If you are considering running a business from home, you’re not alone! The events of 2020 were a catalyst for many people when it comes to working. With the onset of remote working, businesses unable to run, and other challenges, running your own business became a much more viable and popular solution than it had been in past years. To help you out, we’ve put together a quick guide on running an online business from home, including the legalities and some tips on how an expertly designed website can help your business succeed.
Defining your work-from-home business
Legally speaking, you are running your own business from home if you are responsible for its success or failure, you have several clients at any one time, you manage and control how you work, provide the equipment yourself, and charge for your work, products, or services. Simply put, if you’re your own boss, then you’re running your own business.
What to consider when starting an online business at home
- Your workspace
- Equipment
- Practical needs
- Insurance
- Growing your business
Your workspace
Depending on your business, you will need space for focussed work, meeting with clients, and support the day-to-day productivity of your business. This could be as simple as setting up a home office in an unused room to building on a dedicated office space for you, your staff, and equipment.
Equipment
You’ll need to source, purchase, and accommodate any equipment necessary for your business, from computers and printers to industry-specific equipment. For running a home spa, for example, you’ll need reception chairs, massage tables, fully equipped nail bars, etc.
Practical needs
This is the space or amenities you’ll need to run your business, whether it’s parking for clients, storage space for products, and workshop space. You’ll also need essential business services such as good quality broadband, phone systems, or additional plumbing/electricity.
Insurance
Your current home and contents insurance may not cover you for business-related claims, so it’s important to update your policy if you have expensive equipment or stock. Additionally, you will need public liability insurance if you have customers coming on to the premises, and employer’s liability insurance if you have staff working at your home.
Growing your business
It’s also important to think about how you are going to grow your business. Home businesses are not generally located in high-traffic areas and can’t rely on big budgets or brand awareness when starting out. To be successful, you need a way to get your name, products, and services out there to the public affordably and effectively.
Legal considerations for running an online business from home
Now things get a little more complicated! While most of the time it is perfectly legal to do so, it does rely on what type of residential property you are living in and whether you own or rent your home.
Council house
Legislation varies, but chances are that you will need written permission to run your home business. This must be granted by your local council or housing association. Businesses can fail to get permission if they could damage the property or disturb neighbours. You should also refer to your tenancy agreement for any relevant information.
Rented house
If you are renting, you’ll need your landlord’s permission to run your business from their property. There may also be information relevant to this in your rental agreement. A landlord can deny you the right to run your business, but they can’t be unreasonable with their refusal or delay permission. Typically, permission can be refused if the home could experience excessive wear and tear or damage, or if it would cause problems for the neighbours.
Property you own
Start by looking at the property title, which you can get from the Land registry office, as this may restrict certain types of business use of the property. Then, check the terms of your mortgage, which may restrict your rights to run your business. If it does, you should try to get this amended and get permission, as breaching these terms can trigger very severe penalties. If you are planning to extend or change your home for the purposes of running the business, you will likely need planning permission from your local authority and a Certificate of Proposed Lawful Use or Development first. Finally, depending on the type of business you want to run, you may need a licence from your local authority.
You can read more about permissions, licences, and legislation for running an online business from home here.
Running a business from an outbuilding
You might be thinking of running your business from a shed home office or out of your garage, which will fall under the same restrictions and permissions as listed above for property you own. It’s really all about how it impacts the material use of your property. For example, getting permission to run a small marketing business from home will have very different material implications for the property than opening a car mechanic shop out of your garage. Usually, the biggest obstruction to getting permission will be whether the business infringes on the right of neighbours to enjoy their property and potential damage to neighbouring properties.
Tax implications of running a business from home
It’s important to consider how this change will affect your tax position and discuss it with an experienced accountant to make sure you are compliant and getting the full benefit. For example, your Council Tax may be affected as the portion of the home you are using for your business may incur business rates.
You may also have to pay Capital Gains Tax on this portion when you sell your property. So, if 30% of your home is used for business purposes, you will need to pay CGT on 30% of the profits you make when you sell the home.
If you are a sole trader or part of a business partnership, you may use simplified expenses as part of your self-assessment tax return. This allows you to pay a flat rate for some business expenses, and claim back portions of your household costs including Council Tax, heating, and internet bills.
Advantages of running your own home business
Running your own home business puts all the responsibilities in your hands and is usually considered to carry more risk than working for another business. However, for many people, the advantages considerably outweigh the risks!
Lower operational costs
It’s much more affordable to run your business from home than renting or purchasing an office space, and saving that monthly expense is usually more than worth it – even if it may affect your tax position.
Everyday savings
You can also save considerably on transportation costs and other daily expenses that are the norm in office buildings, such as lunches, takeaway coffees, etc.
Work-life balance
Running your own business isn’t easy, but it does give you a lot more control over your life and working hours. For example, it’s easy to schedule in time for exercise, helping your kids with homework, or doing the school run alongside client meetings and work.
Control over your environment
Within reason, you can create the workspace that you want, from décor and amenities to allowing your pets in or working where you can watch your children.
Free online business ideas
Some ideas for starting an online business from home for free include doing affiliate marketing, creating a social media management business, becoming a virtual assistant, offer SEO or content services, data entry, or offering online coaching.
What’s the best way to grow my online business? A great website!
In today’s digital world, the best way to grow a small business is to take it online. Here’s what a great website delivers.
- Visibility and an equal playing field – Websites are the most effective way for small businesses to compete with businesses large and small, exposing you to the right audience wherever they are in your local area or the world. In the UK, 45.6 million people purchased products and services online in 2020, and revenue is forecasted to reach £91,412 billion in 2021. No matter the size of your business or how established you are, you can take it online and ensure it is seen by your customers.
- Access affordable marketing – Digital marketing is much more affordable than traditional forms of marketing, and there’s a lot that you can either do yourself or outsource to a digital agency. However, for digital marketing to work, you need a high-quality website that you can direct customers to from social media accounts, email newsletters, and Google searches. As the foundation of your digital marketing strategy, it’s essential that every element of your website is perfect if you want to realise the full potential that digital marketing offers.
- Professional image – First impressions count, and a quality website will deliver the right professional image for your business. 75% of internet users will base their opinion of a business’s credibility on their website design alone! For many online customers, a company website is the first interaction they will have of your business – and how it looks, the values it promotes, and how it functions will reflect your business. If it’s slow, messy, filled with errors, and amateurish, then your business will look less reliable and less qualified than your competitors and customers will get frustrated. In fact, 88% of customers won’t return to a website after they’ve had a bad experience. But if it’s elegantly designed, filled with functionality for online shopping, and reflects the values and interests of your target market, then you’ll outshine the competition.
- Showcase your offering – Websites are a creative and informative medium for showcasing what you offer but only if it is expertly done, as 38% of people will stop engaging with a website if the design is unattractive, and 57% of internet users won’t promote a website that doesn’t work well on mobile. You can create multiple, high-quality pages for different products and services that not only help bring customers in through Google but highlights your unique differentiator. It’s as good if not better than a physical store, taking your customers through a detailed and enticing experience that makes them want what you have to offer.
- Get more of the right customers – We’re living in a digital age, and that means that if we want something, we tend to ask Google first! In fact, 81% of people search online for a product or service. By aligning your website with the most effective search engine optimisation (SEO) techniques, your website content can help customers who are looking for your goods and services to reach your website. You can target local or regional customers, promote core services and products to people most likely to want to buy them, and drive traffic to your website.
Websites can be simple, elegant, and affordable, and many digital agencies are able to host and manage your website in-house, so you don’t need any technical knowledge to either build your website or keep it running securely. With a well-designed and maintained website, your online home business has access to a world of 4.66 billion people who need to have their nails done, order in meals for delivery, book a home cleaning service, buy gifts, and anything else you can imagine. At Yellowball, an award-winning online marketing agency in London, we’ll make sure your website and online presence get your home business to the top.
