There’ve been lots of negatives over the past year or so, but one positive is that more and more people are considering the prospect of becoming financially independent by starting their own business. Particularly attractive is the idea of doing so from home, as many have now experienced the benefits of home working for the first time. Here, we run through some of the most important steps when it comes to starting a business from home, and offer up some tips that could give you the confidence to finally go for it!

Registration

Every new business has to register with HMRC, in the UK. This is a straight forward process which can be done online and is totally free of charge. If you’re starting a new business from scratch from home, it’s likely that you will be working alone in which case you can benefit from the ease of registering as a sole trader. If you’re going into business with a business partner, don’t worry, the process is still straight easy to tackle and you still register through HMRC.

The process for limited companies and limited partnerships is a little more complicated, and there are more ongoing responsibilities going forwards. The benefit of being a limited company is that your business’ finances will be separate from your personal finances, so any losses incurred won’t spell disaster. However, most people only chose to switch to this option once they are more established, as the business’ finances will become public and the associated paperwork and costs are significantly more, so it’s not something you need to worry about right away.

Permissions

When you’re running a business from home, it’s important to get permission to do so from your Landlord, if you’re renting, or your mortgage provider if you own your home. Furthermore, if you’re going to be receiving lots of deliveries, or a significant number of customers visiting your property, or even installing advertising for your business on or outside your property, you will need permission from the council.

Expenses

As a sole trader, you will have to fill out what it known as a tax return, once a year. This enables you to pay income tax on any earnings over £12,570 per year, just as you would if you were in a salaried job. Similarly, you still have to pay national insurance contributions. If you earn more than £5,965 per year this only amounts to £2.80 per week. If you earn over £8060 per year the amount you pay will be 9% of your earnings, and if you earn over £43,000 per year you will pay 2% of your earnings.

If you earn over £85,000, legally you have to start charging VAT on the products and services you sell, which is then sent to HMRC. However, you can also claim back any VAT on products and services purchased by the business. If you post your products to your customers, you can avoid having to pay business rates, however, if your customers visit your home you will have to incorporate these into your expenses. If you do choose to begin as a limited company, you will also have to pay corporation tax every year, which is 19% of your earnings.

As you can see, most of the more significant financial strains of running a business only come into play when you’re revenue grows which, in turn, dilutes their impact. So, don’t let this side of things dissuade you from taking that leap. However, it is crucial to carefully keep track of all expenses and income as a new business, as it makes the process of paying taxes and national insurance so much simpler. As businesses grow, they usually onboard accountants to help with financial tasks and make sure they’re ticking every box in order to avoid fines, but while you’re just starting out the same can be achieved through regular bookkeeping.

The government’s guidance on starting a new business will give you more information on this and you can visit their site here.

Licences and Permits

As well as permissions, depending on the nature of your business you will also have to apply for a number of licences and permits before you can trade. For example, if you’re selling goods online, selling to customers who live abroad, selling on the street or selling food and drink, you will need to apply for the relevant licence. Www.gov.uk has a great tool called Licence Finder which helps you to  figure out whether or not you will need any in order to start your business.

Insurance

Business insurance is a must, no matter the scale of your company, and there are three main types. Public liability insurance covers you for claims that the public make against your company, while professional indemnity covers the costs associated with complaints from customers regarding poor quality of products or services. Once your business has grown to the point of being able to employ staff, you should also consider the third type, employer’s liability insurance, which protects you against injury and accident claims that your employees make against you. All business insurance also covers essential costs such as those associated with theft and damage of any of your business’ assets, like stock and tools.

Design Your Workspace

As a sole trader just starting out in the business world, you won’t yet have the responsibility that comes with hiring employees. For example, when creating a suitable workspace, you only need to consider your own needs. It is easy to underestimate the importance of careful planning when it comes to designing a workspace just for yourself, but it can have a big impact on how much enjoy your new venture, so don’t take it too lightly.

Every kind of business will have different requirements for its workspaces, for example, the workspace needed by somebody making celebration cakes for a living will differ from that of a copywriter. However, it’s important to take the time to plan before you begin putting it together. Imagine every step of the process you will follow in your role and what will enable you to carry it out as effectively and efficiently as possible. Could a double oven help you to make double the amount of product in the same time, therefore doubling your potential profits? Will you need to incorporate safety features into your workspace if you’re a metal worker? How can you make sitting in front of a computer all day more comfortable, and how could your environment inspire you creatively?

Create a Springboard

As well as the technicalities associated with starting a business, before you begin trading you need to establish your brand, and in order to kickstart interest you should invest time, and money if you can, into marketing. Consider your target market, how you’d like your logo to look, and what it needs to say about your business. Are there certain colours you’d like to feature in your branding, and what branded materials do you feel you will need? Will your product require packaging, will your customers reach you via a website, and will you need any physical advertising materials such as billboard posters or signage?

You could hire a graphic designer to take over branding for you, but it is also possible to design it yourself with a little research into the important thought processes behind it. As well as saving money by doing this, there are also lots of ways in which you can begin marketing your company without having to spend. For example, make the most of social media by ensuring that you are as discoverable as possible with the help of ready-made tools like hashtags, which enable users to find your company when searching.

Furthermore, don’t be afraid to reach out to local publications such as lifestyle magazines and newspapers, as they are always on the look out for news of new businesses. They will usually be happy to feature your company for free, and a great way to make the most of this opportunity is to offer introductory offers to readers to encourage their interest.

Outsourcing

Hiring employees can’t be at the top of your list of priorities when you’ve just set out on a new business venture, as they are one of the most significant expenses associated with running a company. However, this doesn’t mean you have to go it alone. Outsourcing is an ideal option for new businesses owners, especially those operating from home.

You can outsource lots of different aspects of your business, but in the early stages it is most likely that you will need a little help when it comes to communications. A key priority will be building your customer base but as a one person organisation, you might not be able to dedicate as much time to it as you’d like. Instead of hiring a full-time member of staff, which involves paying a salary as well as their national insurance and pension contributions, you can simply outsource on a temporary basis, as and when you need the help. 66% of small businesses outsource services, showing just how popular this route is becoming.

As well as the financial benefits, by outsourcing to a communications company like Cymphony you can also capitalise on the experience and skills of specialist, trained professionals. This helps you to begin building an excellent reputation, as it gives the impression that your business is more established as well as ensuring that customer enquiries and requests are handled to a high standard. Another benefit is that every call or live chat request, depending on which services you’d like to make the most of, will not only be answered immediately but any leads will also be converted into revenue thanks to the skills of call-handlers. In turn, you can focus on delivering excellent products, safe in the knowledge that every opportunity coming your way is being maximised.

Now that you know how to take care of the serious side of starting a business, from registering your company, to making sure you have covered your financial responsibilities, have the ideal business model and have kickstarted the development of your customer base, you can focus on the aspects that motivated you to break away from the 9 to 5 and start your own adventure! 

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