How to start a home business

Setting Up From Home

One of the best ways to start a business is from home. There are many positive factors to starting a business from the home environment. Most large businesses do in fact start out as smaller, home-based businesses and later, if necessary expand out from there. Costs would be at a minimum, therefore it's a much more affordable way to get a business started, with a lot less financial risk.

Pros

One of the most expensive setup costs for a business set up, is finding a work-space. If it's practical to start your business in a home environment, then there's no reason why it can't be done, as long as you have enough room to work from. Overheads will be reduced and you will only need to purchase any extra equipment you need to get the business up and running. Since the introduction of broadband internet and fast, super cheap home computers, it has been possible to stay in instant contact with clients.

All administration, printing, networking and marketing can be done from the comfort of the home office. Travelling can also increase major costs in your business. Working from home in your own time, can offer much more personal flexibility and the freedom to work the hours you want to. Generally there are no car or public transport costs to pay out. No daily commuting to and from the office, that is unless your business requires travelling to and from clients or work sites.

Cons

Even though it may be possible to work from home, it could get impractical or even uncomfortable at times. If you have a family and space is limited, it might also become a distraction to you and your work and even become a hazard. There are also tax, insurance, and health & safety implications to consider which may complicate matters, depending on the type of business you run.

Tax Matters

As a self-employed business owner you will have to register with HMRC in the UK for declaration of tax from profits earned through your business. The size and turnover of your company will depend on how best to set up with HMRC. If you're a single person running the company with no employees, setting up to be a sole-trader will probably be the most practical and beneficial method.

However, if you're setting up with a partner or group, it's best to register as a partnership or Limited Liability Company to offset the company's liabilities and divvy up future profits. Depending on how high your income gets, this will also affect whether your company is liable to pay V.A.T. Tax and V.A.T thresholds change every business year so it's wise to check directly with HMRC or hire a good accountant for more detailed information relating to that.

Liabilities

Running your business from home can attract certain liabilities depending on how your company runs on a day-to-day basis. If you have clients coming to visit you regularly, it will be necessary to have public liability insurance. Local authority Public Health and Safety officers will want to check your premises for safety issues pertaining to the working environment.