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If you’re considering making your home a base for your business or your primary place of work, don’t forget to factor in the possible pitfalls.
2013 figures from The Office for National Statistics revealed that 58% of self-employed workers use their home in some way – whether they work from home fully, work from the grounds of their home (ie a separate office or workshop), or use their home as a base (think taxi drivers, mobile hairdressers, freelance gym instructors and so on). For many it seems to be the ultimate dream – low cost, no daily commute and the ability to work in your dressing gown and make as many trips to the fridge as you like! However, there are downsides to working from home. If you’re considering making your home a base for your business or your primary place of work, don’t forget to factor in the following possible pitfalls:
Interacting with your clients and customers face to face can be tricky when working from home, as inviting them into your living room for a cup of tea while trying to conduct business may well be personable but it’s unlikely to be seen as professional. There are ways around this issue however, including hiring meeting space as and when needed, renting a ‘flexi’ office or premises, or simply going to them instead of them coming to you. If you are likely to need a lot of face to face interaction in your line of work or business though, working from home is unlikely to work for you.
If you decide to work from home selling items online, taking clear photographs, writing accurate descriptions, building (and advertising) great feedback and responding quickly to customer enquiries can all help to build trust between you and your target market.
All self-employed workers, whether working from home or elsewhere, need to register as self-employed with HMRC and will be liable to pay tax and National Insurance contributions (above the earning threshold of £9440 for 2013/14). Whether you choose to employ an accountant or self-assess online or using the SA100 form will depend on the complexity of your business balance sheets and how strong a head you have for figures.
When it comes to borrowing for your business, whether that’s to invest in home office/computer equipment, stock, advertising, growing your business or something else, whether you work from home or from an office shouldn’t make a difference to your applications – although there is a school of thought that having a business address presents a more professional image to lenders and investors. Different types of finance available to you could include business loans from the bank, business overdrafts, credit cards or other forms of investment. Research the right type of borrowing to meet your needs carefully then check your credit score at CreditExpert.co.uk to identify any potential issues with your credit history that could affect your borrowing prospects.
Remember that there are different implications depending on whether you are a sole trader or have registered as a limited company. The main difference when it comes to financial matters is that the finances of a limited company remain separate to those of the company director (including liability for debts), whereas a sole trader is held personally responsible for all financial aspects of their business. Gov.uk has useful information on forming a LTD company, which is perfectly possible when working from home, if this option appeals to you.
When you work from home, as opposed to in a shop or office, your interaction with clients, customers and colleagues is likely to be much less. In fact, many people who work from home don’t usually have any face to face contact and may instead connect with their target market or their clients on the phone or online. While this may suit some, others can find it a challenge. Ways to combat ‘cabin fever’ include taking time out of your day to get out of the house – perhaps go for a walk on your lunch break (make sure you take a lunch break!) or meet a friend – or making a deliberate effort to meet clients, customers or colleagues in person occasionally. Even taking your laptop to a coffee shop for a morning of replying to emails can provide a welcome change of scene.
Just like when working elsewhere, there are insurance issues when working from home. Depending on your area of work you may need some or all of the following liability insurances: public, professional and employee, as well as making sure that the tools of your business are insured separately to the domestic items on your home insurance. You might also want to consider taking out an earnings insurance policy, to protect against illness or injury.
While the benefits of working from your home are clear (a 2 second commute for starters!), working where you live can cause the work/home life boundaries to become blurred – for both you and any family members in the household. While the temptation may be to never really switch off from work (we’ve all been guilty of checking emails from the sofa), setting clearly defined times to be ‘at work’ and ‘at home’ is key.
Having a routine which signals the end of the working day can be useful. For example, taking a shower, changing clothes or going for a walk can help to clear your head and ease the transition from work mode to home mode.
If you’re considering joining the estimated 4.2 million self-employed people who work from home in the UK, it’s important to take into account the common pitfalls as well as the perks, to make sure that it’s the right choice for you.
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