Before starting a business ask yourself
- What business you would enjoy?
- What are your strengths?
- What are your weaknesses?
- Will you need additional training?
- What are your hobbies?
- Can you take skills from your existing job? (But not the same job as that would be competitive!)
- Has anyone ever asked you for advice?
- Do you volunteer?
- Has anyone you know had experience in business? Could give you guidance?
- Do you have some spare cash?
- Are you computer savvy?
- Would you work alone or with a friend or partner?
- Do you actually have the time?
- Are you motivated?
- Will it interfere with your day-to-day job?
- What type of insurance will you need?
- Can you keep good financial records, manage a payroll, and know how to pay tax on business earnings and National Insurance?
- What is your ‘Why’ for starting a new business
- Do you need or want to start a new business?
The legal aspects
If you are looking to start a home based business, please be aware of the following (and note they are based on UK regulations only). So, if you are not based in the UK, please check the rules and regulations of your Country.
Your current boss
Do you need to tell your Manager?
Some companies have written into employee contracts that they cannot take on additional work, especially if it is going to be in competition with them.
It is important you check your current Contract of Employment. Normally as long as it does not affect your daily work then your employer should be fine. They could be pleased that you are learning/taking on new skills (and they do not have to pay for it). But be aware that you must still excel at your current job and that your new business venture does not mean a poor work performance with your current employer.
Most home-based business will require additional insurance.
When starting business at home you should check your home insurance and upgrade if necessary to include relevant business insurance cover.
Below are the different types of insurance that home business owners may need.
It is recommended you speak to a local insurance broker to establish the best one for your business.
These are only guidelines.
Public Liability Insurance
This may already be included in your home insurance policy. Public Liability Insurance is vital if any customers visit your home. It will protect you if someone is injured or their property is damaged because of your business.
You run a tanning salon from home and have just cleaned the floor of spilt tanning lotion just before a new client arrives. The client then slips on the floor as the tanning lotion was not cleaned up correctly and injures themselves. Public Liability Insurance could help cover the potential legal fees and compensation costs (up to the value of the policy).
Professional Indemnity insurance
This is relevant to home business owners who offer services, and processes information. It will protect you if a claim is made against you for any negligence or mistakes.
You are providing finance information for a firm of accountants and in error you copied in the wrong person in an email regarding payments. The accountant could sue you for breach of confidentiality. By having the Professional Indemnity Insurance in place, it could pay the compensation costs as well as legal expenses (up to the value of the policy).
Employers’ liability insurance
You need this if you employ anyone as part of your home business. In fact, this is a legal requirement. You will find that most employers must have at least £5 million of employers’ liability cover or they could risk a fine of up to £2.500 per day.
You employed someone for your building business, and they used some specialist equipment and injured themselves and made a claim against you. The Employers’ liability insurance over could cover the claim and any potential legal costs involved (up to the value of the policy).
Do check with your Insurers if you need car insurance for your home-based business.
If your home business is run from your study, kitchen or in a corner of a room then you would not be subject to business rates. If, however, you are using a room exclusively for your business such as a therapy room then business rates could apply.
Full details on business rates can be found here
Health and Safety certificate
If you are working just from your PC/laptop this may not be so vital. However, if any visitors are going to be visiting your home or if you are preparing food (as part of your business) then health and safety checks are going to be required
British Safety Council
Most Neighbour’s are fine, but they could get annoyed if you start getting a lot of visitors or deliveries which may cause noise or even taking that precious parking space! Should they complain state you will keep the noise to a minimum.
Disclosure and Barring Service Check (DBS)
A DBS check is a record of checking the person’s past and this covers any convictions, cautions, warnings or reprimands they could have received.
Depending on the business you choose you may need DBS checks. Again, speak to a business advisor for further clarification
Full details on DBS checks can be found here
The tax man
You should inform HMRC of activities within 3 months of trading. Registration is fairly straightforward, and the forms required depend on if you are a sole trader, partnership or limited company. It may be worth speaking to your local accountant for further information before you start and checking the HMRC website.
Value Added Tax (VAT)
Please refer to the UK Government website for further information
Get a good accountant
Unless you have time to deal with bookkeeping and logging detailed records of incoming/outgoing earnings and expenses then consider getting a good accountant.
To find a good accountant suitable for your needs ask friends or family if they have any good recommendations. Also check out your local area for accountants and make a visit to a few of them to see which would be suitable for you. A good website to find a good local accountant is https://find.icaew.com
Other essential information
Where to run your business
You may be running your business from home but perhaps you may want to consider a Virtual office? You can find Virtual/serviced offices in and around your area. Also check out local business owner they may have a spare desk in their office. By working in another location other than your home you will be more focused and there will be less distraction.
The benefits of a Virtual/Serviced office
- They offer short term leases
- You can lease for just one month or longer
- You have access to all the facilities to help you run a business
- Good networking opportunities
Regus – https://www.regus.co.uk
Serv Corp – https://www.servcorp.co.uk/en/office-finder
Getting post redirected
Do you want your home post separate from your home business post? You may not want everyone to know your home address.
You can get your post redirected to another address for your business. The Royal mail can assist with this.
Working as a sole contractor note the following
Going it alone can be great and nothing more satisfying that seeing your business grow but for some people going it alone may not be what you expect.
You need to remember that you get certain benefits as an employee that you do not get when you are running your own business
You will not get the following
- Holiday pay
- Sick pay
- Maternity leave
- Guaranteed hours
- Company pension
- You will have to pay your own National Insurance and tax
- Provide your home office equipment
- You are also using your own Utilities such as Gas, Electric and Telephone
Going it alone can be a challenging experience. You may feel you do not have a good network of people around you. So it would be helpful if you could get a good support team you can reply on.
Are there any local business owners you could seek advice and support from – perhaps they could be a good business mentor for you?
Look for local business organisations that you help you with education and training with regular meetings with other business owner. Find out the best professional organisations within your niche as they will be able to provide invaluable information.
I hope you found this blog post useful.