Start a business from home

While it is fairly straightforward to run some types of businesses from home, there are strict rules around others. This is because homes are generally designed for people to live in, rather than work in. Some types of businesses can change the character of the area and negatively affect neighbours. Also, a home setting may not always be safe or hygienic for you, your employees or your customers.

Before you set up a home-based business, check:

• if your local council requires you to request planning permission (the rules for what is required may vary between councils)
• if you need permission from your landlord - whether that’s a social landlord or private landlord
• if your mortgage provider requires you to notify them and request permission
• if the title deeds of your property have any restrictions on running a business
• if you need to tell your home insurance provider as most policies won’t cover any business equipment or activities.

The Scottish Government provides more information on what to check before setting up at home.

For some types of small business it is usually permitted to work from home, provided your employees don’t work from there as well, and visits from customers and deliveries are minimal. These include:

• consultants
• designers
• arts and craft makers
• publishers
• virtual assistants.

There are specific rules for some types of home-based businesses:.

• Childminding. This inevitably involves more people coming to the property, potentially more noise, as well as safety and safeguarding implications. Therefore, anyone being paid to look after children under 16 for more than two hours a day in a private home needs to register as a childminder and you could be fined or go to prison if you do not register. The Care Inspectorate provides guidance on registering and running a childminding business on your own or with a partner. Rules may vary across different local authorities, but if you are ever caring for more than six children (including your own who may not be present), or employing another adult, then planning permission may be required from your council. Childminders may also have to register as a food business with their local authority, depending on what food they provide.
• Catering and food. Any type of food business requires high standards of hygiene, and appropriate waste management. There are potential impacts of deliveries, cooking smells, and more people coming to the property to collect or distribute food. Your council may require you to have planning permission depending on the scale of the business. The UK Food Standards Agency has a useful general article on the practicalities of starting a food business from your home and Food Standards Scotland has advice for any new food business including a checklist and guidance on whether your business needs to be registered or approved in Scotland.
• Guest accommodation. If you use your home, or part of it, or any garden room for any type of guest accommodation such as B&B or holiday let, you will need a short-term let licence. You must also meet mandatory conditions around energy performance, standards of repair, fire safety, gas and electrical safety, legionella risk, buildings and public liability insurance. You can apply through your local council and they may have additional conditions such as planning permission if you are letting out the whole property at any point.
• Animal boarding such as kennels and catteries, dog walking, and grooming. Check what licences your local council requires for operating any form of animal boarding from your home. There are likely to be limits on the numbers of animals you can look after. The Scottish Government has recently run a consultation on licensing dog walking and grooming businesses so look out for potential changes in this area.

The legal structure of your business determines whether you need to register with Companies House - for example, if you are setting up a limited company or limited liability partnership (as opposed to being a sole trader or general partnership). This puts your official business address in the public domain, as well as your name as a director. Therefore, if you work from home, consider whether you are happy for your home address to be published and consider any personal risks around that.

If you don’t want your home address to be published you can set up your official business address elsewhere and use that. You don’t need to rent premises to do this. You can use:

• An agency such as a virtual office, company formation and registration service which act as your official address. They are relatively low cost and usually have a range of service options, such as a basic one for forwarding on mail from official authorities such as HMRC, or for a little more, forwarding on all mail, filing your annual confirmation statement and sometimes providing a phone answering service too.
• Your accountant or solicitor. Some professional services permit their clients to use their address as their official company address.

You can’t use a PO Box as your registered address for Companies House.

Authorities such as Companies House and HMRC will send official letters to your registered address, so you need to be confident that whatever option you choose, they will forward your post to you promptly, by either redirecting or scanning it and emailing it to you.

Whatever type of business you run, you will need an office area for admin. You may need:

• a desktop computer or laptop and monitor so when working for long periods you can ensure the monitor is at eye level
• relevant software, including anti-virus
• fast, secure broadband access
• mobile phone
• office desk - large enough to work at comfortably
• chair - adjustable so you can keep your feet flat on the floor and back straight
• storage to keep your desk clutter free

If buying office furniture, remember it can often be found second hand for minimal cost, and can also be classed as a business expense if used solely for business purposes.

Create a dedicated space where you can work without distraction, keep work matters and data confidential from others in the house, and switch off from work at the end of the day.

Having a separate space (such as a spare room with a lockable door or an outbuilding) enables home business owners to:

• deal with clients in a professional manner without background noise and mess when on calls
• resist demands and interruptions from other members of the household
• keep work equipment separate from home equipment.

However you will need to check if allocating part of your house as a workplace and not using it for anything else can have tax and insurance implications.

You can also create a space to call your own by:

• using office equipment in a general area of the house and putting it away when not in use
• housing your workstation in a cupboard, wardrobe or under-stair space with lockable shutters or doors.

If you're feeling isolated from other people, Business Gateway and other organisations can provide you with support and details of networking events.

As a business owner, you are legally responsible for health and safety - including your own. A health and safety risk assessment will be required for your work space.

The Health and Safety Executive highlights the following points to help you stay healthy and safe when working from home:

• avoid trailing leads and cables when arranging equipment and furniture
• ensure plugs, leads, wires and cables are in good condition
• keep your work area tidy and free from obstructions that could cause slips or trips
• check you have adequate lighting to avoid eyestrain.

The costs you incur from running your business from home can, in some cases, be allowable expenses which can reduce your tax bill, for example items that are used solely for your business, such as laptops, or a proportion of gas, electricity and internet bills.

The way this works varies depending on whether you are self employed or your business is a limited company which has you and/or others as employees.

It can be quite hard to calculate the proportions of expenses such as gas and electricity that have been used for your home compared with your business. If you are self-employed, you can use the HMRC Simplified Expenses approach which provides flat rates.

There is an equivalent approach to tax relief for employees of limited companies, where you don’t have to keep evidence of extra costs. There are other home-working expenses and benefits that are exempt from tax.

It’s worth getting professional advice before you start to claim other costs such as using a room in the house solely for business purposes.

Once you’ve started your business from home, you can grow without increasing headcount and needing to acquire premises by outsourcing some activities to freelancers or other businesses including:

• accounts
• administration
• telemarketing - for generating leads
• PR
• design and copywriting.

If you need meeting spaces to host clients and suppliers, or work side-by-side with partners or employees, sometimes meeting in a cafe or restaurant or visiting their premises is not always appropriate. Most cities have commercial business centres which rent meeting facilities for occasional use.

If you’ve decided to set up your business from home, then you’ll work through the same steps for getting started as other businesses.

If you’d like to explore renting or buying business premises first, there are a few things to consider when choosing a location.