tarting a business comes with a lot of risks – more so than staying within the safety net of working for an employer. But the benefits typically outweigh the negatives, such as greater freedom, no boss to take orders from, and flexibility when making decisions.
All this and more can make starting a business an exciting proposition for many. And the easiest place to start your money-making empire is right from the comfort of your home.
So, what do you need to know about starting a business from home? In this blog, we’ll dive into the nitty-gritty, ensuring you’re equipped with the right knowledge and tools to make your new venture a success.
Keep reading to learn more!
The Difference Between Sole Trading and a Limited Company
When you’re considering starting a business from home, you need to decide what kind of business it will be. This must be declared to Her Majesty’s Revenue and Customs (HMRC) alongside any income you make. Let’s break it down:
- Sole Trader
A sole trader is a person who is the sole owner of a business. They keep all profits made and have complete control of daily operations. Some common examples are freelance writers, catering companies, landscapers, bookkeepers, etc.
- Limited Company
A limited company is legally distinct from the owner or director. Therefore, profits are kept separate from their personal finances. Benefits of owning a limited company are lower tax, more profitability, greater funding options and more credibility within your industry.
What You Need to Know About Starting a Business From Home
Property Restrictions & Permissions
If you’re the owner of a property, it’s legal for you to start a business from home. However, there are some restrictions. For example, no more than 40% of the property should be used for business purposes. Essentially, the property must still be considered “residential”.
For those in rented properties, it could be a little trickier to start a business from home. Depending on your rights as a tenant, as stated in your tenancy agreement, your landlord may have specified that zero business activity shall occur within the grounds of the property.
Gaining Permission to Start a Business From Home
Think you’re all set and ready to begin your money-making empire? In some cases, you’ll need to gain permission regarding aspects of your business. For example, if you plan to place an advert outside your home, you need to get in contact with your local council. Similarly, if, later down the line, you want to expand your property to run your business more easily; you need to consult the local planning office.
Changes to Your Insurance Policy
Did you know? You may need to update your home insurance if you’re running a business from the property. There are many types available, but some of the most common are:
- Public Liability Insurance
This covers accidents or damage caused by customers in your home.
- Employers’ Liability Insurance
This covers you if you employ a helping hand, and they make a claim against you.
- Product Liability Insurance
This covers you if an injury should occur or your home is damaged because of a faulty product you were using.
Opening a Business Bank Account
Opening a business bank account is not a legal requirement for sole traders running a business from home. However, those that own a limited company don’t have the same freedom. Because limited companies are considered a distinct “legal entity”, you’re legally required to ensure your personal and business finances are kept in separate accounts.
TOP TIP: Not every bank allows sole traders to use their personal account for business use. Particularly if you’ll be depositing money or sending money from your account multiple times per month, your bank will probably be in contact. For this reason, opening a business bank account from the get-go is the best option.
Regardless of whether you’re a sole trader or a limited company, opening a business bank account presents many benefits. Let’s take a look below:
- Less Stress When Completing a Tax Return
Putting all your business income into a business bank account means that money is entirely separate from your personal expenses. Therefore, when you’re ready to complete an annual tax return, it’s relatively simple to see your incomings and outgoings.
- Better Business Budgeting
For many, reinvesting in their business is a great way to improve their product, services or equipment, and ultimately, grow into a bigger and better business. However, when your personal and business finances are tied to one account, this can become incredibly confusing. Hence, a business bank account makes it simpler to track your budget.
- Perks and Benefits
Business bank accounts present greater benefits for business owners. Some of those include the ability to accept regular card payments from clients, business credit cards, and even the option to take out a business loan.
Starting a Business From Home: Sending Money Worldwide
When your business gets off the ground, it’s highly likely that you’ll start reinvesting, as we mentioned earlier. Perhaps you need to pay suppliers for your products or are considering hiring a remote freelancer to assist with basic tasks.
At DT&T, we provide fantastic Multi-Currency Accounts for businesses, enabling you to send and receive money from all over the world securely and safely.
What are the benefits?
- Instant conversions at competitive FX rates
- Instant payments globally
- Send and receive money locally and nationally to 180+ countries
- Manage 35 currencies at any one time
- Easy access to transactions and statements
- One handy app
As a team of multi-currency experts, we’re passionate about empowering businesses to make quick and easy payments all over the world. Can we help you expand the possibilities of your at-home business? Visit our website to sign up and begin your DT&T journey.