Are you considering – RUNNING A BUSINESS FROM HOME?
Home-Office: Considerations
Running a business from home is now much easier because of the advances in technology.
However some of the things to consider are:
Will you have enough space to operate effectively?
Whether there are any permissions your type of business requires?
Will suppliers or customers need to visit you at home?
Are there going to be any distractions in the home which might interfere with the business?
What will the work, home-life balance be like?
Which ‘Health & Safety’ considerations need to be adhered to?
Business Types:
Technology is one thing but there are many more factors in choosing the best business for your circumstances, not least your abilities.
Depending on the type of services or trade you decide to pursue, you might have to consider licensing; say for instance you decide to run a ‘childminding’ business in the UK, you would have to register with the ‘Children Services’ at the ‘Office for Standards in Education’ (Ofsted).
Along with the kinds of insurance required for your type of business like personal indemnity, or loss of trade etc.
Also some tenanted properties require the landlord’s permission because the property might suffer excess wear and tear as a result of the business activity.
where are you going to keep your supplies?
If you have to make deliveries or receive them. (too much activity might disturb the neighbours).
Taxation:
You have to consider the ‘Business Rates’, you have to pay as they are considered on a case-by-case basis by your local council.
This could mean that if you are liable to pay ‘business rates’ on part of your home, the domestic council tax bill for the rest of your home could be reduced.
See also:
(If you live in England or Wales; go to www.gov.uk/local authorities to find your local office; if you live in Scotland Scottish Assessors Association ; or for Northern Ireland its Land and property services NI).
Vat:
If you are registered for VAT you must keep records of all the supplies you receive, sales you make and a summary of VAT for each period covered by your VAT return.
You must keep these records for six years after the year they relate to.
We also discussed some ‘business taxation’ issues in our previous post; about setting up your business Here.
Regarding other tax liabilities, you will also need to be aware that you might be subject to ‘capital gains tax’ if you were to sell a home that had been used for the business.
For all tax related issues it is recommended by ‘Finance Magnate’ to seek the services of a ‘Tax Accountant’ that specialize in these matters.
More Considerations:
You can see from the considerations above; that there are many facets involved in running a business from home that you have to consider; based on your circumstances.
Remembering also that businesses must keep records of all receipts and expenditure for tax purposes.
The exact records you keep depend on the type and size of your business, but they must be sufficient to enable you to complete a precise and accurate tax return (there are many technological advances in this area).
You will need to record all sales and other business receipts as they occur and keep the records up to date for your own benefit.
Consider also keeping paper records under lock and key, preferably off site or in fire resistant cabinets.
Employment:
If you employ staff; you must keep all wages, salary and National Insurance (NI) records for six years.
As an employer you must hold employers’ liability insurance and it is good practice to keep a record of all your insurance policies in case there are any claims against you in the future.
If you keep confidential or personal information you must comply with the provisions of the Data Protection Act 1998.
This places obligations on all businesses to keep personal data safe and secure and not misuse it.
Go to: Data Protection Register; notify ICO about Personal Data for more information.
Spaciousness:
You’re going to need ‘Space’ to store all these records and your stationery.
If you feel that you might struggle to find time to deal with day-to-day business administration but cannot justify the administrative costs of employing; you could consider hiring a freelance ‘virtual office assistant’ to support you.
Virtual assistants (VAs) can undertake a wide range of administrative functions and provide tailored services to allow small business owners to focus on their core business tasks and have a better work-life balance.
Transportation:
There are various options for arranging the transport in your business, depending on requirements.
If you are planning to operate as a sole trader and plan to use your own car for business travel; you should immediately start to keep detailed records so that you can separate your business mileage from your private mileage because you can claim the business proportion of all your motoring costs, including fuel, road tax, insurance and repairs.
You can also claim the same business proportion of the cost of the car as a capital allowance.
For more on this download a pdf. “Expenses and allowances for the Self Employed“.
The rules on this can be complicated, so you should seek advice from your accountant.
The best way to make use of the technological advances is to choose a business that would only require administrative tasks at your home and outsource any labour-intensive tasks.
Let’s say for instance you are creative designer and make your own jewellery, much of this would be done by computer whilst the manufacturing/deliveries could be done elsewhere.
These many complexities is why Finance Magnate UK is here, to assist you in deciding what is best for your circumstances and where to get professional assistance.
We are always available to discuss any issue that you may have at: info@financemagnate.co.uk
Also please leave a comment in order to help others who are considering or having difficulty with any of the same issues.
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