Many people dream of running their own business, working from the comfort of their own home. So just how easy is it and are there any pitfalls to avoid?
This guide explores the pros and cons of working from home and what you need to do in terms of tax, National Insurance and the law.

What is home working?

More and more people are choosing to work from their own homes. It’s easy to see why. Working from home saves you both time and money – two of the most important things you need when it comes to setting up a business.

It’s not just the self-employed that are opting to work from home either. A growing number of employees are choosing the flexibility of teleworking. Advances in communications technology now mean it is perfectly possible for them to do so. All kinds of jobs can be done from the home, including journalism, public relations, cookery, secretarial jobs, management consultancy, graphic design, music tuition, telephone sales, hairdressing, computer processing and software design, to name just a few.

Benefits of home working

• Financial savings. If you are just starting out, the major advantage is that you save on premises costs. Why pay out for office space if your spare room can do the job adequately for the time being? You also save on commuting costs if you opt to work from home.
• Time savings. With no commuting to do, you reap the benefits in terms of time saved. This can be very important when you are just setting out in business.
• Flexibility. Working from home also gives you flexibility. You can work the hours that suit you and your lifestyle, and take breaks when you want to.
• Family ties. If you’re a parent, home working will allow you to balance the responsibilities of family life with that of your business. You can fit your working hours round the school day, for example, or work in the evenings once pre-school children are in bed.
• Your own rules. It’s up to you what you want to wear, how you decorate your desk, the hours you work or even where you work.
• Family support. You can enlist family members to help you (by answering the phone, typing or simply keeping away from your office space!)

Disadvantages of home working

• Tied to the office. Some people find it hard to get away from work when they operate from home. The temptation is to work long hours, but it’s important to set limits or your work could adversely impact on your family life. Balance is the key.
• Distractions. Interruptions from family members could easily distract you, or you may find?yourself drawn to do certain household chores during your work time.
• Wrong image. Clients may get the wrong impression visiting your office if, say, there are children running around the house, or you don’t have a proper work space set up or somewhere to meet with them.
• Loneliness. Working for long periods of time on your own can be an isolating experience.
• Lack of space. If you need lots of equipment for the work you intend to do from home, you may find the home environment simply isn’t big enough to accommodate this.

Pitfalls to avoid

Before even considering working from your property, it’s essential to check that you won’t be breaking any laws or upsetting neighbours by doing so. Assuming your business is unobtrusive, no one is likely to object. But if your neighbours start noticing that lots of cars are blocking the street because of your car repair business or large lorries are delivering goods regularly to your
property, you could be in trouble with your local authority. There could be restrictions that prevent you from using your home as a base for a business. You may even need planning permission if your home-based occupation changes the use of the property. Check too the deeds of your property to see if running a business is prohibited.

Inadequate insurance is another pitfall that needs avoiding. Your home contents cover will almost certainly need to be extended to cover work materials, computers and so on. Even if it doesn’t, you should inform your insurers that you are carrying on a business from home or you could find they refuse to meet any claims. You may even need a specialised home workers policy which will cover you for business interruption. This would pay out for providing a temporary office if, for example, your home was flooded and you were unable to work there. Check too whether you need any other insurances (see below), such as public liability cover for visitors to your office.

Tax and National Insurance

If you are working from home for an employer, they should deal with your tax and National Insurance in the normal way, deducting under PAYE. But if you are self-employed, you will need to register so with the Inland Revenue. They will then send you their Starting up in business guide which explains what sorts of records you need to keep, how to pay your National Insurance and how your tax will be worked out in future. Each year, you will be sent a self-assessment tax return to fill in. For more information, contact the Inland Revenue’s Helpline for the newly self-employed.

Keeping within the law

Depending on what sort of business you are running, there may be a myriad of laws, rules and guidelines you need to be aware of. For example, if you are preparing food, you will need to check up on food safety legislation.

Below are some of the main areas to be aware of:

• Protecting the public. You may be required by law to take out public liability insurance in case someone injures themselves whilst on your property.
• Employer’s liability insurance. If you employ anyone – even part-timers – employer’s liability insurance will be compulsory.
• Planning permission. You may need planning permission from the local authority for using your property for business purposes, particularly if it involves changes to your property (for instance, converting a room into a tea shop). The permission may be qualified by some conditions relating to hours of work or callers at the house.
• Employees rights. The National Minimum Wage and the Working Time Directive (which restricts the number of hours employees may work each week) may affect you if you employ staff.

Real stories

Freelance journalist Jo Cooper works from a converted loft in her Cotswold home. ‘I’ve been freelance 12 years now and have always worked from home. It suits me well, though I do sometimes miss the camaraderie of an office. At one stage I thought about renting offices with some other freelance friends who were also feeling a bit cut off working from home. But when we looked into it, we decided it was going to be too pricey.

‘The advantages of working from home far outweigh the disadvantages for me – I can work when I like and how I like. One thing I do think is important is to have a room that is your office. That way, at the end of the day, you cs FY8 1NY T: 01253 336000, W: www.fsb.org.uk can shut the door and feel you’ve left work behind. If you work from the kitchen table, you never get away from it.’

Useful contacts

• Working from Home by Lynn Brittney (published by Which? Consumer Guides, priced £9.99) is an excellent guide to making a go of running a business or job from home.
• Inland Revenue helpline for the newly self
  employed: T: 08459 154515
  National Federation for Self-Employed and Small
  Businesses: 32 Orchard Road, Lytham St Annes, Lan

Back