Starting a small business from home is a dream for many people seeking freedom from the nine-to-five routine. It can offer a great deal of flexibility, financial independence and the opportunity to shape your own empire – without needing too many resources. As accountants working primarily with small to medium sized enterprises (SMEs) and start ups, we regularly meet people who are just starting out on their business journeys. The best part is that many go on to make a success of their businesses, and through working with them, we have become very knowledgeable in the skills, experience and advice small businesses need in order to grow.
According to Bloomberg, eight out of ten entrepreneurs fail within the first 18 months of starting their businesses. This statistic was quoted by Hiscox, small business specialists who know their subject inside out. However, we see many small businesses go on to become profitable, so we are well placed to advise on what is required, and what these businesses do differently in order to succeed.
Can I start a small business from home?
Absolutely – it is perfectly possible to start a small business from home. Many people do so very successfully. However, there are some pitfalls and you need to know how to avoid them. If you are fully aware of everything you need to do to be compliant and to market your business, then there is absolutely no reason why you can’t be successful.
To help you, we have broken down the information we have to share, categorising it as legal or professional advice. This will help you to gain a better understanding of the requirements when setting up your own small business from home.
How to open a small business from home – the legal side
Opening a business always requires a great deal of legal learning and there will always be hoops to jump through. You need to be even more astute when setting up a small business from home, especially when it comes to your finances and taxes.
Personal tax can be a minefield – anyone who owns a business or who is self employed must report all earnings to Her Majesty’s Revenue and Customs (HMRC). This can be a lengthy process and can end up costing you more than you think, as taxes are difficult to navigate and predict accurately. There are also tax penalties, in place if you make mistakes and HMRC deem them to be careless. To report your earnings to HMRC, you must complete a tax return. This can be completed by you, but it is a complex process so many small business owners choose to use an accountant.
VAT generally only applies to businesses with higher earnings, so it won’t affect you when you are starting a business from home. At the same time, it is something that you need to be constantly aware of, because the moment you hit the threshold, you will need to register for VAT. It might also be beneficial for you to register for VAT before you reach the threshold, depending on the size of your business and your expenses. This is the kind of advice that you can get from a good accountant, who will help you to weigh up the positives and negatives.
It is essential that every business is registered with Companies House, whether you are a sole trader or you have a larger business. We can help you to register your business and complete any other start-up registration services you need. Whatever business model you might have in place, we will be happy to advise you and talk to you in person to offer you bespoke, personalised advice. You won’t pay per appointment – we work differently to other accountants.
Creating a professional image when starting a business from home
Starting a business from home is cheap and convenient but if you want to find customers, you need to maintain a professional image. This isn’t always easy if you are working out of your dining room, or you have an office set up at the back of your living room! You want your potential customers to know that you take your business seriously, and that they can trust you completely.
It’s important that your business looks professional, regardless of size. Many business owners don’t want to use their personal address because it will be on a public register, but you must also consider how this will look. Does it make you look trustworthy? Potentially not. Could it put customers off? It potentially could.
It is a very good idea to use a virtual office address service, where you can register your business using a different address. We offer this service to our clients, which means you can choose our prestigious Chislehurst, Kenley and Bexley addresses for your mail instead of using your own. You can have all post forwarded on to you, or you can come and pick it up.
Networking and reaching new audiences
It’s important you find ways to promote your business and meet like-minded, relevant people who can help you. Networking is perfect for this, introducing you to others who can help and support you – and maybe even find you those coveted customers. We offer regular networking events, workshops and more. Talk to us about what’s coming up or find other networking opportunities near you.
Creating a business plan
A business plan is always a good place to start. Sure, your business model might change, especially over the first few years as you are just finding your feet, but making a plan is still a great way to define your goals and give yourself aims and structure. We often find that working with an accountant on a business plan is especially helpful for our clients, as it’s a good way to consider your finances with expert direction and support. We can give you business plan templates and talk you through the process, offering as much advice as you need.
Starting a small business from home – getting an accountant on board
Many small business owners choose to work with an accountant, as this can actually save them money in the long run. As with anything in business, it is short-sighted if you don’t consider your future from a long-term perspective – and usually, in the long run, you simply won’t have the time or expertise to sort your financials. Your time is precious and it is best spent building your business. By working with an accountant, you can focus on your business and how to run it, whilst leaving the financial side to someone who knows exactly what is required.
Please get in touch if you have any questions at all about small business finances. We are well prepared and set up to support your business from the beginning.
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