Starting a Business from Your Home
People all over the world have had their lives turned upside-down by the Coronavirus pandemic. This had led to a knock-on effect on the housing market, with huge numbers of people choosing to move house.
One of the biggest reasons for this is the impact that COVID-19 has had on our working lives. Put bluntly, commuting to the office is an outdated concept. We have all been working from home, and for some, this has become an agreeable way of life. If you have upsized to a new property and spent the time creating the ideal home office, you may be considering starting a business for yourself.
Here at Van Man York, we back your entrepreneurial spirit all the way. We started as a small family business and have steadily grown to become the successful enterprise that we are today. All the same, there a few things that you need to know about the legalities of starting a business from home. Allow us to share the benefits of our experience!
Tell Your Landlord or Mortgage Provider…
First things first – ensure you are allowed to start a business from home. Some mortgages state clearly in the terms and conditions that no commercial activity can occur in the home. Equally, it may be against the terms of your rental agreement to start a business. If you live in council accommodation, inform the local authority.
You could always chance your arm and not report your activity. This is a dangerous game to play, though. If your business takes off, as you’re no doubt hoping it will, it will become common knowledge that you are working from home.
This could lead to your landlord evicting you for breaking the terms of your lease, or your mortgage lender demanding immediate settlement of your outstanding figure. They have the right to repossess your home if you fail to hand over these funds.
… But Do Not Tell Your Utility Providers!
We’ll hold our hands up – this advice could be considered a little naughty. It’s not breaking any laws though, and it’s hugely important. Under no circumstances inform utility companies, most notably your internet and telephone providers, that you are using these services for business. As far as they are concerned, they are exclusively for personal use.
For a start, this is true anyway. You won’t be using the internet exclusively for work. If your provider learns that you are running a business, however, they may try to move you onto a business account. This will typically multiply your monthly bill by the power of ten. If the internet goes down, bite your lip and avoid demanding that it’s fixed ASAP so you can work. This may backfire on you.
Check if You Need a License
You may also need a license to start a business from home. This is not always applicable. If you are a skilled graphic designer and decide to go freelance, for example, you won’t need any kind of permits. The following industries will require a license, though.
- Animal care (i.e. dog sitting or dog walking)
- Any sale of alcohol
- Any creation and sale of food
- Fitness services (i.e. acting as a personal trainer)
- Chauffeuring or taxi driver services
- Tattooing or piercing
- Financial advice
If you’re not sure about whether you’ll need a license to trade, make an appointment with your local town clerk. You can do this through the town hall. Ask for a meeting, and don’t let them hurry you. Leave no stone unturned in your quest for information to make sure you remain on the right side of the law and do not run into trouble just as your business is taking off.
Consider Your Neighbours
Once you are serious about starting a business from home, have a chat with your neighbours and make them aware of your plans. This is not a legal requirement, but it’s basic good manners. Nobody wants to be the neighbour from hell – and if you inconvenience your neighbours in any way, they will be entitled to make a complaint about you to the local council.
This inconvenience needs to be fair and reasonable to hold up as a complaint, so don’t panic. Do consider the impact that your business may have on neighbours, though. If you’re welcoming clients to your home, for example, think about parking. If you share a driveway or have off-street parking without permits, your neighbours may rightly be aggrieved if you are hogging all the spaces.
If you’re going to do business, you’ll need to protect yourself with insurance policies. At the very least, invest in third-party indemnity insurance. This means that if anybody is injured as a result of your business practices (such as being bitten by a dog that you are walking or tripping over tools that that spill out of your driveway while loading up your car), you will not be financially responsible.
You should also seriously consider taking out a personal income protection insurance policy. Owning your own business is great, but it also means that if you cannot work, you will not get paid. How would you pay your rent or mortgage if you grew unwell without the safety net of sick pay? This insurance policy will provide such protection.
Register with HMRC
Finally, make sure you are legally compliant by registering as a taxpaying business with HMRC. You could do this as a sole trader or a limited company. The main difference here is in tax repayments – though if you’re a business, you’ll also need to file annual accounts, so you’ll need an accountant.
We recommend starting as a sole trader. This way, you will need to file a self-assessment tax return at the end of each financial year. That’s much easier and faster than logging full accounts. Once you start earning enough money to justify registering as a business, you can always change your status.
Once you are registered as a taxpayer, the world is your oyster. Get out there and make your mark on the business world! When the world goes back to normal and you decide to rent an office for your ever-growing enterprise, we hope that you’ll consider Van Man York for your big move.