Starting up at home

Starting up at home

Author
Discussion

enjo

Original Poster:

339 posts

137 months

Wednesday 23rd April 2014
quotequote all
Hi All,

I am currently employed full time as a Product Designer.
I would like to start up a design consultancy in my spare time at home with a view to one day being fully self employed.

There are a few things that I constantly use as excuses not to do this! The first is tax, am I right in thinking that I would need to move to self assessment and that this is a one way street?

The other is my current mortgage. Buried in the small print there is a sentence about not running a business from the property. I know many people do run business from home, is it something I need to talk to the mortgage provider (HSBC) or even home insurance about?

Many thanks.

Frimley111R

15,538 posts

233 months

Wednesday 23rd April 2014
quotequote all
I wouldn't worry about running it from home if its just a back bedroom type of thing. I think the issue is greater if it means lots of cars outside your home or some major mods to the house, changing it from a domestic property.

enjo

Original Poster:

339 posts

137 months

Wednesday 23rd April 2014
quotequote all
Thanks for the reply - The plan is quite literally back bedroom! This is where my desk top currently resides. I would be thinking of adding a small 3D printer (makerbot replicator 2 or similar).
The next issue would be funding the software and printer!

Eric Mc

121,785 posts

264 months

Wednesday 23rd April 2014
quotequote all
If you have ANY income derived from running a business (no matter whether the business is full or part time), then the only way you can properly account for the tax (and NI) arising from the profits of that business is to register with HMRC for self assessment.

If, at some time in the future, the self employment ceases and no other reasons exist to be in the self assessment system, then HMRC will tell you that you don't need top do self assessment.


enjo

Original Poster:

339 posts

137 months

Wednesday 23rd April 2014
quotequote all
Thanks Eric, that makes it a little easier.

I am pretty sure that the easiest way to move forward would be to register as a sole trader. Would there be any real benefit for me to set up as limited company when it comes to things like registering patents?

If I were to come up with some earth shattering product that everyone must have I wouldn't mind being bought out by google/facebook/mircosoft etc for many millions, in this regard would it be a good idea to register the IP to the company?

Pot Bellied Fool

2,125 posts

236 months

Wednesday 23rd April 2014
quotequote all
Something else to consider is a virtual office address (quite a few folk I know use this virtual office, gives you some idea of costs anyway) as it gives anyone doing a quick search on you more confidence than if you're obviously home-based. Depends on the type of business though.

I should get round to doing it myself to be honest but I generally build a relationship with prospective clients first so by then it's not as critical. Depends how you're going to be drumming up work. If tender based then I believe a lot of people find it really helpfull to appear to have 'proper' premises, less important if it's B2C.

Eric Mc

121,785 posts

264 months

Thursday 24th April 2014
quotequote all
enjo said:
Thanks Eric, that makes it a little easier.

I am pretty sure that the easiest way to move forward would be to register as a sole trader. Would there be any real benefit for me to set up as limited company when it comes to things like registering patents?

If I were to come up with some earth shattering product that everyone must have I wouldn't mind being bought out by google/facebook/mircosoft etc for many millions, in this regard would it be a good idea to register the IP to the company?
Patent regulations is something I know nothing about.

If you are only trading at a very small, part time level, I would not go to the trouble of setting up a limited company as the additional bureaucracy etc is not worth the hassle - and the cost.

enjo

Original Poster:

339 posts

137 months

Thursday 24th April 2014
quotequote all
Pot Bellied Fool said:
Something else to consider is a virtual office address (quite a few folk I know use this virtual office, gives you some idea of costs anyway) as it gives anyone doing a quick search on you more confidence than if you're obviously home-based. Depends on the type of business though.

I should get round to doing it myself to be honest but I generally build a relationship with prospective clients first so by then it's not as critical. Depends how you're going to be drumming up work. If tender based then I believe a lot of people find it really helpfull to appear to have 'proper' premises, less important if it's B2C.
Thanks - I'll look into this although I'm not sure about having a Merseyside address as I may need to meet with clients - I'd much rather them know where I am in the UK.

enjo

Original Poster:

339 posts

137 months

Thursday 24th April 2014
quotequote all
Eric Mc said:
Patent regulations is something I know nothing about.

If you are only trading at a very small, part time level, I would not go to the trouble of setting up a limited company as the additional bureaucracy etc is not worth the hassle - and the cost.
Thanks again. Would it be easy to switch to a limited company if things go well?

Eric Mc

121,785 posts

264 months

Thursday 24th April 2014
quotequote all
Yes.

Setting up a limited company is easier than it ever has been.

It's administering it and keeping it going that is tricky.

Pot Bellied Fool

2,125 posts

236 months

Thursday 24th April 2014
quotequote all
enjo said:
Thanks - I'll look into this although I'm not sure about having a Merseyside address as I may need to meet with clients - I'd much rather them know where I am in the UK.
It was meant more as an intro to the idea & to give some idea of costs - didn't think you were local. But there'll be similar outfits close to you. I know the owner of that one, John, and he's a real good egg if you did need one up here though!

Siscar

6,315 posts

128 months

Friday 25th April 2014
quotequote all
It's worth having a look at your employment contract to see if you would have a problem there.

enjo

Original Poster:

339 posts

137 months

Friday 25th April 2014
quotequote all
Thanks PBF, will have a look around.

Siscar said:
It's worth having a look at your employment contract to see if you would have a problem there.
Nothing in my contract but I will be running by them first. If I do go down the 3D printer route they could be my main customer!

Thanks.

MitchT

15,789 posts

208 months

Tuesday 29th April 2014
quotequote all
As I understand it the room from which you're running your business may be liable for business rates rather than council tax unless you can demonstrate that it's still in use as a part of the home too. Quite what the minimum requirement is to achieve this I don't know. Does anyone else? A simple case of sticking a small chest of drawers with a couple of pairs of socks in it in the corner of the room or something more elaborate?

Eric Mc

121,785 posts

264 months

Tuesday 29th April 2014
quotequote all
It is very, very unlikely that any local authority would ever challenge anybody who runs a small business from a converted bedroom.

I've only ever had one client challenged in respect of using their home as a business and that was because they had converted the top floor of their free standing garage into a workshop. The council agreed that there were no business rates implications.

surveyor

17,768 posts

183 months

Tuesday 29th April 2014
quotequote all
Eric Mc said:
It is very, very unlikely that any local authority would ever challenge anybody who runs a small business from a converted bedroom.

I've only ever had one client challenged in respect of using their home as a business and that was because they had converted the top floor of their free standing garage into a workshop. The council agreed that there were no business rates implications.
As this. There was a case a few years ago, ironically started by a home working trying to reduce their council tax because of their home working.

The rule of thumb is it should be assessed if it's a specific room put to one side for the business. In practice if it's someone working from home with no staff and limited visitors they are just not interested.

http://www.voa.gov.uk/corporate/Publications/worki...

Hoofy

76,253 posts

281 months

Tuesday 29th April 2014
quotequote all
I should imagine the only issue with visitors/staff would be parking/traffic from the LA's viewpoint? As for insurance, that's another issue - contents won't cover theft if a visitor steals something nor will it cover you if a visitor trips over something.