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How to start a small business from home in a few simple steps

How to start a small business from home in a few simple steps

Working from home has become more popular, especially over the last year. Many people have realised the benefits of flexible working, avoiding the commute, and controlling their environment, and have turned to home working as a viable alternative to heading into the office every day.

For a lot of people, working from home means staying with a company and working online, but the brave and ambitious are turning to starting their own businesses. Although this may seem like a daunting task if you are just starting out, the process can be quite simple once you have your initial idea and plan.

We look at some of the most important questions you need answers to when starting your small business from home and give you a step-by-step guide to setting up your small business. With the right information, starting your business can be exciting rather than stress-inducing.

Do I Need Special Permission to Run my Business from Home

Getting permission to run a business from home depends entirely on the type of business you plan to open as well as the property you are on and if you own or rent your house. Although running a business from home is entirely legal, there are different processes to follow depending on where you live.

If you rent your space, you may need specific permission from your landlord to run your business from the property. Check your lease agreement, and if you are unsure, ask your landlord. You would rather they know from the start than find out later and shut you down. You should get everything in writing and change your tenancy agreement to reflect the new arrangement. This will help you avoid any ugly surprises down the line.

If your landlord feels that your business will disturb the peace, then they can deny your request. This could include having multiple delivery vehicles every day, having vehicles blocking the road, or creating extra noise.

If you own your house, then you will need to check the land registry to find out if there are any restrictions on your property. You also need to consider what your business is. If it is likely to cause any damage to a neighbouring property or prevent a neighbour from enjoying their property, then you may need to rethink your plan. Businesses including noisy construction or mechanical activity can often be a disturbance and you might be better renting a commercial space.

If your business will require you to do alterations on your house that completely change the use of the house, then you might also need to apply for special permission. Also be aware that if you change the use of your house, you may need to pay more in council tax as your rates will change from household rates to business rates.

If you are likely to have a lot of people coming to your house, getting a lot of deliveries, or are planning to advertise outside your house, then you will also need to contact the local council.

Do I Need to Register as Working from Home

If you are starting a business, regardless of where you are working, you will need to register as self-employed, a sole trader, a partnership, or a limited company. The HMRC website will take you through all the steps to complete the process. You will need to carefully keep your own financial records for tax purposes and will need to fill out a tax self-assessment every year. Depending on the type of business you are running, you might also need to send HMRC your financial records (or books) at the end of each year.

Do I Need Business Insurance to Work from Home

The first thing to do is check your current home insurance. You might not be covered for business items such as stock or business assets. Taking out business insurance will help you protect your capital and investment.

IF you are likely to have customers coming to your house then you should also look into specific insurance to cover any accidents or injuries that occur while you are conducting business. Something as simple as a customer tripping on a stair could land you with legal fees and lawsuits, so make sure you are covered.

What Kind of Business can I do from Home

As long as you are not disturbing your neighbours or breaching rental or mortgage contracts, you can run almost any business from home. Some of the more popular choices include:

–          Virtual or digital work

–          Crafts, baking, and other homemade goods sales

–          E-commerce

–          Services that require you to travel such as dog walking, gardening, or cleaning services

–          Consultancy

What are the Steps to Starting a Small Business from Home

There are seven simple steps to starting your small business from home:

  1.       Develop your Business Plan
  2.       Make sure your Home is Suitable
  3.       Get the Correct Permissions and Registrations
  4.       Set up your Finances
  5.       Consider Insurance and Copyrights
  6.       Create your Brand
  7.       Market Yourself

When broken down into manageable steps, starting your business should be a relatively easy process and you can get through the frustrating administration quickly and get to doing what you love!

  1.       Develop your Business Plan

You may have been thinking about your small business for years and have a fully fleshed-out business plan, or you might still be trying to decide if you really want to leave your comfortable corner office. Either way, the place to start is developing your idea and plan.

You will need to decide what goods or services you are selling, do research into your industry and field and know your competition, research your target market and know how to reach them, and think about things like start-up costs and operating expenses. These are key elements to starting your business and without this knowledge, your business is unlikely to get off the ground. As Benjamin Franklin famously said, “By failing to prepare you are preparing to fail.”

If you know you want to work from home but are still battling to find your idea, spend some time thinking about:

–          What you are good at

–          What you enjoy doing

–          What marketable skills you have

–          What markets you have easy access to

–          What you can financially afford to do

–          How you could market yourself, your goods, or your services uniquely

–          What sets you apart in any potential market (think about your values and ideals as a person as well as your plans as a business)


  1.       Make sure your Home is Suitable

Your home’s suitability will depend entirely on the business you are starting. If you are starting a baking business, you will need to make sure your kitchen meets health and safety standards, that you have enough space for suitable storage, and that you have cleaning protocols in place. However, if you are planning to offer graphic design services from your home, all you will need is a desk, a laptop and software, and a decent internet connection.

Think about the kind of business you are starting and what you will need for it. There are a lot of forums online where you can get advice from others who have started similar businesses before you. If your home is not suitable, then you may need to hire a different space for your business or make the necessary changes or renovations to your house.

You should also factor in how your partner, children, pets, or other people in your house might influence or be influenced by your business. Will you need to put up baby gates for a home office or sound-proof a room because of a noisy parrot” These are all things to consider before you move on to the next step.

  1.       Get the Correct Permissions and Registrations

As already discussed, certain permissions are needed from the local council, your landlord, or your mortgage provider, depending on where you live and the type of business you are starting. Get these permissions sorted out early to avoid delays on your business’ start date.

You will also need to register your business through HMRC.

  1.       Set up your Finances

Depending on how your business is set up you will either need to keep a full set of books or you might be able to simply keep track of income and expenses. If you struggle with organisation or numbers, then you should consider hiring an accountant to help you get set up and explain any requirements to you. An accountant will be able to advise you on the best practices for your business and you should be able to find an accountant that you can hire for a few hours of consultancy every few months rather than someone you need as staff.

You should also open a separate business bank account. Having a separate bank account will help you keep personal and business finances separate. A lot of business accounts also have specific advantages including certain protections for your funds. Shop around and find the best business account for you.

At this stage you should already have thought about start-up costs, but if you haven’t, do it now. You need capital to start almost any business. Capital will allow you to budget in things like advertising and initial costs including software, internet, stock, or equipment necessary for running your business. If you need investors, find them now and start putting capital into your new bank account ready for all your upcoming business expenses.

  1.       Consider Insurance and Copyrights

Collect quotes on home business insurance from as many providers as you can.  You may choose not to insure, but it is better to be covered in case something happens to your business or to one of your customers because of your business. Different types of business insurance packages have been designed for different businesses, so do your homework and know what you are looking for.

–          Public liability insurance will protect you if a customer is injured on your property.

–          Product liability insurance will protect you if your product causes injury or damage.

–          Professional indemnity insurance protects you if you offer services such as consultancy and are negligent or make a mistake that has a detrimental effect on your customer.

–          Employer’s liability insurance is a legal requirement if you plan to employ anyone.

You should also look into copyright laws if you are selling a new product or if you are selling anything that already has a copyright on it. Knowing about rights laws will protect your intellectual property as well as protect you from lawsuits brought on by selling copyright products (including, for instance, a cake shaped like a Disney character, or a superhero suit that uses the design of an existing character).

  1.       Create your Brand

Branding is vital for any business. Beyond the name and colours of your business, your brand also holds your business identity. Think about what you stand for and what you want to promote. In the current cultural climate, customers are more likely to bring their business to you if they agree with your core beliefs, so make sure you know what your business stands for. This could be ethically sourced products, local investment, or family focused living.

As a small business owner, your business will probably be a reflection of who you are. What is important to you will come out in your goods or services. Condense this down and think about how it works into your image, your online presence, your packaging, your stationery, and your interactions with potential customers.

  1.       Market Yourself

You are finally ready to start your business! Using your research and careful planning, go and find your target market and advertise your new business in the way you know will appeal to them.

Most businesses use online advertising, but if you are focusing on a local market then you might have more success going door to door, advertising at local community hubs, or getting your friends to promote your business. Think strategically about who you are selling to because strategic marketing is more successful than mass marketing for a new business no one has heard of before.

At this stage, you have everything in place to be a successful entrepreneur. All that’s left is to put on a brave face and start promoting yourself.




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