the business adapts.

 

What Type of Business Are You Running from Home?

One of the first questions you will need to ask and one of the first considerations you will need to make is what type of business you are planning to run from home. For example, if you are selling physical products that you need to hold in stock, you will need to ensure you have the physical space in which to store the stock intended to be sold.

If you do not have sufficient space in which to store and maintain your stock, you will naturally need to find an external storage facility in which to store the items. 

If you are running a service-based business from your home you are unlikely to need much if any stock and therefore the initial set up of the business will be easier from this perspective. You may for example be setting up an affiliate marketing business, covering anything from online property sales and rentals to payday loans online, to online marketing services and potentially more besides.

If this is the case, once you have your work area set up and you are connected to the internet, there is little more you will need to do before earning money and starting up the business in question. 

You should make sure you set yourself up with regards to taxes, both corporate and personal, depending whether either or both apply before you start earning any money from your new venture.

Insurance and Liabilities

Typical businesses, such as those run from offices and dedicated business premises will need specific insurance policies such as public liability insurance and potentially business insurance, to cover the specific needs and requirements of the company in question. 

When it comes to running a business from home however, things are a little bit more complicated. For example, if you do not physically engage with any clients from home and if you have no staff working from your home with you, you may not require public liability insurance as you would in a traditional workplace.

With regards to liabilities and governance however, it depends on what your business is and what it does and offers. For example, if you sell multivitamins from home you will still need to make sure your products are properly regulated and authorised, whereas if you are offering marketing services from your home, this will not be the case.

For some products, particularly those that fall into the remit of health, food and drink and consumables, you may need to have assessments carried out on the products by the necessary regulatory bodies and this may well need to be carried out in your home. For example, if you are running a baking business from home, you will likely need to have your kitchen checked to ensure health and safety.

As with any business you should always make sure you have checked and confirmed what you are and are not liable for when it comes to running any business from anywhere, including from your home.

Is The Business Client Facing?

If you are starting up and running a client facing business, the chances are, by virtue of what your business is doing, that you will need to ‘meet and greet’ clients at some point and in some way. Thus, you will need to think about and consider where this will take place. 

It is not necessarily the case that a client facing business cannot be run from home, but it may be a bigger challenge in some industries and areas.

You may find that clients are happier meeting at neutral venues like coffee shops and even bars and co-working spaces. However, if your business requires a degree of confidentiality and customer privacy, for example if you are facilitating the sale of property portfolios you may fund that you need your own, dedicated and more bespoke workplace in which to meet your clients in an increased degree of privacy.

If your business is not client facing however, so long as you are comfortable and able to work from your home, there is little reason why you would not be able to effectively and successfully run the business in this way.

Taxes and Expenses from Home

All businesses, no matter where they are run from will incur taxes and expenses. Although taxes are of course dependent on the profits a business makes, with regards to expenses, there are almost no businesses in the world that don’t incur any business expenses.

When working from home, you will still be entitled to claim business expenses for things like equipment needed for the running and effective operation of the business. Here will however also be some expenses that conditions allowing, you may be able to claim when working from home. 

You may for example be able to claim for pieces of furniture which benefit both your business as well as your personal living in the home. Cupboards, cabinets, desks, chairs and stationery can all be reasonably claimed when running a business from home. 

Just because you also use them for personal use in your place of abode, it does not mean they cannot be claimed as ‘capital business expenses.’

With regards to taxes, you will need to separate your corporate taxation set up from your personal tax set up and working from home may make this a little trickier. 

To avoid any problems here, a good place to start is to avoid registering your business at your home address unless you have no option but to do so. Keeping your personal and business presences and entities apart from one another is wise, to avoid any ‘muddying of the waters.’

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