Business from home

Would running a business from home suit you?

Using your home as an office can be the ideal way to start up a business if you need little more than a laptop computer and a telephone line.

The home is now the most popular location for business start-ups, with more than 2,000 created each week.

How to run a business from home without outgrowing it is a dilemma facing many entrepreneurs. They are reluctant to move into an office and give up the benefits of working from home – while at the same time they are equally reluctant to restrict the growth of their business.

The good news is that, with a little lateral thought, it is possible to run your business from home without sacrificing its potential. The solution is to outsource everything that will not fit into your home – whether that be staff, storage facilities or specialist skills.

For example, you might want to build a bespoke team of people around you who are not necessarily based in the same office as you, but who with network communications can seem to be so as far as the client is concerned. You might also want to buy in expertise, such as product fulfilment (where another organisation processes and dispatches product orders for you) through to professional services such as accountancy.

Indeed, lots of small and growing businesses across the Westcountry make use of the Stokes & Co Business Service, designed for just this instance. Now in its third year, the extent of the service is agreed with the client at the start of the relationship, a price is fixed and the client leaves us to look after as much or as little of their accountancy and administration as they wish – leaving them free to do what they do best.

Recently, Enterprise Nation, the homeworking website, surveyed its members and found that virtually all wanted to grow their businesses over the next year and 86 per cent believed that they could achieve this while still working from home. Sixty-three per cent would also rather outsource than employ full-time personnel. The survey also highlighted the fact that for many people the lifestyle benefits were so great that, even if their businesses became large enough to require offices, they would prefer to find solutions that would see them remain working from home.

However, there are potential downsides to this business arrangement. One of the biggest deterrents to continuing to run a business from home is not space, skills or technology, but trying to understand the many rules and regulations laid down by local councils over matters such as planning permission and business rates. At present the rules vary from area to area and are often unclear. Enterprise Nation is working with the Department of Trade and Industry to clarify the Government's position on this issue.

The other area with potential pitfalls is your and your business's relationship with HM Revenue & Customs (HMRC). If you work from home it is vital to keep your business expenses separate from your household expenses, otherwise you may find yourself facing an expensive and time consuming investigation by HMRC. Expenses that are often challenged by HMRC include those relating to telephone use (including mobile phones and Internet), utility bills, motoring expenses (you are not strictly able to claim expenses for business car journeys that start and finish at your home) and even food and drink consumption.

Be careful if you are converting any part of your home into an office, and always run through your plans with your accountant beforehand to make sure that he or she can help you avoid undue interest from HMRC. Your accountant may suggest setting up a distinct business structure, such as a limited company, partnership or limited liability partnership (the latter two if you are in business with somebody else).

As with all major business decisions and issues, be sure to seek the advice of the best professional expertise you can afford before making any important decisions.