How to run your business from home

Here's what you need to consider if you run a home based business, and some practical tips on how to make working from home work for you.

• you need to tell your mortgage provider and your household insurance company that you are running your business from home.  If you need additional insurance to cover your business liabilities, get a no-obligation business insurance quote here.
  
• you don’t usually need planning permission but that’s only if the premises remains predominantly residential. If you’re planning some alterations to help accommodate your business you should check with the local planning office first.
• if the room you plan to work in is dedicated solely to your business you will need to pay business rates rather than domestic rates on that home business space. This is not necessarily more expensive but it is another cost to administer.
• your ‘free from capital gains tax’ status on your primary residence may be compromised if you’re using part of it solely for business use

Tax Allowances for home businesses

If you do choose to run your business from home there are some tax benefits you can claim for proportions of your council tax, heating, lighting etc. 

Ask for our simple 'use of home as office' tax calculator spreadsheet for guidance on what you could claim for and how much you can claim.

Check the HMRC guidance on calculating allowable expenses if you run a business from your home

The advantages of running a small business from home

• you don't spend time or money travelling to the office
• it’s effectively rent free
• you can decorate and equip your office to your own taste
• it’s convenient – you have all the tools and equipment you need close at hand
• it’s especially beneficial if you have to balance your business with family commitments. 
  

The disadvantages of running a business from home

Although there are advantages to running a small business from home, the disadvantages also need to be taken into account.  Consider these carefully to ensure it really is a viable option for you.

• home working can be intrusive on your home life
• paperwork needs to be contained to your office area
• it can be hard to ‘switch off' in the evenings and at the weekend
• you can feel isolated and lonely
• you won’t necessarily have anyone to bounce new ideas off or resolve business problems with
• You don't have anywhere to hold business meetings.
  

When you can't run your business from home

Sometimes it’s just not practical or feasible to run your business from your home. Examples of when you will be unable or unwise to run your business from home include:

• you live in rented accommodation and it’s against the terms of your tenancy
• you need specialist equipment
• you are working with hazardous substances
• you need a large amount of space
• you employ staff who need an permanent base
• you are likely to make a lot of noise or a strong smell
• you have a lot of deliveries
• you have a lot of people visiting you

If running your business from home is not viable see our article on 'Choosing business premises' for other options.
You might also consider using a serviced office to give you all the flexibility and none of the setting up costs or overheads.

How to cope with running your business from home

If, after taking everything into account, you decide that working from home is the best option for you, here are our top tips on how to make it work:

• you need to be very focussed and very self-disciplined
• for your own comfort and to maximise productivity you need to ensure you have enough physical space in your home office for the equipment you will need, and enough heat and light to perform your tasks in comfort
• make sure your business equipment is fully insured – take out a separate policy if necessary as your home contents insurance is unlikely to cover business equipment in a home office. If you need additional insurance to cover your business liabilities, get a no-obligation business insurance quote here.
• install a separate telephone line. A dedicated business telephone line will not only ensure your business calls are answered appropriately but will also make logging your business expenses much easier
  
• 'train' your family not to interrupt you while you’re working, especially when you’re on the phone or meeting someone face to face
• Consider using a telephone answering service to ensure your calls are answered in a professional manner, and so you don't miss any business calls while you're out
• ensure any confidential or sensitive information is kept secure and out of sight