Starting home based employmentThis section will be useful to you whatever kind of home based employment you intend to set up.
It's the business bit minus the web, the things you need to think about with any type of business that's based in your home. By reading through this section, you'll learn about some of the practicalities of setting up your business and some of the essential expenditure you'll need to make:
Essential kit for home based employmentI reckon you can start a web-based home business
for about £500, even less if you already have a dedicated laptop
that you can use.
Here are the essentials:
Total = £450 Notes: you probably have broadband and a laptop
already! Often home based employment on the web requires you to hold no stock and the first, most time-consuming part of the process is researching your niche and doing the preparation required to get your website up-and-running. Registering your home based employmentYou need to decide what kind of a business you're
going to be.
You'll probably go for Sole Trader in the first instance as it's straightforward, simple, carries minimal obligations and allows you to 'test the water'. If things take off and business is booming, you can consider the other options! Sole Trader: You're the boss, you make the decisions and you keep the profits. You take all the risk too! This is the simplest and cheapest home based employment option - all you have to do is register with the Inland Revenue and keep a good record of your accounts. Partnership: You share the risks - and the profits - with one or more people. The rate of taxes paid by each partner depends on the percentage of income they draw from the business. A partnership agreement is a good idea! Limited company: The main benefit of this arrangement is that business liabilities are not shouldered by the owners, the finances of your company are separated from your personal finances. Tax matters
You won't get far before you encounter the Inland
Revenue, in your new home based employment, but fear not,
they're incredibly helpful and only want you to pay the correct
tax - not too much or too little. You will need to pay Class 2 National Insurance contributions if you are self employed (currently £2.20 weekly), however you might find that you are classed as having small earnings currently less than £4635) and can get a Certificate of Small Earnings exception. My guess would be that unless you've come up with the next eBay or Facebook, this will probably apply to you in your first year of home based employment. I'd also recommend that you don't give up the 'day job' in the first instance. Start your web business slowly, part time, in the evenings and don't make any irreversible decisions until you're happy that the money is coming in. Class 2 contributions count towards:
You will also need to complete a self assessment tax return in you are self employed ... and therefore that means keeping decent accounts. I'll deal with free and cheap accounting packages elsewhere in this section, but for now, just make sure you keep all business-related receipts and record all income and expenditure.
I thoroughly recommend that you take advantage of the Inland Revenue's excellent (and free!) courses aimed at people in business. When I started my own home based employment I attended the 1/2 day course on self employment and the 1/2 day course on self assessment. Both were simple, straightforward, well-presented and completely without fear! I also learnt exactly what my obligations are and some great tips for exactly what I could offset against tax, including what percentage of your home bills you can offset against the business and how you can claim 'depreciation' on your biggest business asset, which in most cases will be your PC or laptop. My final tax tip is to do your self assessment online. Not only is it very straightforward, you get more time to file your return and it gives you an immediate calculation as to what you owe the Inland Revenue or - as in my first year of home based employment - what refund they owe you! Do you need to register for VAT?Many people in home based employment register
their business for VAT because they feel it gives them extra credibility.
I'd suggest you leave it out in the first instance as it may make you more expensive than your competitors and you'll have to submit a VAT return four times a year. You have to register for VAT when your home based employment turns over a certain amount of money - but let's not run before we can walk! Who else you need to tellIf you're using your home as your place of employment,
even if it's only part time, make sure you notify the following
people about your new home based employment, even if you're still
doing the 'day-job':
I got a bit jittery when I did this, but it's perfectly straightforward and was given the nod immediately from all three. Here's what I wrote in my letters: I am writing to update you about a change which I would like you to note on my records. I am proposing to run an internet business from my domestic residence from (date), though I do not anticipate that it will change the 'domestic residence' status of my property for insurance purposes. Please note:
I would be grateful if you would flag up any issues which you feel may be raised by these changes as soon as possible, or indeed confirm that this information is noted and that no changes will apply. InsuranceI think it's wise to take out a basic insurance
policy on your business, just in case you run into any problems,
but to be honest I think most web-based businesses are pretty
low risk.
However, there are many perfectly cheap small business policies. I used my start-up cash to buy my first year's policy as my course tutors certainly encouraged us all to take out a policy however 'low risk' our businesses were. Bank accounts
Get a separate bank account for your business money. Shop around for the cheapest account (most charge for paying in cash and dealing with cheques) and once a free introductory offer is over, change bank for the next enticing offers, so long as you're still only dealing with small amounts of income. If you're making lots of money, you'll probably have got yourself an accountant by now and won't want to be messing around with bank accounts! Data protectionFinally to data protection.
I'll do more on this in a separate section but at a basic level, if you store data (names, addresses, emails addresses, telephone numbers) you have certain obligations as to how you handle and protect that data. You need to register with the Information Commissioner's Office (cost at time of writing £35 per year) and I recommend that you do so. WAHM-Ideas offers moms ideas and tips to enable them to become a real work from home mom.
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