How can you set up a small business from the comfort of your own home? From the big idea itself to putting your plan into action, a lot of time and effort goes into getting started.
You can get set up pretty quickly, but it’s essential to do some planning to make sure you tick every box. Here’s how to start a small business at home.
- Put Together a Business Plan
- Make Your Home Business-Ready
- Establish a Business Address
- Registering Your Venture
- Setting Up Finances
- VAT Considerations for Home Businesses
Put Together a Business Plan
When you create a new business, you must begin with a vision for what you want your company to be and do. Planning is the roadmap that gets you and your business there.
Whether you’re trying to be the next Apple or the best builder in town, or open a shop you must have a vision in your head about where you want to end up and how you want to get there. There were 5.9 million small businesses in the UK at the start of 2019, so you’re in good company. But new businesses fail at a rate of 330,000 or so meaning that without a plan, you might get lost with the others along the way.
Spending time on business planning improves your chances of success. Statistics show that businesses who plan, grow 30% faster than those that 'just wing it' and hope for the best.
The one-page business plan template below is a great starting point. It’s an exploratory process where you can analyse your industry, target market and potential opportunities. You can add your company logo and branding to the document and make it more personalised to your business.
Make Your Home Business-Ready
Besides making sure you have a defined space to work, some other factors contribute to making your home business-ready. What you need to do to set up depends on your type of business, where you work and whether you take people on to help.
Register: You’ll need to decide which type of business suits your needs: self-employed, partnership or limited company. Each has its individual process to follow and you can find them all at GOV.UK.
Health and Safety: If it’s just you working from a laptop, this won’t need too much consideration. However, if you’re expecting customers to visit you at your premises or you’re going to prepare food, health and safety checks will be vital.
Mortgage: Starting a business shouldn’t mean any change to your mortgage repayments, but the government guidance advises you to let your mortgage provider know if your home is going to accommodate a business.
Insurance: Whether it’s a whole new policy or just amending your existing coverage, it’s good to get some insurance sorted. A tailored home business insurance policy is quick and easy to set up and keeps you covered. If you employ anybody as part of your home business, employers' liability insurance is almost always a legal requirement. Learn more about EL from GOV.UK here and check if your insurer is authorised.
Establish a Business Address
If you operate in the B2B space, potential clients may be wary of dealing with a service provider who doesn't have a professional business address. Equally, if you're a tenant in your current home, you might not be able to register your business at the address.
In either case, you might want to consider signing up for a virtual office space. Even if you're free to register your business at your home, using a virtual office address can save you the hassle of updating your details every time you move or when your venture gets too big for your backroom.
Setting Up Finances
There are the less glamorous aspects involved in starting a small business from home, such as tight budgets, lack of direction and limited resources. The good news is you might be eligible for a grant.
Although in some cases you can use your personal bank account for business expenses, it’s probably not the best foundation for your business. It makes accurately keeping your records complicated, tax preparation becomes difficult and you’ll need to spend extra time shuffling through transactions.
Consistently blurring the lines between personal and business expenses can cause significant issues. You want your business to grow, but using a personal account for business expenses might hinder that progress rather than giving it a much-needed boost. You can find more about using a personal account for business expenses here and some essential guidance when it comes to your finances.
Comparing cash coming in compared with cash going out, (i.e. cash flow), may well become your most pressing concern. If you have borrowed money or mortgaged your house to start your business, then accurate but simple bookkeeping must be at the forefront of your mind. Even though there are many small business expense tracking apps available on the market, many still use traditional templates in the beginning.
Registering Your Venture
Every new UK business needs to contact and register with HMRC. If you’re setting up as a limited company, you’ll also need to inform Companies House.
From trademarks and patents to copyright and design protection, you’ll want to make sure your intellectual property and unique name, brand and inventions are protected - depending on your business.
VAT Considerations for Home Businesses
As your business grows (and your taxable supply reaches £85,000), you’ll need to register for VAT. This means you can recover the VAT you pay on business purchases and charge VAT on your sales. Once you’ve mastered calculating it quickly and accurately, you can find out how to register for VAT easily here.
This is just the starting block. There’s so much more to learn and get excited about for your small business. Legalities, marketing, finance and HR - you need to figure these out so you start to thrive. We’ve got just the resources you need.
Get Started With Your Small Business Venture
Although starting a business is exciting, scary and hopefully rewarding, there's a lot to organise first before seeing the benefits of your time and effort.
To help get you well on your way, we’ve put together everything a small business owner would need to begin. From marketing resources that help showcase your services online to bookkeeping templates that make managing your finances easier, all these resources are in one place.
Grab your copy below.